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Daniel, this is one thing that I think we disagreed on, such are the mechanics of pre pack, I never thought that MA had much of a chance of getting his hands on SPD, either before or after it had taken place.
He really did miss his chance by using such maverick tactics, that may wash with some in his business, but certainly not the sort of lenders they were dealing with in this case.
https://www.ft.com/content/9b6e6cb0-71d1-11e9-bf5c-6eeb837566c5
Well there you have it ladies and gentlemen, despite Lazard running a sale process, no acceptable bids were lodged. That means that nobody valued the business higher than the debt, and the true intrinsic market value of the shares is 0.
Not even Mike Ashley could pull out his miracle bid in this process huh?
I've never really rated SPD. I bet against it in the high 700's and finally got out at the high 200's. From memory, that feels like a lifetime ago!
Even at 800p there was the usual BB cries of BUY!
it looks like an over valuation doesn't it. The question will be by how much. If it's large it might have an impact....
Back to Metrobank for me, page 81 of the Prospectus....Conditions. Hey, ho...the capital raises give me a little hope, and the yields not bad at 8% (give or take). I may have a little punt.
https://www.retailgazette.co.uk/blog/2019/04/debenhams-what-went-wrong/
Really detailed article.
Should've been valued at market price IMO. Unfortunately, (and as far as I know) IFRS allows companies to value equity stakes through their own DCF models, and as long as the methodology is robust, it is allowed. Crucially, I do not believe the assumptions that go into such a model are scrutinized.
Isn't this exactly what happened with the likes of Noble Group and Yancoal? I think Noble's stake in Yancoal was something like 13x the market value on its balance sheet (all from memory).
"Wonder if these investigations will then go on to look at the Deb BOD and the pre-pack?"
I doubt It, DEB was a different company not controlled by SPD.
Sports Direct has been contacted by The Financial Conduct Authority (FCA) to ask about its disclosure of information surrounding a possible bid for Debenhams last year.
The Financial Reporting Council (FRC) has also queried how the retailer’s auditor, accounting firm Grant Thornton, valued its stake in Debenhams.
The two regulators launched an inquiry into Sports Direct’s financial accounts and compliance with rules on inside information, after concerns were expressed about how Grant Thornton valued its holding in Debenhams, which recently fell into administration.
Sports Direct tycoon Mike Ashley had his 29.7 per cent stake wiped out when Debenhams went into administration last month, after repeated attempts to acquire the department store chain and keep it from completing a refinancing deal with its lenders.
Following Sports Direct’s AGM in September, the the FCA is understood to have raised some questions with the sportswear retailer, and the company was forced to issue a statement saying it did not aim to place a takeover offer for Debenhams, according to The Times.
Sports Direct said its senior independent director, Simon Bentley, had been misunderstood on the situation when he allegedly told the media that the board could combine Debenhams with House of Fraser, the department store which Sports Direct bought out of administration in August last year.
Meanwhile, Grant Thornton was questioned by the FRC on the most recent audit of Sports Directs’ financial results, which could result in a sanction.
From the Retail Gazette
Looks like i
The FRC also looked at whether Sports Direct’s stake in Debenhams should have been accounted for as having enough influence over the company.
Noticed this in the morning report I subscribe to:
"Two regulators are scrutinising Sports Direct over its accounts and its compliance with rules on inside information. The retailer’s latest accounts have been queried by the Financial Reporting Council over concerns about how its auditor, Grant Thornton, valued its holding in Debenhams, which almost collapsed last month. - The Times"
Wonder if these investigations will then go on to look at the Deb BOD and the pre-pack?
(and MA did not accept any counter-proposal),
Overall, he just made the position even worse. Given the lack of confidence of the lenders and the hostility of SPD, the only obvious course for Board was Administration.
At least they respected the wishes of the major stakeholders, the lenders, and avoid the disasterous outcome of a disorderly, door closing, collapse.
