The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
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I couldn't be clearer - anyone can post anywhere BUT why post just to have a go at a shareholder who is still trying to look for any positives. How would YOU feel if you had invested £20k (say) in a company and suddenly it got suspended - whether it was high risk or a company that appeared safe - you probably would be annoyed at your loss especially if the company continued trading. That's my point - IF Pearls wishes to post links on possible developments for ex shareholders - I really don't understand why non holders wish to attack him - except for the odd shorter who keeps posting ...
BTW - Simple maths and finance. If someone is insolvent is it wise to borrower more money to put off the inevitable? Debs was insolvent as called out by the board. So income was unable to meet on-going expenditure and liabilities and was also decreasing. The retail sector is in serious decline so was anyone really expecting income to increase over the medium term. Where was the hope value here. It was no Tesla where income cannot meet debt/expenses, however the hope value is everyone will be driving a Tesla and they are the market leaders in electric cars and income will increase ten fold. Its all speculative though. An investment consists of yield - what are my earnings - for shares EPS - to simplify further what is my BTL returning...as in what yield. If my asset is not generating an income its not an investment....plus debt is a huge factor not to mention other on-going liabilities.
Knigelk - Do you now decide who should post here? I can tell you if Debenhams has a future. It does. The lenders from what it seems are going to hold and put management in place for the next number of years to ensure they receive a better price for the company and to lessen their loss. This seems to me to be the strategy.
http://www.cityam.com/277849/sports-direct-mulls-legal-challenge-over-debenhams-rescue
Guys, you don't need to read or post on the thread, especially if you have already made up your minds!! Pearls, has every right to wait and see if MA takes any action. If not, I think even Pearls will admit it's game over re any hope for ex shareholders. I'm interested in whether Debenhams still has a long term future. If the likes of Boots are considering a CVA then it's really game over for the entire high street within five years imho
DarrenR it's all fantasy land even now when the shareholders have been wiped out
U just don't get it Pearls, if you did I suppose u wouldn't of had shares in debs. Thank you for continually uploading the same opinion based articles.
Part two:
Offers are now being sought for the operations, but on tough terms that stop a buyer contacting landlords or concessionaires for 18 months – a ridiculous restriction, not least since Debenhams is now in a Company Voluntary Arrangement with creditors to reorganise its debt stack.
Does this restriction apply to the lenders and current owners? No wonder Sports Direct has complained to the FCA that this potential sale is not genuine. The Americans have ridden roughshod over UK insolvency law while regulators sit and watch.
Directors would insist that they have acted in good faith, putting the interests of the company – and therefore its shareholders – first. However, the Companies Act 2006 is clear on fiduciary duties to shareholders as a whole, as well as on exercising powers to reduce the influence of dissenting ones.
Something is up with the Debenhams process, with the scale of possible wrongs ranging from simple lack of judgement by directors, to what Ashley has described as a “long planned theft”.
Swooping magpies are a protected species unless they are shown to be a threat to conservation. What Debenhams’ directors have conserved is debatable – certainly not Ashley’s 29.7 per cent stake, at an estimated loss of £150m, nor the chance, through his rights issue, for other shareholders to participate in a turnaround.
Regulators have a duty to take a much closer look at what appears an appalling use of the pre-pack process.
By David Buchler, Chairman of restructuring and turnaround advisers Buchler Phillips.
Foiled Debenhams suitor Mike Ashley won’t miss the irony that while his Newcastle United Football Club is nicknamed after these swooping robbers, a marauding band of debtholders have led a planned effort to steal the stricken retailer from under his nose, wiping out his near 30 per cent stake and those of other shareholders.
The situation is far from black and white. Controversial Sports Direct owner Ashley might be “Marmite”, but the pre-pack administration of Debenhams raises important questions of directors’ obligations to shareholders.
No cheers for the non-executive directors here. Former chairman Sir Ian Cheshire was off the board comfortably before the pre-pack, ousted in January’s AGM. Debenhams had lost 90 per cent of its market value on his watch over less than three years.
The wisdom (and freedom) of remaining directors in appointing administrators is questionable.
Ashley’s long-running battle with Cheshire about underperformance is well-documented. During this period, Sports Direct grew its shareholding to just below the mandatory takeover level. But at some point, the board cemented its determination to keep Ashley’s tanks as far from their lawn as possible, whatever the cost.
In December 2018, Sports Direct’s offer of a £40m interest-free loan, in return for security over some of Debenhams’ assets, was rejected as against the interests of other stakeholders – although the move was seen off by directors in a manner that suggested they were preserving their own positions, as opposed to those of the company.
In football speak, Ashley said it was like being offered Messi on loan and turning him down.
Two months later, the board agreed a loan of £40m from existing lenders, on stringent terms, notably that any fresh debt would require the lenders’ consent. The directors effectively shut Ashley out from that point.
While directors were planning in March to raise £200m from these lenders, Ashley offered £150m interest-free, on the condition that he became chief executive and the new debt plan was dropped. Later in the month, he considered a £61m cash offer for Debenhams’ equity – double the market value. Finally, in the 24 hours ahead of the group falling into administration, he offered to underwrite a rescue rights issue for £200m.
The company had effectively been working against a timetable imposed by an Emergency General Meeting process. Debenhams had to respond within 21 days and hold the meeting within a further 28 days, meaning a late-April deadline.
