Member Info for adzy2k11

Fosun stands ready to inject capital into the business and we expect management will seek to convert £1.0bn of bond debt into equity, potentially saving £55m pa of interest. Assuming say £1.0bn of new shares (£500m for Fosun and £500m for
bond holders) are issued at the current price, this would point to EPS of 0.5p (over 80% dilution). Applying a 6x multiple would suggest fair value for the shares of 3p our new TP (was 0p), which likely calls into question whether bond holders would accept this approach.
Base assumption: New equity is issued at the current price of 5p.
? £500m Cash Injection from Fosun in the form of new equity (plus £250m liquidity facility) – which should reduce seasonal drawings on the RCF and group interest costs by c£25m pa assuming 5% interest cost.
? £500m equity issued to bond holders in return for writing off bonds with a face value of £1.0bn – saving £55m pa of interest.
? Y20E EBIT margins of 2.1% in line with our current forecast.
So we should add £150m from the current RNS.

The recapitalisation proposal remains subject to certain conditions including performance conditions, due diligence, further discussions and reaching agreement with a range of company stakeholders (including the pension trustees, noteholders, other financial creditors and Fosun's shareholder approval)“

Wow. Not even a shareholder vote? Got to say they’ve been telling us not to invest in the equity since 12th July. Last week was a god send to get out.

What if UK leaves EU in a hard Brexit? Still subject to the 50% rule?

Changing the topic - buck: Did you manage to get out of MKS? Or do you still hold?

“Increasing debt as a defensive strategy has been deployed in the past. By increasing debt significantly, companies hope to deter raiders concerned about repayment after the acquisition.”

TCG suddenly leak that they need £150m extra within 4 weeks of announcing the Fosun deal, that too during a week where we have another bidder ... hmm... PF is literally ****ting himself and has ordered Alex in IR to stop doing his job responding to shareholder queries.

Yes, I understand your rationale Amers - that’s from a PIs lens. But I would have thoughts IIs would be a lot more worried a lot reputational risk of holding a stock that might potentially go bankrupt should the D/E or takeover not happen. I just don’t believe that if it was such a good opportunity to get out last week why NONE of them bailed? Maybe they did and an RNS will show so, but if not, it’s worth asking yourselves why not...

that doesn’t make much sense, risk losing another 90% for a “might be” stake in the new business?
And it’s pretty easy to buy stock following news of a “tangible” takeover. I’m playing the AGN ABBV arbitrage. Or is that not “tangible” either?

Given all the volume occurred in the first three days of the week then we should get an RNS early this week of IIs selling. Let’s see...

I doubt those less than 3% can move the price. Jupiter Asset Management Ltd. 5.0
Marathon Asset Management LLP 5.0
Orbis Investment Management Ltd. 5.0
Capital Guardian Trust Co. 5.0
BlackRock Investment Management (UK) ... 3.9
Invesco Asset Management Ltd. 3.8
Standard Life Investments Ltd. 3.5
If last week was such a good/obvious selling opportunity why did none of these IIs sell?

Which large holders are selling exactly? I haven’t seen any RNS in the last week suggesting any of the large ii sold? There has been >$1bn if shares traded over the last 10 days - that means 2/3rds of the company has changed hands ... so something is happening, none of us know exactly what.

What makes you all think that the news released from these up and coming kids at the FT is true? If you scroll through their history you will notice they have more than once released “fake news”. DYOR!

broken 10.6 crucial level. not good. back to lows now.

yikes. best of luck - hope you can make much as possible

there's nothing on the share register that shows a sale of 12m units? max single trade was 1,050,000 at 8.41 @ 14.4p

have you invested all your money into this one share?

it's going to surpass the 200m, which would make it the 2nd highest volume day of the year! wow. what a battle

they must have delayed prices

I think you're delayed, it's in mid-10s now

retest of neckline, must hold here at 10.6

I personally think it was just a gap fill from Monday morning.