Member Info for 1GW_

Perfect. Just what was needed. Look forward to the open on Monday.

Excellent news. Now over to the lenders I guess. Please can we have an rns publicising the UK decision and saying that the lenders have agreed to further defer the covenant tests while German undertakings are negotiated?

No pro platform, just looking at the rns's and the trade listings. I don't believe it is significant, I was just trying to be helpful by responding to the questions on the rns's and the speculation about buy and sell imbalances. Perhaps I shouldn't have bothered.

Yes but as I read the rns's they couldn't ignore it in the closing auction as it set the price which caused two extensions to the auction.

They got the uncrossing trade away at 14.25p in the end so I presume the imbalance was to buy, although they only managed to clear 2118 shares at that price by the look of it. The final (and apparently only?) automated trade before the closing auction was at 13.5p. So as I understand the rns's the "price monitoring extension" kicked in when they couldn't get the uncrossing trade away within a certain percentage of that price. The eventual uncrossing trade of 14.25p was about 6% above this 13.5p reference, but I don't know what the limit percentages are for triggering the extensions or what prices they would have cleared at (but for the extension rule) in the first 2 attempts at the closing auction.

I don't think the current price is crazy but I do think the risk-reward balance is reasonable at this price level. As a holder I am betting that Sepura and Hytera will be able to negotiate undertakings with the German authorities which avoid the need for a lengthy formal review on public policy and/or national security grounds. I am also betting that Sepura's lenders will allow a further deferral of covenant tests while the German negotiations are concluded (and perhaps also while they wait for the results of the UK public consultation to be announced). Since the German situation doubtless has a fairly political angle I don't think a favourable outcome can be seen as a sure thing. But, I am hugely encouraged by reading the CMA review and the UK undertakings document. These to me indicate that Hytera still wants to complete the deal, which had become a significant doubt in my mind. And I don't see why they shouldn't offer similar undertakings to the Germans or why the Germans shouldn't accept similar undertakings. I would feel more comfortable however if I saw evidence, in the form of 8.3 notices, that one or more institutions saw it the same way. I was disappointed that there was no purchase 8.3 yesterday covering dealings on 9th May, the day the UK update was published.

I liked the "increase" bit in point 66: "Sepura expects its revenue from non-Airwave TETRA devices to increase to £[REDACTED]m in 2017."

Seems the Cambridge BW is very upbeat. I'm not sure I'd quite go along with the "minor hurdle" interpretation, but nice to see such a positive article now I'm again a shareholder: "While the German authorities, which originally said the acquisition fell below their radar, has now decided to take another look at the deal Sepura can negotiate its way round that minor hurdle once the UK clearance is obtained." http://www.businessweekly.co.uk/news/hi-tech/government-set-clear-hytera%E2%80%99s-takeover-sepura

Fascinating read for anyone interested. The CMA report in particular gives some insights into what's happening in the UK market, despite some of the most potentially interesting bits being [REDACTED]. The fact that Hytera is apparently prepared to offer these undertakings suggests to me that it does still want to complete the merger, which removes (for me) one major doubt. Also, I don't see why they wouldn't offer something similar to the Germans to try to avoid the public interest/national security review there. So I've bought some back just now. The major risk now in my mind is German process (can they negotiate undertakings in a timely manner so that Sepura's lenders are prepared to allow sufficient time for the deal to complete). https://www.gov.uk/government/consultations/proposed-acquisition-of-sepura-plc-by-hytera-communications-corporation-ltd-draft-undertakings

Difficult to put a negative spin on this one I think - it's unambiguously good news if a detailed CMA review is not needed. Sepura will have to hope that nothing material comes out of the public consultation of course. It still leaves the acquisition dependent on keeping the lenders happy while the German approvals are sorted out, as far as I can see, unless Sepura/Hytera can pull off something there as well by 15th May.

Oh dear! So what are the lenders going to do now? I bet this wasn't one of the events expected to lead to a further deferral of the covenant tests beyond 15th May. This must be a risk that this is seen as the final straw.

