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Umeed this is not a hiccup this is a structural shift in the market.
Sain: Do u know what? Intu share price is equal to a year of their profit ... and even if their interest payment, debt servicing, administrative and all other expenses is deducted from their yearly income, if present share price 35 pence stays, they can buy all the shares in market within 2 years and in next 3 years, could pay accumulative 50 pence dividend per share.
With this stats, if I was Intu manager, I would be stupid to take any takeover offer for the company and if I am forced to, I would not rec-ommend shareholders to accept offer less than £2.50
I sincerely believe that all this fuss is just a hiccups and many compa-nies has seen this situation. Next at one time went to 6 pence a share ... today Next is not 6p but ~6880 pence or over 1000 times and that ex-clude all dividends Next paid to shareholders. Signet once went to 8 pence. So, patient is the key word.
Sain: You should know that after all this reduce valuation of assets, Intu still has ~£8.3 billion in asset and £4.7 billion in debt, comes to ~ 57 percent debt on asset. At one time, Intu asset was worth more than £10 billion and more less than 50 percent was debt.
That still leaves £3.6 billion in asset. If Intu borrows a £2 billion to be paid in 10 years and repay present £2 billion debt, Intu would still have £4.7 billion debt and £8.3 billion assets (that personally I think, is undervalued).
Remember, no increase in asset value and no decrease in debt ... still:
If that happens, what u think Intu share price would be? ... Obviously, more than £3.00 right?
You miss the point .The only way these funds can meet redemptions is to sell stock unless of course there is a rapid influx of money arriving to counterbalance
In a challenging market this is going to have a negative effect on values creating more stress on Intu and its LTVs
One thing is for sure Intu wont be taking life easy at the moment
Difference between Scottish fund and Property shares is that, many fools who are investors, can ask Scottish fund to encash their investment and Scottish fund knowing that property shares in their fund is undervalued, still have to encash them effecting value of other shares they hold. As for Property shares, they do not need to cash their shareholders. If fools come to market, they sell their assets cheaply, that is all.
As for Intu, even at present valuation, they have around £8.3 billion worth of assets and £4.7 billion in loan. With net asset of £3.6 billion, if they borrow a billion pound to pay of old expensive billion pounds loan, all their perceived problem would be over and share price could go over £2.00 in no time.
With so much liquidity in the market, I think such borrowing is not too difficult. Since Intu do not need loan urgently (their payment would come in 2021), they are taking life easy, that is all.