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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
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.
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.
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.
"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.
Thought as much coming down to 15p
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.
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.
The thing is whatever we (or I) think the share price is well above the OO price implying there is support for the OO. I'm not sure why.
it implies people are really keen to buy 1 share at 18.5p and then another 19 at 15.3p
is this a market aberration and it will look different in a week? Do Coltrane have cards up their sleeve? Do people think the lenders will be forced to make a better offer?
All a puzzle to me.
Cc well anyone who is buying today in order to take part in the offering should probably take the time to bother reading Appendix 1 of the deleveraging plan paying particular attention to the record date and ex-entitlement date.
More likely, they are speculating that Coltrane will indeed get a better deal.
I actually agree and I'm surprised the SP is holding up this well...
Maybe the following statement offers a glimmer of hope.....
"the Board has also received confirmation from the Lenders that they are only able to provide monies and continue supporting the Group in its current state if the Deleveraging Plan or a transaction substantially similar to the Deleveraging Plan is implemented in the immediate future"
Does this leave room for Coltrane to negotiate a slightly better deal?
looks like Coltrane will approach this in a different way
http://www.cityam.com/273901/breaking-interserve-lead-shareholder-threatens-sue
It is a shame, as it looks like Coltrane are too far apart from the current deal to even bother trying to renegotiate with the Lenders...
I'm still hoping for a 7.5% deal being agreed (by all parties) to avoid litigation and liquidation.
Guess most existing shareholders would accept this now.
My apologies. those buying today do not of course have rights to the OO.
Well guys I’m gob smacked by such a horrendous deal. Initially I misread the RNS in the morning as 9 shares for every 1 held, which was bad enough but this is taking the biscuit. For me to take up this offer would involve me forking out a whopping 100k!!! This is shear madness.
The only reason this SP is holding up as they can’t afford for it to drop below 15.3 for now, since they will face a similar issue as Kier where they had minimal takeup. I may bloody cut my losses and sell up, as this is just ludricous. The fact the bod will not take place in the OO tell you there is more to come and we will see 10p again.
i have 10000 shares recorded in open offer. The share price will stay between 17p (lender's offer price) and 25p (sp this morning). i could buy 190000 at 15.3p. which is too much for me. i will buy in the market if sp go under 15p and buy full in open offer if sp over 25p and 30% between.
I hope some of you note the use of the OO and not a RI as was discussed some time ago on here, the difference being you can't sell your rights in the market. Shareholders shafted again.
However, whilst the deal does look horrendous to me, the share price certainly doesn't reflect that. that's alot of shares changing hands today
The volume today in relation to the mcap is baffling more so the way it went up first thing (expected) then went down when the reality sets in (expected) but then way up again? Strange. Anyone that has read the deleveraging plan and unaudited 2018 results will see that today the board has served up quite a sandwich. And neither the bread nor the filling is palatable. I pointed out some of the low lights without even mentioning that the Middle East looks like the next Efw saga.... or that the Middle East strategy relies on oil prices staying high. I can only conclude that those buying today are expecting a miracle from Coltrane to be delivered in the next 16 days, have not bothered to read anything published today, are clinically insane or a combination of all 3.
Meta, - Perhaps someone is trying to scoop up 24% to add to Coltrane's 27% or a bit less if Farringdon are in league with Coltrane.
Or perhaps it's just a number of parties on the wrong side of the trade who wanted out at any price.
The document more or less says the risk of de-listing is not just a risk but one of the debtors is likely to do so.
The issue IRV can't get away from is that they lost £110m in the year and however the great the EBITDA looks, there still appear to be further unresolved significant risks at the operational level. Staff morale must be terrible leading to potential further cock-ups.
It is difficult to see why the SP went back up unless the Company / Lenders influenced the SP and are trying to maintain positivity on their deal and want headlines like "shares up 10% on deleveraging detail".
Excluding disclosure below 0.5% there was still 1.52% of shorts to close
Maybe that is reason for the purchases
I’m confused bsidering selling my holding and buying in at the open offer with the same money. Will reduce my average by 50p. Do I need to hold these to be eligible???
Also all is not what it seems. Existing shareholders can only purchase upto 33% of the share capital so effectively it looks like it will be 6-1 prememotive offer meaning lenders will still own 60% of the shares.
https://www.google.co.uk/amp/s/amp.theguardian.com/business/2019/feb/27/interserves-biggest-shareholder-says-rescue-plan-is-terrible
"Perhaps someone is trying to scoop up 24% to add to Coltrane's 27% or a bit less if Farringdon are in league with Coltrane."
CC2015,
What is the point of Coltrane or an ally acquiring more shares before the vote on the deleveraging plan scheduled for 15th March?
27% and 24% would give them a 51% majority of the shares, enough to vote down the refinancing plan. But as the company has made it clear that administrators would be called in if the plan is voted down, Coltrane would in effect be voting to wipe out the value of their own share holding.
The 51% majority might be useful if the vote to deselect the BoD was before the refinancing General Meeting, but as it is not, I cannot see how Coltrane can hope to change anything. They are reported to be engaging solicitors, but can they reverse the EGM dates? I doubt it, and would not be surprised to see Coltrane sell down their holding, rather than stump up over £6m just to maintain their 27% holding after the Open Offer.
Sorry forgot to multiply by 19 when calculating how much it would cost Coltrane.
They will need to pay around £114m to retain their 27% holding.