If you would like to ask our webinar guest speakers from WS Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund a question please submit them here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
My advice is to take everything directors say with a pinch of salt. They're (or rather their lawyers are) extremely picky with the words they put in public statements. If it looks like a company is heading for a restructuring (where shareholders are out of the money), it probably is – regardless of how the directors dress it up to maintain supplier confidence (which obviously failed here)
Unless the legislation has changed recently;
Directors making misleading statements, for example in a Prospectus for an IPO, can face upto 7 years imprisoment and personal libilities.
This include forward look statements, false promise or forecasts, dishonestly conceal any material facts in a statement etc, etc.
It's why everything Debenhams Directors would have done would have gone through a barrage of corporate lawyers.
"Do ou expect anything formally before the Supreme Court have made their judgement"
Yes, because if it's a clear case of misleading, then it could be market abuse and that doesnt require any change in legislation. Its already part of the Criminal Justice Act and I expect the Financial Services Act.
if the Directors, Company. Administrators and Lenders are invloved in a fraud, as some have suggested here, then why would you wait. Them being found guilty under one of the existing pieces of legislations would only strenghten a case seeking compensation.
Why wait for soemthing that might not make it into law?
Old news but posting it since some people appear to have forgotten it: https://uk.finance.yahoo.com/news/mike-ashley-releases-furious-statement-155200189.html
Do ou expect anything formally before the Supreme Court have made their judgement?
It will after all have widespread consequences not only to us on here but also to the shareholder / bondholder / administrator equation more generally.
if you are in here, am I right in thinking "MREL-eligible securities" are unsecured debt, rather than a securitization?
"any concrete update from MA or SPD with regards to a court case"
there doesn't appear to be anything.
No RNS from SPD, nothing from the Administrator, Lucid's (Issuer the for bond) or comment via the NewCo.
Nothing on the LSE or any exchanges the bonds are listed.
Nothing in the financial press confirming litigation (as far I can tell).
It's pure speculation.
The odds of a legal ruling going through seems very remote. Has there been any concrete update from MA or SPD with regards to a court case? Or is this just peoples wishful thinking?
This is the December Trading Statement https://ir.debenhams.com/static-files/9bbcbb9e-e78b-4dc9-a191-1e65a3d431c1
Just for the record, can you tell us where you think the subterfuge is?
They tell you it's a challenging market, you can see sales have declined again, they state the level of debt (obviously because they know everyone was concerned about) and they tell you they need to talk to the lenders in light of the need to refinance in the next 12 months. They even tell you as a consequence they can't sell any assets. (that's because lenders were worried!). i suppose I want to understand why as the shareprice kept declining you thought one thing and the market thought something else. Lets not even mention the shorts. How every one else thought this was business in severe decline, but you didn't.
Knigelk, I have to admit your comment about the BOD reiterating that DEB was a going concern is spot on. They persisted with this subterfuge for so long that many shareholders must have been hurt in this mess.
And staff as well of course.
Just totally disgracefully misleading.
Pearls, in short - as far as I am concerned at least part of the reason shareholders ended up with nothing (the debt obviously had to be tackled as well as the rent) ..was to lock MA out... well done Directors - it worked
Actually, haven't the conditions for the 5.25% holders improved under the new arrangements.
Looking at the latest financial report, it looks like the Second Lein has been renegotiated to L + 5.25%
It's been given the additional benefit of Libor plus the interest of 5.25%
That's better than a haircut.
"How does that compare with their current position? They should have taken MA's option"
Why? He wanted to give lenders a hair cut, but not benefit from any recovery.
This way, some of the lenders have swapped debt for equity and will benefit from any recovery. Others just hope to be paid the interest and capital back.
I really don't see how that require SPD? With them in control, lenders would have been worse off.
"I stayed invested in part because of comments made by the BOD"
But, at one point you were calling for the Board to be more bullish!!
You can't have it both ways LOL
Lenders take a £148m cut?