The pre-pack deal agreed by directors immediately sold the shares in the trading entity to a new vehicle controlled by US debt investors.
Offers are now being sought for the operations, but on tough terms that stop a buyer contacting landlords or concessionaires for 18 months – a ridiculous restriction, not least since Debenhams is now in a Company Voluntary Arrangement with creditors to reorganise its debt stack.
Condition (ii) My Lord.
On 29 March 2019 the New Money Facilities Agreement was entered into. This provided for an immediate drawdown
by the Company of £101.25m under Facility A of the New Money Facilities Agreement, which refinanced the Bridge
Loan, funded certain fees and provided additional working capital to the Group to address its immediate financing
needs. However, Facility A alone provided insufficient liquidity to enable the Company to trade in the long term,
instead enabling additional time for an agreement to be reached in relation to the Company’s funding needs that
would enable the release of Facility B of the New Money Facilities.
2.11 Facility B of the New Money Facilities Agreement, amounting to £98.75m, was to be made available to Retail.
However, its utilisation was subject to certain conditions. These conditions allowed Retail the ability to utilise Facility
B only in circumstances in which:
(i) SDI announced a firm intention to make an offer for the Group and made arrangements satisfactory to
the Lenders for the financing of the Group’s working capital requirements and the repayment of any
Debenhams plc (In Administration) - Group Historical Profit & Loss
£m FY 2016 FY 2017 FY 2018
Revenue 2,342 2,335 2,277
Cost of Sales (2,040) (2,046) (2,045)
Gross Profit/Loss 302 289 232
Gross Margin 13% 12% 10%
Distribution costs (115) (125) (134)
Administrative Expenses (56) (57) (55)
Exceptional items (12) (36) (525)
Operating Profit/(Loss) 119 71 (482)
Operating Margin 5% 3% -21%
Source: Company Statutory Accounts, the Company's year end is 1 September
7
amounts drawn under Facility A of the New Money Facilities Agreement, the RCF and the Notes, which
would become due and payable as a result of the change of control provisions that would be triggered
by such offer; or
(ii) SDI withdrew its request for an EGM, entered into a stabilisation agreement satisfactory to the Lenders
and agreed to either underwrite a £200m rights issue by the Company or provide a £200m long dated
subordinated debt instrument.
Daniel I got to read some more of this in the afternoon - fascinating as it really details what occurred. The lenders really did ensure they protected their position but would have worked with MA on their terms. They ensured their loss was not going to be greater by working with MA on his terms. I refer specifically to 2.10 & 2.11
Thanks Daniel.........I don't have time to read it all but it really does say it all......'None of SDI’s proposals were considered implementable by the Company in light of the wider liquidity and financing needs
of the Group and contractual obligations in its financing arrangements' ............In plan English the lenders called the shorts fully as they were entitled to do due to contractual terms in the lending, to ensure they protected themselves first and foremost in order to minimise their loss.............Pearls/SS I know you don't really get this but please try...my understanding was that both debs and their lenders engaged the top legal/restructuring advice on matters. They are comfortable in their position. There was no equity in debs in many years even when the company was trading on the market. Buying shares in debs was the same as backing a horse it was not an investment but a speculation!
Oh and for anyone that's interested, it's going to be annoyingly slow getting these positions properly marked with brokers https://www.fticonsulting-emea.com/~/media/Files/emea--files/creditors-portal/cip-emea-public/debenhams-plc/joint-administrators-proposals-28-may-2019.pdf
There's 0 value left at the top but they have to go through the motions
Pearls, it may have have been a disaster but it was entirely foreseeable. You were warned by many people on here over the course of several weeks / months. If you chose to ignore that warning from people who know what they're talking about, then it's completely on you I'm afraid.
He should give it to his wife and tell her he is sorry and will never gamble again. I would also like to see P & SS get 1k each so they could do the same thing
DC, I'm with II and mine are still shown as a holding in my account. Keeps on reminding me of what a disaster this was!
Mine don't. Broker even sent me a nice little letter in the post to explicitly say the equity no longer existed. It's gone -- reversing it as impossible as a dead person being made to live again.
Atb
I've seen some thick summer ditches in my time.... but nothing like this
Why is it only DEB is in administration over CVAs? If this can be turned round at all, shareholders should be able to benefit from the sale etc once debtholders have been paid off. Our shares are currently suspended, and are worthless, but they have not disappeared. They still exist, admittedly with no value. It is time for the administration to be reversed and for the CVA's to be pushed through and the shares to be traded again.
Aside from anything else, I bet the administrators would find their job a lot easier if they got MA on side and recreated some residual value for us shareholders to hold onto.
Pearls.... wise up
Knigelk, fingers and everything else crossed until 6th June.
Hopefully MA feels the case is strong enough to go ahead, and as you say, only he has big enough pockets. A class action needs to get off the ground on this sooner rather than later. Shareholders have been treated disgracefully by the BOD as pointed out in the CityAM article.
When I can't help if you are not wise enough to understand my point :-)
Let me say it another way - no poster on here is about to take legal action against the company or advisers - so we can have our opinions but it will not change anything. SPD/MA have stated they might go down the legal route - they do have the cash to go to the courts - personally I doubt they will - but watch this space
Yes Silver how revealing your answer was. Knigelk - yes true never mind me a BB poster......I hopefully will never have you level of wisdom