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I might just hold off until after the refinancing when there is little or no risk of prepack or liquidation. I am guaranteed 15.3p but just be a case of waiting to see it drop further after this, hence the board not buying.
There's another item to add to the mix here. From what I've read the lenders aren't all in alignment. It's not hard to see why. There are about five lenders which range from RBS who will be very concerned about computational damage to Emerald and Kempner who won't care.
Please don't forget that IRV is losing money. £245m in 2017, reducing to £110m in 2018. £110m is a huge number compared with £2,900m turnover and the £110m was after around £60m (look it up) one off benefit from the pension scheme.
£160m cash was put in in April 2018 to save the company and now depending on which scheme you look at, they are going to get another £75-110m. Who is going to keep giving them cash if they make losses year after year? of course we can debate whether the exceptional costs are really exceptional costs and whether they will cease or not. Sure, some of them will, but they seem to be becoming the norm and if you read the deleveraging plan you will see there remains considerable risk there will be further exceptional's. Sure, some of these risks will not occur but to suggest none of them will would be foolish.
So, where do we go from here. The Coltrane plan leaves the company with a cash injection and reduced interest such that EBITDA is capable of paying off the debt. It looks do-able to me, but is reliant on the bond-holders agreeing to it and why should they, they have their own objectives. The bondholder plan looks do-able too and certainly there would advantages of taking it private (which it appears there is conflict between the bond-holders on). Taking it private would remove the scrutiny and reduce some of these crazy adviser costs to nearly zero, producing significantly more cash to pay off the debt. I suspect the bond-holders would bleed IRV dry though, wind down construction over time, sell everything they can except RMDK. It won't the same IRV in 5 years time, maybe half the size it is now. Not very nice for the employees but at least they will have time to decide what they want to do.
So, the question remains. The Coltrane plan isn't a plan unless the bondholders agree to write off their debt and Coltrane cannot make them only suggest it to them. If you take the view that Emerald and Kempner's objective is gain total control of IRV, Coltrane's offer is of no interest to them.
Then the second question becomes, is the pre-pack a real option and I am not skilled enough to comment. It looks fraught will legal challenge to me, but I'm sure the bond-holders have done their research.
In the end game here the bondholders appear to hold most of the cards. Doesn't look pretty for shareholders even if Coltrane do secure a better deal as however you look at it IRV is losing money year on year.
Bill,
You asked for a level to get back in.
In my view this share will go below 15p, whether that is today, tomorrow or next week - I cannot see why it wouldn't.
Anywhere below 15p would be a decent buy (in my view). 10p would be great.
As others have pointed out and in my previous posts - there are still three BIG risks here -
Pre- pack admin, Liquidation or De-listing.
If you don't want a risky share, look elsewhere.
I don't mind taking risks (if I can afford to lose) and in my judgement sense will prevail and a deal will be done. I am prepared to take a risk on that outcome.
Then I am prepared to take a bigger risk, that they will not de-list the company and in my view this is a bigger risk.
The point is, if you buy at 10p or 15p, you need to be prepared for the worst and judge that against the best upside, which I see a long way down the road at 30p unless the current deal is improved.
GL
Ok, put your trust in the competence of the government and the mercy of the banks then.
Meta- Maybe go join a board where you’re actually invested rather than come and talk nonsense in here.youmust be so bored or obsessed with IRV that you continually plague the board, but have no position.
Yes no one wanted that position with Carillion, but did anyone foresee the damage it would cause in the future? Answer is no they didn’t , suppliers went bust, taxpayers forked out a fortune, banks lost millions along with all the rest.
Now the govt and banks have witnessed what a liquidation will do, no one will want a repeat unless everyone is looking to loose s few hundred million.
Literally 20 minutes after I write here:
"to the reply "but nobody wants that scenario", I can only remind people that nobody wanted the Carillion outcome. But that is what they got."
I get a reply
". No one wants a repeat of it, so all pressure will be to reach a satisfactory resolution"
Please dont make me repeat myself!
The Lenders pushing this into administration or liquidation......
Would be the equivalent of turkeys voting for Christmas.
Where is the value to be had ? they would all be fighting over whats left of RMD (250m?)
Interserve's ability to win work in administration would be zero, especially from their main client.
The Lenders need a decent deal as much as Coltrane do.
I see one win / lose outcome, one win / win outcome and one lose / lose outcome
Win / lose : The current deal gets pushed through and Coltrane litigate
Win / Win : A slightly better deal is pushed through and Coltrane and the lenders take their medicine
Lose / Lose : Coltrane vote down the current deal and pre-pack admin
If I was the BoD, I would be talking to both sides and negotiating a middle ground - if they are not doing that, then they shouldn't be on the Board!
Mera84- but you forgot to add it was only months after Carillion went bust that they realised the extent of the damage. No one wants a repeat of it, so all pressure will be to reach a satisfactory resolution. If Coltrane issue a binding proposal then thinks will pickup, otherwise it’s prepack but certainly not liquidation.
CC- I guess you read that bit about reputational damage and the possibility of loss of confidence in clients and the supply chain as well then? I agree, the arguing is a nightmare. What way will this go? To be honest, the situation is now so dire that I think the balance of likelihood is that IRV will either go into a Mouchel style pre pack administration, or Carillion style liquidation. The de-leveraging plan is so bonkers that even though the board recommend it to be in shareholders interest to get it through (well, sort of), I can see shareholders voting against it, just for the sheer hell of it. The lack of confidence within the supply chain coupled with a number of contracts requiring the company to operate as a listed company make administration less likely. Nobody wants it, but Carillion style liquidation is a more likely outcome. Imho. Oh and to the reply "but nobody wants that scenario", I can only remind people that nobody wanted the Carillion outcome. But that is what they got.