How does that compare with their current position? They should have taken MA's option, hopefully any investigation will explore this pretty obvious point as well.
"f you recall, MA was willing to offer £100m / £200m etc as a fully underwritten rights issue where he took up all the rights"
But, you've missed the bit that required the lenders to take a £148 cut, so it was never going to happen.
"shareholders deserve more answers - from the BoD - MA - even the lenders - has the debt now "disappeared" in exchange for the equity they now have as the new owners?"
Well they aren't going to come on this BB to give you the answers you want are they?
What are you going to do about it- other than pose the question on a BB that none of those people read?
Oh yeah, nothing. Windbag.
Well said Knigelk. Completely agree.
You should also blame SPD-MA in part for the mixed signals - a possible 5p offer that never happened - various financial offers with strings attached - some shareholders like you probably stayed invested because of his antics and expectations of a bid - that's fair enough but NO ONE comes out of this in a good light imho. Again 1) why did the apparent debt go up £300 million in just 2-3 months? 2) why the urgent need for the refinancing? Bonds did not have to be repaid for another two years 3) why the going concern comments in the annual report - misleading or what?? 4) why were shareholders told in a RNS that some options would result in wipe out but some options would mean equity being maintained? Too many questions and not enough answers - the shorters don't need to be concerned!! They made their money and perhaps should be now spending their time looking at their next target (Thomas Cook?) .. but shareholders deserve more answers - from the BoD - MA - even the lenders - has the debt now "disappeared" in exchange for the equity they now have as the new owners? Clear as mud isn't it?
Daniel, I must admit you always argue cogently, but I would ask you to comment in response to the CityAM article that was posted up on here recently. That explains things far better than I can.
You cannot blame us shareholders for still pursuing this matter. Personally I lost a lot of money on this stock, and I stayed invested in part because of comments made by the BOD. I now see that they misrepresented things to us materially.
That, in conjunction with [hopefully] a Supreme Court ruling, will lead to a class action developing here. I expect this board to become more active soon as things start sparking off.
Pearls you're getting confused again. It wasn't really the board who rejected it. It was the lenders, who held the ultimate leverage as without their consent, they could've taken the company in a disorderly insolvency process (vs. the actual orderly process) AND left MA with nothing after putting in the cash. Leaving aside the conditions that MA put on his RI (incl. making him CEO and with a get-out clause) which were unpalatable to any board.
As for the directors' conduct previously, I'm a little confused about why you think they deliberately took on more debt? If they did do that, and had no purpose for the cash, the cash would just sit on the balance sheet, which would just cancel out the debt that was raised (and nobody is in any worse position, except for a relatively minor amount of interest). The key point is that the directors didn't deliberately take on more debt, they were forced to take on more debt as their performance had collapsed and working capital was squeezed. It really is basic corporate finance.
Meta, if you can't work out how the Supreme Court ruling could be dynamite for us shareholders you must be on another planet.
Devon, if you recall, MA was willing to offer £100m / £200m etc as a fully underwritten rights issue where he took up all the rights but the BOD refused to consider such options even though they would not in fact have diluted other shareholders.
Very good thanks. So nothing to do with Debenhams then.
"however the smoke signals are there, the biggest of which being that no rights issue, never mind how diluting, was ever put before shareholders."
And could it be possible that the company knew they wouldn't get it away, because it might take one of the major shareholders over the 30% mark?
Remember they stopped at 29.5%
Because if they went over that, they would have been required to make an offer to buy the debt out....above par, plus interest. And they didn't want to do that did they.
So they might not support it enough.
And it they didn't, do you think the small percentage of stock held by PI's would have been enough?
You'd have to crunch the numbers, talk to the other investors, to see if that would have been the case, but the company would have an army of people doing that.
And if that right issue hadn't got away? we know what would have happened don't we, utter collapse and closed doors.
So maybe it's a little more complex than you than you say.