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Interesting thoughts Sudnal, quite a few possible outcomes that may not be rosy.
Yes Mark that’s how I read it paid off a large chunk of money that they didn’t need
Speaks volumes imo then there is the odd Director purchased far North of here
GLA LTH glad this week is out of the way bring on the results any day now
You can pain , you can guess or you can listen:-
"In extending the facility, the Board has taken the opportunity to review the Group's borrowing requirements in the light of the strong cash generation of the business. The Board has elected to repay the $175 million of the RCF which was previously drawn as a precautionary measure in March 2020, and has reduced the size of the RCF to $350 million. These actions reduce the Company's gross debt and costs associated with the facility.
As at 31 August 2020, the Group had cash and cash equivalents of approximately $700 million, which combined with the extended facility provides the Group with total liquidity of approximately $1,050 million, with no maturity dates on Group facilities prior to June 2024."
Yes they made a mistake but 3 years of breathing space and expecting updates in next few weeks, to each their own, ill wait and see what next update brings, if people want to take a huge loss, we'll good luck elsewhere in :-)
“ The fact of the matter is that they swallowed too big an acquisition and unable to digest over 5 years, leaving them with a mountain of debt to pay and still the business is not successfully integrated.”
That’s what it boils down to, unfortunately.
Capita is a value trap and in no way comparable. Hold through the pain Sudnal
I honestly fear that this will become a similar story to Capita. Capita appeared undervalued right from £8, sold numerous parts of the business blown away £2bn through disposals and rights issues and we are now back to debt levels of £1bn over there with share price languishing at 24p with no free cash flow. Have looked at the board of directors page on Micro focus website and it doesn't instill a lot of confidence to be honest. Will ponder over the weekend and will make a call to on whether swallow the bitter pill. 35% down at present and no respite appears in sight. The fact of the matter is that they swallowed too big an acquisition and unable to digest over 5 years, leaving them with a mountain of debt to pay and still the business is not successfully integrated.
“So this is being shorted at the moment but they are about to get stung?”
I was reading the same comment on the board when the share price was £10. The shorts have made so much money that there is no way they will be stung any further sp slide is now upside for them.
Eventually the worm will turn and head north. Unfortunately, IMO I think this will bottom out at £2 or just under. Material Upside at these prices.
As for buyout, there is no way there will be offers more than £5 or £6 taking into account the debt mountain and accelerated revenue decline.
If the company really wants to make a material relate on the share price just dispose of one of the Many diverse software assets they have and use the money for paying off debt or share buy back.
The sum of the parts are definitely worth more than the company company!
Tex
You can see MOST of the short positions right here on LSE:
https://www.lse.co.uk/ShareShortPositions.asp?shareprice=MCRO&share=Micro-Focus
This does not include the smaller PI shorts, but IDK how to see all those, I do know if you go to IG you can see % of its users who are long vs short, they were 50/50 long to short last week and week before, past 24hrs everyone has gone long
So this is being shorted at the moment but they are about to get stung?
When are earnings due?
Remember in the past when you would stand on the train line with your eyes closed and trying to guess the very last minute to jump out of the way before the train lands and well destroys you?
That is the situation right now, but the shorters are you. They think its a disused train track thats going to be decommissioned and they are wrong. Wait a few weeks for an update and you will see what happens to the SP. Its easy to get spooked when a share price looks too good to be true but the markets in general are spooked.
What am I missing?