BillTucker89-"looking for a decent entry point now to double up". Have you considered a visit to the casino? I reckon your chances would be more favourable there. LOL!
Your forget something Meta. It's in a long term downtrend too...
There is no support, no resistance, no moving averages, nothing to assist even the most experienced analyst in picking the right entry point.
Further every Coltrane and Emerald continue arguing over this, the less there is to save. Every day they deliberate is another day Clients aren't giving them work and another day where sub-contractors will be demanding improved credit terms.
Net debt end Dec £630m, net debt today £730m. All their credit lines drawn. The two of them need to sort it out.
I get that, but looking for a decent entry point on a share that in
3 days has gone from 9p to 25p down to 16p, back to 22p then down to 17p. The other day it was down 11% at breakfast, up 10% at lunch down 5% at tea and up 50% on the day.
There is no support, no resistance, no moving averages, nothing to assist even the most experienced analyst in picking the right entry point.
Meta try, but I’ve just lost 65k so need to recoup it somewhere and quick as possibl. This is very volotile so may help?
A decent entry point? On this share? Good look trying to work that out
Hi guys just sold out at 18.62 for £5500. Looking for a decent entry point now to double up.
They haven't just spent £75m on advisers. that's the total of the April 2018 advisers and the bit they've spend recently on this round. I think (it's in the deleveraging plan published yesterday) they've spent around £13m in the last couple of months on advisers and see themselves spending around another £20m to complete this funding round.
Interserve have said "“currently the only plan that is capable of implementation in order to provide sufficient liquidity, cash and bonding facilities to allow the group to service short term obligations and secure a stable platform”
Currently.....leaving an opening?
I doubt it though, even if Coltrane's deal is more fair, better for all stakeholders than the current proposed deal and the Lenders were willing to move towards it ....I think the BoD (advised by their advisors) would still stop it.
Why? because they have just spent £75m on advisors to put their deal together and if another deal that cost £0 is the way forward instead, they are going to have to think of some clever explanations......
Pundit1. Their is a clause in the loan agreements that if the CEO and FD are removed then IRV is due to pay a sum of money to the bond-holders. it was in the Press. I think a sum of £10m was mooted (please check this figure I may not be right on this). I'm not sure if this is each for the two of them or whether there are further clauses in the loan agreement.
This would have been put in place in April 2018 and whilst it appears IRV and the directors have done nothing legally wrong by not declaring it, to me it feels morally wrong. And thus my views on whether the Directors are showing bias whether unconscious or not.
CC
Agreed. In a hostile takeover Coltrane could force an immediate General Meeting.
But as stated, I don't think it is Coltrane buying shares.
Be interesting to see if yesterdays rise was just a blip or this continues today.......
Cc2015- what do you mean in your earlier remark about the directors contracts and conflict of interest? The directors surely have to have the best interests os shareholders at heart, don’t they? Not surprising now that there was a ‘resignstion’ from the board only s few weeks ago. Contract paid up? Golden handshake? We will see when and if the Annual Report ever gets published.
Thanks Kenj for your research of the meeting dates. It's really helpful.
I am remain, let me say concerned about the Board here. Their major shareholder, calls a meeting and the Board have more or less dragged the timing out to the longest possible time. Clearly they are entitled to do this. However, it doesn't seem to be doing anything to work with their biggest shareholder, more frustrate the process. And this I suspect is the problem. Are the Board acting in a way which is too skewed towards the bondholders. They may be legally within their rights but it seems to do nothing but annoy Coltrane. Of course their Board membership and the jobs of their colleagues are at risk and that may be introducing unconscious bias towards the bondholders
One other thought for you Feileb. Coltrane cannot buy more than 29.9% without making a bid for the company so in order to introduce more leverage they need another party to get them up to 50%.
It is debatable how you read this but it could well mean 21 days plus a further 28 days.
"If the request is properly made, the directors must within 21 days call the meeting for a date not more than 28 days after the date of the notice calling the meeting."
Correction the request from Coltrane was made on the 6th Feb.
The EGM was called by IRV on the 26th Feb (within 21 days of the request).
And the date of the EGM was set for 26th March (28 days after IRV announced it).
" The Board were asked for an EGM by Coltrane. Under LSE rules, this has to take place within 20 days. The date proposed by IRV exceeds this."
CC2015,
You are wrong about that. The meeting must be called within 28 days.
The request was made on 26th Feb, and the meeting has been called for 26th March - 28 days.
https://www.companylawclub.co.uk/calling-general-meetings
"If the request is properly made, the directors must within 21 days call the meeting for a date not more than 28 days after the date of the notice calling the meeting."
Bill - i think the EGM has to be called 28 days from the request made under Section 303 of the companies act. Not 28 days from when their intentions appear in the media.
Its a technicality, but an important one.
"You seem to believe the only date the BoD could be deselected is the date the BoD have set - the Coltrane meeting post deleveraging deal."
Feileb, yes that is exactly what I believe. Board members are selected and deselected at Board meetings, or at an AGM or EGM. The board must respond to a call for a meeting by any shareholder holding 5% or more of the company shares. Should they choose to cave in when someone waves 51% of the shares under their nose, then that as I understand it, is their choice. However, if they choose to observe due process and call a vote, then that is their right. And IRV have cynically called Coltrane's EGM for after the refinancing EGM.
The other thing to bear in mind is who owns the company. With Net Debt of £631m, and IRV's market cap of £31m, it is the banks and lenders who effectively own the company. I don't like what is happening here either, but when you carry large debt, the banks are the ones who are really in charge.