I don't think there's much you can say that's positive about the Board, but at least they kept the lights on in an impossible position.
Caught between lenders who must have been highly concerne (or bought expecting this outcome) a hostile shareholder and the trading they could only offer a plan and positive outlook to calm lenders. Christmas was the last straw. To be honest, if it hadn't been for them, the Board I wouldn't have been suprised at a collapse mid 2018.
Yep, crucially this was in the hands of the lenders.
You see, they had the final say on whether a rights issue on MA's terms would go ahead. If they didn't like the terms (and MA did not accept any counter-proposal), then it was a going to be a no.
Also, it's probably worth pointing out that should such a rights issue have gone ahead, existing shareholders would have been highly diluted (as most would / could not be able to put in the money required to protect their stake). It would not have ended very well for existing shareholders at all. Most probably would've been cashed out in a post-rights issue reverse stock split at a de minimis price
"MA offered to fully underwrite a decent rights issue for DEB which at the time would have provided enough cash"
But, not to the satisfaction of the lenders.
When you owe £500,000,000 and your profits look shakey, and very small in comparison to the turnover/cash needs ,then the reality is, however brutal, the power is with the lenders.
He didn't guarantee the bond holder, he didn't provide the confidence the lenders required. It's as simple as that.
That's why he stopped short of 30%. That was a clear message to bond holders.
As a consequence, some acted to protect their money, others to leverage the power they held.
As I said, you had several differnent lenders in the mix that included those that buy distressed debt and then take businesses private.
"Clearly things must have very suddenly deteriorated"
This was a business dependant on the goodwill of it's lenders. So, confidence was all. As the risk to the lenders grew, and the rhetoric was less friendly, they did what you expect. Protected their money.
"I cannot see how either of these would have hurt DEB"
Because lendesr thought he might make there position worse. That's why they didn't want him. They protected their position and money, end of.
Devon, what are you talking about? MA offered to fully underwrite a decent rights issue for DEB which at the time would have provided enough cash. Clearly things must have very suddenly deteriorated in March - but we are still none the wiser on what exactly happened.
His proviso was that the CEO had to go [which has now happened] and that he was put in charge. I cannot see how either of these would have hurt DEB, only the self serving BOD who seemed to have caused this mess and were only interested in their own jobs. Utterly hopeless.
"He did destabilise DEB with his public comments but one cannot blame him DEB's moving from a profit of £33m in December to £720m in debt by March"
But you might be able to blame the poor Christmas trade for being the straw that broke the camel's back and pushed creditiors to loose confidence.
When that happens there's a spiral of lost confidence that pushes some companies to borrow from Peter to pay Paul.
They do that to avoid a disorderly insolvency. Director's don't like that, disorderly, because it can give them personal liabilities, so they move a company quickly to administration.
It's one their most important duties, enshrined in law, not to be running an insolvent company knowingly.
Especially if the key shareholders aren't willing to underwrite a full blown rescue that will satisfy creditors.
In this case, the major shareholder wouldn't, so the creditors responded in the most logical way. They excersised their rights to be repaid.
It happens all the time.
Who can buy Deb,
Amazon, Qatris(Harrods), SPD, Amazon, on supplier side some Chinese.
Amazon boss cosy cosy with Chancellor, to mitigate any future regulatory/tax, Amazon is also possible buyer
Interesting article in the Guardian demonstrating yet again how unstable the HOF operation is. MA needed to critically combine HOF with DEB - he is now missing the boat - what's the point?
Someone with his retail prowess could have turned the combined entity around, but it looks like he did not have the backbone to make a proper bid last month. The result? He lost his £150m DEB investment, and it appears his £90m HOF investment is also going down the drain. He did destabilise DEB with his public comments but one cannot blame him DEB's moving from a profit of £33m in December to £720m in debt by March. I cannot believe his comments put off any of DEB's core customer base over that period so how did such debts arise so quickly?
