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No wonder Coltrane wanted rid of the BOD. How many private investors are going to "invest" ( waste) more good money in IRV and the directors themselves are not willing to invest.
Threatened by Coltrane. Doubtless many here will suddenly become legal experts.....
Interesting quote from a source close to Coltrane "Instead of using the cash on much needed capex the same advisors which presided over Carillion are again sapping the company of cash"
And the main beneficiaries of shorting Carillion were......
Sitting high on their horse now.
Meta,
Your comment re. 25% free float was interesting....not sure if you spotted this though?
It is expected that the Company's free float will fall below 25 per cent. and the Company will need to formally apply to the FCA for a temporary modification of the requirement to maintain a free float of at least 25 per cent. Whilst the FCA has indicated that it would be minded to grant such a temporary modification to the Company for a period of twelve months from the date of completion of the Placing and Open Offer (even if there is no or a limited take up in the Open Offer), such modification will be subject to the Company being able to demonstrate that the market in the Ordinary Shares will operate properly and that there will be sufficient liquidity.
So shareholder now have these option:
1. Vote for 5% dilution
2. Don't vote for dilution, and the company goes into administration
Then
3. Thanks for voting to dilute yourselves. You now have 2 new options:
3a- take up the offer of more shares at 15p and hope that enough other shareholders do as well.
3b- don't take up the offer, but be warned if enough people don't, there is a chance that IRV will de list and you'll get nothing.
Thought as much coming down to 15p
"The banks will not want to be the major shareholders of Interserve, as it will damage their ability to do business in the Sector."
The banks seemed quite happy to be major shareholders in Mouchel, which was immediately taken private after the pre-pack administration and renamed MRBL. They later sold the company to KIER, who have also now sold it on.
This is my guess.
If the deal gets through, then the Lenders become the major shareholders.
I don't believe they would de-list the company as they would need to provide an "offer price" to existing shareholders as a buy-back before de-listing from the stock exchange (this would likely be at a small premium)
If the Lenders become the major shareholders, then I see them trying to ensure the Business becomes more profitable. They would do this so the SP rises and they can exit the shares at a pre-determined level (profit) as soon as possible.
The banks will not want to be the major shareholders of Interserve, as it will damage their ability to do business in the Sector.
They would get the share price higher ASAP, take their profit and run.
But will the deal get through, more twists and turns around the corner..I think.
19 new shares for every one currently held at a price of 15.3p. This means that anyone wishing to avoid dilution must cough up 290.7p for every share they now owns.
The directors meanwhile have voted not to subscribe to this naff deal, but have offered a little encouragement to any wavering shareholders.
"Further, if there is no take-up or only a limited take-up by Qualifying Shareholders under the Open Offer, the Company believes that it is likely that one or more of the Lenders may requisition a Shareholders' meeting to vote on whether to cancel the Company's listing."
The BoD have deliberately put Coltrane's EGM vote to remove them, after the re-financing EGM and the allotment of the new shares. Consequently it will cost Coltrane a fortune to take up their share allocation and retain their percentage shareholding, and voting strength. Even if they did stump up this large amount, they may still be out voted by the large newly acquired shareholding of the participating lenders.
This is even worse than the POG re-financing of 2015, that I warned of previously. At least POG tried to keep shareholders in the game, and actually bought some RI shares themselves. The IRV board have simply decided to shaft existing shareholders. It is so like the way Mouchel acted.
Finished reading the de leveraging plan. It is quite extraordinary really.
The board recommends that shareholders vote this through as it is the only deal available to avoid administration. Which is understandable enough.
But it then warns that to remain listed the company is required to maintain a "free float" of at least 25%. Now, in their own words:
"Following the Placing and Open Offer, and based on the information available to the Company as the Latest Practicable Date, it is expected the Company's free float will be reduced from approximately 45.5 per cent.... to between 45.5 per cent (assuming full take up of New Ordinary Shares by Qualifying Shareholders in the Open Offer) and approximately 9.4 per cent (assuming that there is no take up of New Ordinary Shares by Qualifying Shareholders in the Open Offer.)
So in other words it is in the interests of shareholders to take up the New Ordinary Shares, in order to prevent de listing.
Yet, in the same document "the Directors.....do not intend to take up their respective entitlements to New Ordinary Shares"
This is absolute insanity! I cannot see any possible reason for holding, let alone buying shares in this company when such contrary messages are contained in the same document.
This is my guess. All conjecture. Company taken private and de-listed. Shareholders can choose to stay in if they wish and not get diluted.
But, since the major shareholders will be the same as the lenders where do you think their interests will lie?
Anyways, take private and de-list, follow by reduce turnover by 15% per year in everything except RMDK. Flog anything you can which is not RMDK. Government continue feeding them work on a reducing basis in knowledge their exposure is dropping year on year.
In four years rebrand and then a year later re-float when stabilised. (CEO and FD then retire or carry on an earn-out basis for a couple more years).
A good outcome for all except the shareholders
Feilb- the fact the bod have elected out of their own deleveraging plans tells all is not what it seems and there are more nasties to come. For this reason I shall not buy in either, but rather buy in later as there is a possibility this will go back to 10p.
It should stop at 15.3p
The company was worth £36M prior to the BoD's RNS proposal, it will end up being worth £23M before the day is out.
Not bad for a days work, lets hope they are taking a well earned rest.
Well, having read the 2018 report, onto the deleveraging plan.
