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CC2015
This is a good deal even for Coltrane. They are looking a the value of the post DfE company with the low Debt to Equity ratio.
In this deal they protect their current investment and the get to purchase a lot of shares at 14.7p. They are valuing the post DfE business a lot higher than this.
If you look at my calculations below, this values a low debt business at £409M which gives plenty of headroom to improve.
I think Coltrane have done their calcs dilligently and are looking forwards not backwards.
This is a good deal for everyone. Crucially it avoids, litigation, Administration and De-listing which are the only other options if the BoD push ahead with their deal.
The BoD would need to have a damn good reason not to give this deal proper consideration.
This is the only WIN / WIN scenario available!
This is how the Coltrane deal works
The lenders receive 1.1bn shares for £435m of debt? Valuing the post DfE share at 25p
Add the £110m new shares @14.7p = 750m shares ( the sp is discounted for the OO).
Total shares = 150m ex + 1.1bn + 750m = 2bn shares
If all new shares taken up by existing holders : 750m / 2bn = 37.5%
If no new shares taken up by existing holders : 150m / 2bn = 7.5% ( more realistic than current 5% deal)
Company value post DfE would be £110m + £22m + £277m = £409M
Share price would be circa 20.5p
Lenders taking an initial hit for 4.5p per share
Share price could then rise (over time) to circa 50p (1bn market cap)
This deal makes sense and crucially the Open Offer would be supported as importantly this deal leaves over 25% Free Float, therefore the Lenders could not De-list (the biggest risk to participating in the current OO).
This deal gives everyone a fair chance, Lenders & Shareholders
The Board should back this deal as it would pass a shareholder vote and is the only consensual deal available.
it's not FTSE250. It's not even FTSE Small Cap.
it's FTSE Fledgling now and there's nowhere to go below that.
Whilst I'm usually taken to writing long posts I'll try and keep it short. I think Coltrane have lost the plot here.
their stake worth £6m (less with dilution from the warrants). To defend their stake of £6m, they are underwriting a £110m rights issue and offering a £75m bridging loan. The numbers are out of all proportion. their risk/reward calculator must look different than mine.
The current Coltrane deal may or may not be accepted, but suggest there will be a counter-offer now from Lenders and BoD.
The SP may well rise a bit this morning. Would it be a good idea to sell everything above the open offer price and buy back in at the 15.3p in a few days. Is there any benefit in holding anything currently above 15.3p at the moment ?.
Meta- wish I could answer that one, but unfortunately no on on this board can. However it does appear it’s all about personal gain here from all three sides, so everyone is making up a story to suit their case. I do see Coltrane having a point on the debt, as it seems to suggest the BOD have deliberately breached the facilities to trigger an insolvency.
I’m sure they have done their research and due diligence around this. Would be interesting to see what happens after prepack if a deal cannot be reached. There will be some car to answer as now the BOD cannot simply argue that was the only option, since they now have an alternative.
Bill, if you and I and others can see that this proposal is going to get rejected out of hand (for whatever reason), then how is it that Coltrane can not see this? Furthermore, if I and others could see that the refinancing last spring was highly punitive and juat kicking the can down the road, then how is it that Coltrane could not see it? Last summer at the PAC, the Ceo told us that Coltrane were on board, why did they not pipe up then. And finally, I have read that Coltrane do not see the debt as being a problem of the same magnitude that the board are presenting it as being. Yet the board are saying they are days, yes days from going out of business. Just how on the ball are Coltrane here?
Feilb- yes I agree they’ve done one hell of a job surpressing the share price, and will reject this deal fairly quickly.
The main issues they face are:
1) there will be no personal gain for them for going for Coltranes offer, whereas they stand to make substantial gain from a D4E.
2) they have just justified spending £76m on advisors to come up with a deal. Now Coltrane maybe spent just 500k or so on a better counter offer. If they implement this how do they justify this cost to their employees and other stakeholders, and makes them look like incompetent moron that they are.
Easier to say the counter proposal is not workable or lenders don’t like it, when it reality it never left their desks.
I'm on the wrong planet today bill
gazza this is FTSE250 not AIM. Are you on the wrong board?