"how easy is it to ask for shareholders details on registrar"
Easy if you have a legitimate reason. I think it's covered in the Take Over codes, but in this circumstance I bet they would think it's a frivolous request. As they've just lost the revenue for running the register you might get lucky. Registrars usually make most of their profit on "corporate actions" so, in these circumstances I wouldn't be surprised if they asked for £10,000. What have they got to loose? Except their reputation and accreditations.
When you've got it you've got 2 potentially thorny issues to deal with:
GDPR and nominee account.
There will be some individuals with home address, but the majority will be the nominee's name and the shareholders account designation.
That means you then have to pay again for the nominee to distribute whatever information you want to send. Very unlikely and if they would, I expect costly.
The GDPR issue, and the way registars hold data, means you probably need to deal with one of the specialist city printers. Again that's costly. They have schools bills to pay you know.
The last message has been filtered, please adjust your filters to view - seem to be a lot of these messages now on here... how do you get rid of a 29.9% shareholder? Answer - get the shares delisted - problem solved
Oh boo hoo, cry me a river.
You're not going to shut up about it, of course.
But what you going to do about it?
Nothing.
The bully boys are the gang of three who appear together within a hour with the same opinion and comments - don't you think we notice? Thanks Cooler for the support - we will not shut up about this scandal. BTW the 5th account to add to my filter list - don't bother replying because I will not be reading your comments again
Throw, toys, pram.
Imagine having a mindset where if you're wrong you say it MUST be fraud, rather than just the most obvious result from basic finance, contract and insolvency law. It provides for a useful insight into how the human mind works
@KNIGELK And also one will comes along and posts things like I have lost x amount but learn to accept it and move on. i
Its like a group of them working together for shareholders not to ask question accept this fraud and losses.
On another note how easy is it to ask for shareholders details on registrar, I think all holders need to form a group and maybe setup a meet somewhere.
Has anyone been touch with these? http://xdebenhams.com/
"Yep Meta, no ring to it at all. And it unfailingly makes Celine Dion pop into my head.
Atb"
I hadn't thought of that. Her biggest hit being the theme from Titanic, seems pretty apt.
Atb mate.
Oh dear how childish flouncing off like a baby because the system hasn't worked for you.
As for shutting down debate, it is very obvious who the troll that keeps coming on various bbs to shut down. A while back I made a comment regarding an II pulling out of Deb. I was swarmed on like a pack white walkers Nigel, and you were front of that queue. I might not ever have commented again, but unlike others, i won't be deterred by your bully boy tactics.
And your continuous threats to 'report' me won't prevent me from calling you out for what you are, a bully troll.
IT'S ALL ONE BIG CONSPIRACY ISN'T IT? Couldn't possibly be that you just made a bad investment?
Not trying to shut anything down, just explaining why you're wrong.
Listen, mate, if you want me to explain why what you're saying re debt / equity payments is completely nonsensical (and would be hugely damaging for the economy), I'll happily do so over a beer.
"recent shorting posters keep coming on"
I'm still long Debenhams and still have a financial interest in the business.
It's some of the other posters here who sound like "shorters" to me, with all this talk of corruption and fraud.
"Frankly it stinks and I don't care what the shorters will say.. filtered"
I didn't know you could filter shorters. Thanks for tip!
It's strange that the same three recent shorting posters keep coming on this thread to try to shut down (ex) shareholder debate about what went wrong here - as if they are working for the company and trying to sweep all the shareholder anger under the carpet - not going to happen.
Thought about my comments and not changing them - as far as I am concerned - shareholders put the capital in - which also helps to fund any debt payments going forward - and shareholders are usually the first port of call for funding - especially on the AIM market - or convertible loans etc - but when it all goes wrong - they lose the lot. Also as others have said - the company continues to trade - so it hurts - I don't expect the shorters to understand. Personally I sold out but feel for those - including SPD - who made various proposals - that now have to watch from the sidelines while the BoD continue in office. Frankly it stinks and I don't care what the shorters will say.. filtered