Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Emmm - not a great RNS to put out after trading close today.
Can Ettyl actually secure the necessary finance for the transaction.
Much for those invested to ponder about over the weekend.
TF - could that rubber ball ( Airline ) bounce back yet again. ESKN really seems to struggle to get it off the balance sheet.
Gla
G
TF - You'll recall how relieved i was when STOB originally off loaded the Airline through the doomed Connect deal, I mentioned at the time that it had de risked the balance sheet through the deal. unfortunately it came back like a bouncing ball.
This time around, I agree the financial backing of this start up purchaser is key. ESKN truly do not want the new owner to fail here.
I believe I've put up some cals. regarding TOSCA taking out the whole business at 40p ( depends on the sp performance ).
An assessment of the liabilities within a take out, balanced against the value of the two major assets, has surely been undertaken.
On completion of the sale the responsibility for another 480 staff is removed too.
TOSCA may be able to pick up the assets for a low ball price and sell the energy division in due course then sit on the airport covering costs until passengers return, when it can be sold at a decent market value.
The challenge for ESKN is cash flow through these difficult months. We need to hear that the Energy Division has returned to pre covid levels in the May report. If it can navigate the next 12 - 18 months within the updated RCF's without breeching covenants then all well and good. If not would TOSCA wish to see another plavcing ?
gla
G
TF - agree it's all about the annual impact on cash.
TOSCA and the other major holders have some decisions to make if the forward projections in the publication of the yr end figures in May dont make attractive reading.
TOSCA must be mulling over a low ball take out if the ssp remains under that key placing level of 40p. Surely better for them than another placing.
I suspect action here on the next 2 / 3 months.
Worth a trade at the right level depending on news.
Gla
G
I think the 'hit' is a bit bigger than the market thought, or at least I thought we'd offload for a £1 and that would be the end of it. Alot more complex and costly it seems.
Back to 32p by end of day. Capital raise imminent.
TF - from our previous chats i feel we both knew ESKN would have to take a considerable hit to escape the lease liabilities.
Am going to re read the structure of the deal a couple more times. Quite a lot of small print to digest here.
The annual cash impact has been laid out for the next three years. Be interesting to understand how this start up purchaser is financed. At least the staff appear to be protected in the short term.
Will await the publication of the Annuals in May, which should provide projected cash flow forecasts, inclusive of the ongoing SA cash commitments.
Can the Energy Division revenues, cover the Airline Division losses, for a sufficient times to allow Southend to get planes flying, hopefully full of passengers ?
If the sp stays sub 40p through to June / July, then ESKN could be taken out for a low ball figure. TOSCA will likely need to decision, on its position. Not sure how the other major holders would react. Some are heavily under water here.
It's going to be interesting. Looks like more trading opportunities coming our way.
gla
G
Hi Castle - usually no smoke without fire.
We know Eskn has to off load the airline with the attached liabilities, to protect cash burn.
We need to see the details of any deal should one be thrashed out, though imv pretty much any deal to dump the airline should be good news. ( famous last words ).
We need to keep in view the length of time the sp has been sat below 40p. Something could give by June. Could be a cheap buy out, or possibly a bid war.
I could be wrong, time will tell.
Gla
G
Interesting that they put out the RNS today - adds a bit more substance to Ettyl buying Esken's shareholding in Stobart Air and Carlisle Airport - once formally announced can only help the SP...wouldn't be surprised to see something this month....