This is nuts. Under the Coltrane proposal, the lenders write of £435m debt and get 55% of the company. Under the Bod proposal, (already agreed with the lenders) the same amount is written of but they get 95%? I wonder which one they will go for? And what then, after Coltrane have underwritten £110m, paid £66m on top of the millions spent aquiring stock. With the bleed from Efw continuing, where would they get the cash to keep trading. Everyone involved here is so out of touch with reality putting forward audacious proposals.
This is not AIM though is it?
Bill,
I think we were doing our calcs at the same time!
I like yours better than mine, so we will go with yours!
Looking more positive, IF the BoD & Lenders get on board.
Let's hope the Bod aren't stubborn and admit their deal wasn't the only deal.
I expect the BoD will rule this deal out fairly quickly tomorrow; if the SP starts rising, as it's clear they are trying to suppress the share price and doing a hell of a job at it.
GLA
This new issue and the conversion of £435m of debt in the Company into equity at par would leave existing creditors owning 55%
An estimate of how things could pan out under Coltrane deal...
The lenders receive 1.45bn shares for £435m of debt? Valuing the post DfE share at 30p
Add the £110m new shares @15.3p = 719m shares ( the sp is discounted for the OO).
Total shares = 150m ex + 1.45bn + 719m = 2.319bn
If all new shares taken up by existing holders : (150 + 719) / 2.319bn = 37.5%
If no new shares taken up by existing holders : 150m / 2.319bn = 6.5% ( slightly better than current 5% deal)
Company value post DfE would be £133m + £435 = £568M
Share price would be circa 24.5p
Lenders taking an initial hit for 5.5p per share
Share price could then rise (over time) to circa 50p (1.1bn market cap)
I like the deal and could vote for it, but not sure the lenders will............
SP up to 25p tomorrow. This is AIM after all
Thr proposals is as follows
7.5% existing holders 150m shares
55% lenders 1100m shares
37.5% rights issue 750m shares @ approx 15p raising 112m
Total shares in 2bn
With the above the rights issue is likely to on 1 for 2 basis. I can see the lenders agreeing to the 7.5% for existing holders but it’s the RI which is questionable. Plus side is bankshave to pour no more money in.
Feilb- I’m guessing it’s based on a projection that bet leverage will only be 1* by year end which will make IRV an attractive investment and drive up the SP. This deal places the SP at 39-40p post D4E.
Tartanx
I think their is some room for negotiation with the Lenders, but unfortunately I just cannot see the lenders accepting anything like Coltrane's current deal.
Their deal values the post DfE company at £791M, I just do not see this as a realistic valuation.
Bill, I have not received any notification other than in my HL account there is an option to purchase 11000 odd shares, but this is not active yet
Sorry the dates are vice versa. 26th was the record date and 28th was the ex record date.
Guys anyone know what date is being used for open offer entitlements and rights issue? The ex records date was the 26th, with the record date being the 28th. However I haven’t received any piper to take part in the OO, but I sold out in the morning if the 28th.
So it looks like I will be excluded from any potential rights issue to?? :(
feileb - on the face of it, Coltranes proposal is a no brainer. It would be criminal for it to be ignored. This proposal would make me think about taking up some of my open offer, I personally think that the 25% free float would not be achieved with existing proposals, but more likely if Coltranes proposal works out.
Ingenuity at work, you cannot argue with that
"Interserve is one of the world's foremost support services and construction companies. Everything we do is shaped by our core values"
Jeez, if IRV are one of the World's best then I wouldn't go anywhere near the others! How can anyone invest in a company that makes such a ludicrous claim?
The Coltrane proposal is based on information disclosed by the Company, most notably the deleveraging plan terms highlighted in the Company's press release of 27 February 2019, which provided only limited information, and itself was a revision of a previous plan the details of which were made public in early December and updated on 6 February.
The updated Coltrane proposal is intended to be delivered on a consensual basis, and is the only plan that can be. It is better for the Company and its key stakeholders, and has been developed by Coltrane and its advisors without any funding from the Company – despite the Company anticipating expenditure of c. £90m on its and its creditors' advisors to implement its proposal, which would leave the Company in a poorer financial condition.