Which having got to only to 1. Introduction, the risk of de listing makes this look like a pretty mad cap plan.
Wel I should have sold at 25p and bought back in now would have reduced my average a great deal. Certainly not taking up my preemptive offer with this uncertainly. Could drop below 15.30
Phew, a few more snippets from the report
43m professional fees for the refinancing (thats the one last year). Nearly half of Irvs stated ebitda then?
But here's the kicker, how much will be paid in professional fees for the deleveraging plan announced today?
£33 million.
I would be surprised if Coltrane followed up with their intentions, I believe they purposely tabled a motion to drive the share price and recoup as high percentage back to the shareholders as possible. 5% better than 2.5%.
Can anyone outline to me when the results of the shareholder vote will be posted?
15th for general meeting?
18th for open offer?
Administration looming
I've just read the whole deleveraging plan and imho the shares should be trading below 10p right now because there appears significant risk shareholders will end up owning shares in a de-listed company.
But hey what do I know, the share price hit 24p earlier and clearly those in the know who were buying this on leaked news (or just jumping on the trend) think differently.
I struggle to see how Coltrane can pull a rabbit out of the hat here (and tbh why they would bother given their shareholding is worth only £7m) but let's watch and learn.
I'm going for my morning walk now. Anything could happen by the time I get back
This is grim stuff.
"If the Deleveraging Plan is not passed on 15th March 2019, the Group will have an immediate working capital shortfall, regardless of whether the Lenders have demanded the repayment of the Group's borrowings under the Existing Cash Financing Arrangement." So thats vote for the deal on the 15th, or administration on the 16th?
"While the company still expects to fully exit its Energy from Waste business during the first half of 2019, significant uncertainty remains on the timing of those remaining projects" So still no definitive resolution there.
Coltrane's outline proposal is non-binding and is stated as being subject to due diligence and potential revision. Accordingly, there can be no certainty as to whether a binding proposal from Coltrane will be forthcoming, nor as to its terms. As such, it is not possible for the Board to support nor obtain the support of Interserve's lenders, bonding providers or Pension Trustee. Without that support, the Coltrane proposal is currently incapable of implementation, particularly in the light of the Company's short term liquidity requirements.
Very Interesting.......
So Coltrane do now have a clear choice......they fully know the liquidity position....will Coltrane make a "fully Binding proposal" ........that it appears the BoD might consider......
Crunch time for Coltrane!
The Board further announced on 22 February 2019 that it had received overnight an outline proposal from Coltrane pursuant to which, as a possible alternative to the Deleveraging Plan, the Company would issue GBP75 million worth of new equity to Shareholders in an offer fully underwritten by Coltrane, together with a very significant conversion of Group debt into equity.
Coltrane's outline proposal is non-binding and is stated as being subject to due diligence and potential revision. Accordingly, there can be no certainty as to whether a binding proposal from Coltrane will be forthcoming, nor as to its terms. As such, it is not possible for the Board to support nor obtain the support of Interserve's lenders, bonding providers or Pension Trustee. Without that support, the Coltrane proposal is currently incapable of implementation, particularly in the light of the Company's short term liquidity requirements.
Interesting...
Scanning through the Results, have come across this in the Ceo's statement:
"The Group has benefited enormously from its hard working employees..........and the strong support of our stakeholders"
Strong support of our stakeholders.
What level of reality are we operating on here?
Since 31 December 2018, the Group's indebtedness has increased, partly in line with expected seasonality, but also as a consequence of payments of approximately GBP15 million to advisers associated with the deleveraging transaction (expected to total approximately GBP33 million), a further deterioration in the Middle East relating to receivables for Support Services and RMDK of approximately GBP25 million, Energy from Waste payments of GBP11 million and a VAT payment of GBP18 million paid post year end, which in aggregate represent a deterioration of approximately GBP107 million. These items as well as an updated expectation with respect to the EfW projects have driven the requirement for new liquidity within the Group and the Lenders agreeing to provide a further facility of GBP110 million as part of the Deleveraging Plan. If the Resolution to approve the Deleveraging Plan is not passed on 15 March 2019, the Group will have an immediate working capital shortfall, regardless of whether the Lenders have demanded the repayment of the Group's borrowings under the Existing Cash Financing Arrangements.
Ouch. So, net net debt now stands at £738m. And what are they doing paying VAT post year end? window dressing I guess.
Will they all be back in the Saloon with guns to their own head again.
Last time Coltrane issued their objection within minutes. But realistically what can they do to get their own deal through?
CC2015
Good to see you back!
I need to fully digest the RNS's but in very simple terms it is stating :
2,844,678,822 new shares issued @ 15.3p = 435.2M debt reduction
Total shares in existence would then = 2,994,678,822
Existing shareholders are left with 5%
This is better than the 2.5% deal obviously, but in my view shows a lack of belief by the BoD - who are siding with the Lenders and not Coltrane.
I would agree with you that the share price will probably gravitate towards 15.3p now.
The BoD have a great knack of lowering the SP (it hit 24p earlier).
Note your earlier comments on EBITDA and will review, when I get chance and get back to you!
GL to all who are holding - shame missed opportunity by the BoD in my view
Lets see what Coltrane do next!
And this nugget is presumably why the Directors aren't taking up any shares.
They save the company, jobs for the employees, the taxpayer a bundle but shareholders get completely shafted.
I'd say Coltrane will not be happy