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Sorry, don't meant to prolong but the cash was on Bergen's books before, not RR's, and Langley will need to replace that now in order to fund BE going forwards (hence being able to buy a business valued at €110m for only €70m).
Small potatoes though - what's €110m (or €143m if you insist :) ) when there's a €1.6bn sale going through as well...
common .. won't prolong the debate any longer , we've given it a fair going over , but just to say that as the cash was Already on RR's books it's not really an additional sum.
There's no debt on the Bergen balance sheet as far I can see.
When TMH were looking to buy BE, Fitch had said it wouldn't materially affect TMH's credit rating as the Fitch assumptions were "TMH's acquisition is fully financed with debt and there is no further debt at the BE level."
Plus, if BE did have debt, that that would INCREASE the EV, not reduce it. Remember, EV is really a measure of what it would truly cost to take over a company (i.e. you can't just pay the market cap as you're also taking responsibility for all debt too, so you must add the value of that debt to the total market cap for the total cost to you. Then, once you own the company outright, you get control of the cash in the bank account so you can take that back off your total purchase price to equal the net takeover cost to you). In summary, EV = Market Cap + Debt - Cash- Cash Equivalents
In this case, the deal was that RR get keep the cash at bank, so take that out of the equation and you have EV = Market Cap + Debt - Cash Equivalents.
We know the EV is €63m and the price paid is €70m, so we have €63m = €70m + €0m - €7m*
Like I say though, the EV figure is for the Langley folks to worry about (i.e. their people want to know the true cost of the takeover/purchase to them, which is €63m).
What RR folk are interested in is how much we get (which is €70m plus €40m = €110m).
* there could of course be debt I'm unaware of the BE balance sheet, but that would be offset by the Cash Equivs figure e.g. if they did have debt of say €10m, then the cash equivs must be €17m in order to square things off. Doesn't matter though, the key thing is we get €110m in free cash
The like for like 150 vs the current is 143.....but, I think the original 150 was actually 143 anyway.
The 150 was including the debt, the case and the "payment".
I've just googled......lots......
CommonSense's numbers are spot on from what I can see, / have read, and absolutely Casapinos, the 33m is included, as the debt is being migrated from RR to Langley.
So it is 70m + 40m + 33m + 7m = 150m less 7m "cash back" = 143m.
The problem is though, that even with this sale, RR hasn't gone up to the level it really should do. I appreciate it's only 100m ish, but this is very very positive......and we've gone up 1%.....hhhmmm
common ...not langley!
Langley I was factoring in the transfer of the outstanding 33 mill of debt which Langley have taken on , as a net positive for RR.
RR got €110m from the sale, not €143m, so significantly down on the €150m they tried to get previously.
The €110m is made up of the €70m purchase price plus the €40m in cash from the bank account. The €63m "Enterprise Value" figure is the net worth of the Bergen business i.e. Langley have spent €70m buying a business which, as well as the plant and machinery, also includes around €7m in 'cash equivalents' (e.g. unsettled invoices, T-bills, CDs, CPs etc). Basically, Langley are getting €7m cash back within 1 year, hence the "Enterprise Value" being the total market cap (i.e. the purchase price) of €70m minus the cash they'll get back quickly. The €63m figure is for Langley than RR to be honest - all we're worried about is the €110m we get in cash.
Also, it's maybe worth remembering that the €150m was the HIGHEST bidder previously, so we knew the price wouldn't get up to that again. That said, I was hoping for nearer €130m so let's just hope the sale of ITP isn't similarly discounted...
Casa.
LOL.
ok, I have to admit, I got lost as well, and you are absolutely correct, Bergen has no Market cap to start with, so the "Enterprise Value" is actually the wrong term to use.
Botbot as Bergen was not independently listed there is no market cap(MC)so the figures are based on RR's "hypothetical" value.Given that the three figures to emerge are cash =40milland EV =63and "sale proceeds"=70mill
Then in the equation:
63=Notional value + total debt - 40, if we assume that notional value is the same as RR's"sale proceeds" of 70 mill, then the equation is
63=70 +X -40
then X=33
the statement then becomes
Enterprise value( 63)= market cap (70)+total debt (33)-cash(40)
We can , I think assume that RR are suggesting that they have , in effect got 143 mill out of the deal , slightly less than the 150 mill of a while ago.
I think?
For all the people that do not understand Enterprise Value, and thinks Bergen was sold for nothing.......which is wrong.
Formula and Calculation for EV
EV=MC+Total Debt-C
MC=Market capitalization; equal to the current stock
price multiplied by the number of outstanding stock shares
Total debt=Equal to the sum of short-term and
long-term debt
C=Cash and cash equivalents; the liquid assets of
a company, but may not include marketable securities
Hi all, is earning tomorrow before or after the bell?
Friends of mine collect watches and have shares in watches of swizerland wish i had there shares have jumped 300 from march i know rr needs a perfect storm as as a lth anything is possible,hoping tommorrow is rhe starting point i know rr wont move 300 in 4 months but 30 would do for starters still short of a lot of year end predictions what are the forum forcast for this year now if a big if i with what we know or things we think we know mine would be bye bye bobbit well done and enjoy your money
"Know!!
Are you for real ??"
My statements are about as real as those made by Nettles.
Take what you want from that...
I did say so.
Just asked a 3 year-old. Apparently the answer is:
70 + 40 = 110.
The reports in the news seem to be conflicting also.
Some are reporting the €63m number, whilst others are opting for €131m.
Feels a bit like smoke and mirrors.
Know!!
Are you for real ??
Case in point.
Lol
Hmm 70 plus 40 equals 120.
Like you say math not your game.
I'm a writer by trade, so math was never a strong point. However, the following:
"Sale proceeds of €70m from the transaction together with €40m of cash currently held within Bergen Engines which is to be retained by Rolls-Royce, will be used to help rebuild the Rolls-Royce balance sheet in support of our medium-term ambition to return to an investment grade credit profile."
...seems to indicate sale proceeds of €120m?
Sadly I fear you are correct.
Forced sellers rarely get their value and ITP is very much a forced sale. Bergen sale is IMO very poor compared to that previously announced.
The mini nuke project might offset this but if ITP is sold for a song RR will be back with the begging bowl in late 2022 and thats going to cement the sp in double digits for a very long time.
Todays RNS say that RR has "sold" its Bergen engines division at an enterprise value of 63 mill euros.Enterprise value is a term meaning the value of the business plus its outstanding loans , so for a company worth £100 mill with outstanding loans of £100 mill the enterprise value is £200 mill . Clear?
This means that Bergen has been sold probably at zero value or below, Langley have taken on its debt and acquired the assets at zero or maybe even negative value. IIRC RR said the hoped for price for Bergen Was 150 mill, this does not augur well for the ITP sale.