But for the institutions all you have to do is look at the 8.3s. Since the shareholder vote on 9th February only BNP Paribas and Aviva (and John Drinkwater), of the 1%+ holders, appear to have done anything (apart from the move of the team from Henderson to Lombard Odier which meant both companies had to give holdings notices). John Drinkwater sold out on 13th Feb. Aviva sold on 11th April and 12th April, when it went below the 1% threshold BNP bought 0.02% (102k shares) on 13th Feb but then sold down steadily from 2.94% on 13th Feb to 2.35% on 5th April. After the news of the UK Government public interest review on 11th April it continued selling and dropped to 1.93% on 20th April, a few days before the news on the Spanish approvals. Yesterday it started selling again, dropping to 1.87%. If you remember leading up to the shareholder vote there were a number of institutions who bought steadily: Oddo Meriten, Cicogne, BNP Paribas. So no real panic in that the (presumed) arbitrage players Oddo Meriten and Cicogne appear to have held their nerve and their positions. But BNP has been selling down steadily. And none of them (and no new ones) have stepped in after the news on the Spanish approvals to increase their positions, which you might have expected them to do given their previous buying if they believed the merger was now almost certain to happen. I agree a UK approval, or rather a decision not to refer the acquisition for further review by the CMA, would be enormously helpful. The point about the Chinese approvals I think is that they might be a "joker" for Hytera. If Hytera gets cold feet because of the impact of the delays on the Sepura business, or just gets fed up with having been messed around over the UK/European approvals, then it might be able to engineer a Chinese refusal. Having said that, Chinese policy on companies making overseas acquisitions with foreign exchange reserves has been in the news from time to time I think - and there might be a genuine policy issue there for the Chinese. Anyway, hopefully things will be a little clearer tomorrow or Friday if the UK government sticks to the 4th May (midnight) deadline for making a decision on the need for further CMA review.

So BNP finally gets off the pot following the Spanish news - and sells some more into the strength! However much you might all hope this is a done deal, the evidence from the institutions continues to suggest otherwise, doesn't it? No mention of those Chinese approvals in that business weekly article.

uddinkas - just watching for now. As I think I said a while ago, I wanted to see progress on the covenant waivers and signs of some institutions buying back in before seriously considering buying back in myself. We've had some progress on the covenants, but the next deadline of 15th May isn't all that far away. I haven't seen any encouraging news on the institutions, with BNP continuing to sell down. I am interested to see if BNP or any other institution decided to buy yesterday after the Spanish news. I would regard that as a positive. On the other hand if they sold more into the strength, or if there are no 8.3's showing buys yesterday, that would strike me as negative.

Chinese clearances (cont). Also worth revisiting these 2 paragraphs in the original 16th December announcement: "The attention of Sepura Shareholders is drawn to the fact that the Acquisition is also conditional on other Conditions and certain further terms set out in Appendix I and to the full terms and conditions which will be set out in the Scheme Document. Sepura Shareholders should take note of the Regulatory Clearances set out in the Conditions in Appendix I, which include the PRC Regulatory Clearances. Sepura acknowledges the very high level of importance and the materiality of the PRC Regulatory Clearances to Hytera, Bidco and the Acquisition." Note in particular that comment on the "very high level of importance and materiality". Now wouldn't you have thought that they would rns receipt of those clearances as soon as they get them given how important they are saying they are?

Chinese clearances specified on page 23 of Scheme Document. "Regulatory Clearances (a) PRC Regulatory Clearances: (i) the issuance of a notice from the Development & Reform Commission of Shenzhen Municipality in respect of the filing notice made in connection with the Acquisition; (ii) the issuance of a record filing notice from the Economy, Trade and Information Commission of Shenzhen Municipality in respect of the Acquisition; and (iii) the approval for the remittance of foreign exchange out of China from the State Administration of Foreign Exchange of China in respect of the Acquisition;" This section went on to list (b) Spanish clearances, (c) German clearances, (d) UK clearances. As far as I am aware, neither Sepura nor Hytera has made any subsequent statement that the Chinese clearances have been received, whereas they have rns'd the change in the requirements for the Spanish and German clearances.

Not forgetting the Chinese clearances of course. I am not aware that Sepura/Hytera have said that the Chinese clearances have been received. It seems to me that these may well provide Hytera with a get-out if it decides it doesn't want to go through with the deal at the last minute (or wants a discount). Another potential disruptor is the FY17 results. Will Sepura feel compelled to publish a trading update before the deal closes? In particular if it gets advice from its auditors that it can no longer publish accounts on a "going concern" basis will it need to share that news with the market? And how would Hytera react to that? And if the UK is still making its mind up on 15th May, we don't know the conditions around a further deferral of the covenant tests.

I wonder how this ESN changeover debate plays into the UK government's Sepura takeover considerations? Can't you just see someone sitting thinking that the change in ownership of Sepura must be an important factor somehow, if only they could work out how - and perhaps kicking the decision into the long grass by having a "review" might avoid the risk of making an embarrassing mistake. https://www.bloomberg.com/news/articles/2017-04-20/u-k-emergency-services-at-risk-of-catastrophic-comms-failure

Sitting on portfolio gains as a whole and wanted to take some off the table. Couldn't bring myself to sell any of my more successful holdings today so decided to clean things up a bit and exit here. Good luck the rest of you. I hope Findel and SPD do that deal in the end.

Maybe we've been a little harsh in our criticism of Findel's management of the financial products issue. It appears N Brown is having similar problems (see this afternoon's RNS). It doesn't make me feel any more comfortable that this might be the last of the increased provisions (in fact maybe the opposite) but perhaps makes me a little less concerned about the competence of the management.