Tim Watts, CFO at Shield Therapeutics #STX presenting at our Life Sciences Investor Briefing Watch Now
Puss, a lot of them are simply because it isn't really being done by the entity we are debating about here. Does it matter what the JV managing the hotels does? I guess about as much as what the JV in China does or the one in Russia. None of it is fully part of the numbers represented at the end of the fiscal year but it is of course used to make it sound as if they are very busy. For the rest of it: TCG is making lots of moves based on their belief that they will have a solution for their financial woes by the end of fiscal year. Would that mean it's a disaster if that plan doesn't happen? Sure, all the more reason to accept it will happen.
TCG is massive and can burn the cash needed to not be irreparably damaged and they do that by the grace of their lenders. That's exactly why at the end of the day those lenders will be who is in charge when the final decision is made. Not Fosun, not the BOD, not NK and his friends and definitely not the the shareholders but lenders and then bondholders.
Pioneer, yes I do cause what NK suggests isn't a plan. He's not thinking with a mindset that fits the Western European market and has had no successes here. He also hasn't offered any numbers so we're just working with dreams. Also: what synergies? Have you seen anything more than him saying they are there? No? Thought so.
BTW Fosun isn't giving up the airlines cause they want to but because they have to. In its current shape TC without airlines would have been bust already. If Lufthansa hadn't botched the Eurowings integration they would have bought the airline in its entirety and they will be kicking themselves for a while over that (but there's definitely room for second chances so don't be surprised if that's where it gets offloaded to in a year or 2).
Pioneer, your view on Fosun's plan is wrong. The main issue with that leak was that without a market understanding of tourism it isn't that easy to read between the lines. What was leaked was actually looking as a more solid plan than I expected. I'm sure banks/bondholders will be given the appropriate amount of insight (after all they aren't in the business either).
Puss, the problem is that you don't see how many things are just smoke and mirrors in this business. The amount of Joint Ventures in play is extensive which is exactly why magically lots of things are not in the balance sheet. Who actually really owns/pays is completely unclear cause it's hidden in something that doesn't need to report it as clearly. It is exactly the same game NK plays and exactly the reason why everyone calls him a billionaire on here. They haven't seen a single balance sheet and have no clue what his net worth really is but "he owns multiple hotels!".
If I take a mortgage and buy a 10M£ castle my net worth also doesn't magically go up but hey, I can still tell everyone I "own" a 10M£ castle right?
I've read the interview, so what? Did you read the glorious announcement of how Anex was going to conquer the German market? Did you then look at how they fared and thought "oh yeah, fair enough all what happened was supposed to be a surprise for them"?! He massively misjudged it and ran it into the ground in a very short time span but now you think he's some sort of genius that knows better than everyone else? The interview essentially just states he didn't learn anything and is still peddling the same stories.
All those other companies that were named in advance as potential buyers all decided against it even though all of them have more cash, synergies ... than NK but it isn't worth it as the investment is massive and you need the cash to chew through a rough period. Fosun has that cash and his idea that they are just investors after they managed to turn around Club Med and are booming in China with their JV with TCG makes you wonder how much research he put into this.
As such, hopefully I'm not giving him too much credit if I think he's just doing it to have his shot at being the biggest Tour Operator in Russia. If the smoke screen clears and he comes up with that: I tip my hat and will call it well played. Yes it will be at the expense of the shareholders but hey that's business and some research and sense would have alarmed them well in advance. If he honestly believes he's going to come up with a plan that's better than what's on the table then let's hope the banks don't fall for it cause there's thousands of jobs that will be destroyed when it collapses and it's no longer worth saving.
Why would banks ever prefer NK over Fosun? The limitations are exactly the same: the airline has to end up in EU hands. Fosun has a lot more cash to back up their plan and have shown to be able to do a turn around in Western Europe with their purchase of Club Med. NK in Western Europe? A failed attempt to get into the UK market 8 years ago (and they cried about losing less than a million) and a failed attempt at getting a proper foothold in Germany.
How is this even considered a competition?
NK has experience in an entirely different market and the only smart thing for him to do here is to tap into that and try and get something out of this arrangement. As such if he gets a stake in the Russian JV that TCG is part of then hat of to him, good and sensible business move. A real part in TCG turn around? Insanity. If he's half the business man the dreamers all think he is he'll sell out the shareholders as soon as he gets a chance at being part of what would be the biggest tour operator in Russia.
Couldn't really spare the time from work to keep up with the hope train so where are we at? How many times has our Russian investor been called a billionaire? How many times did we again need to hear that NK is? How many insane sp projections did we see?
Word on the street in the city: Fosun continues its due diligence and the deal is the only one received and worked on.
His valuation of TCG makes sense each time he says NK is a billionaire. He's in lala land all of the time. NK's net worth is going to be well below a billion and Anex's entire value is less than Fosun's profit. Anex isn't going to battle Fosun. If NK and Anex are smart they can walk out of it with a deal for the Russian market and a stake in Biblio Globus (and that's if the Turkish competitor that is in the Biblio Globus JV with TCG is ok with it).
Why tomorrow? He has 2 days so his TR-1 should be in today. Look at his original announcements: First threshold on Friday 26th -> submission 30th, second reach 29th and submitted 30th and third reached 30th and submitted 30th and all of them released on Wednesday (31st) morning so essentially just all submitted at end of play 30th. He got the rest on 31st and immediately submitted it as cat was out of the bag anyway. As such I also don't see why he would have waited after Friday.
He has to announce any 1% in holding change (and has 2 days to do so) so essentially he's supposed to be still sitting on 8% but likely did not buy/sell significantly on Thursday/Friday. If he has started to sell out you'd essentially also know soon enough though given he has 2 days he can offload quite a bit before he announces it.
The CEO and CFO have explained a lot more than those who believe there's still value in it. On top of that you can see the balance sheet and make up your own mind. While I agree that writing down goodwill is a misrepresentation on the perspective of how it affects loss you can equally argue that having too much goodwill on the balance sheet is a misrepresentation of the value of the company.
So as long as no one offers a proper financially sound explanation on how TC is supposed to get past end of FY (which is end of September) there's mainly risk and an inflated sp in comparison to the facts. It is up to NK to fix that. Just buying shares isn't a plan.
His point is merely that from a financial analysis perspective there's nothing that supports the SP rise. The balance sheet hasn't changed. The state of the share is:
- Only offer on table suggests a single digit sp dilution
- A Turkish investor bought 8% of the shares at an average of around 5p
There's lots of speculation about this Turkish investor buying a lot more shares but if he's doing that he's supposed to report that within 2 days when he hits 9%, 10% ... and as such it gets less likely that he actually was buying shares on Thursday and after. He also diligently reported his movements within a day last week and now he would all of a sudden be slacking?
As long as there's no counter offer on the table there's no logical reason to invest in this but in hindsight whoever invested at around 5p did a genius move and as long as they keep a healthy stop loss will make a ton of money.
The problem for now is a lack of RNS on further holdings by NK. He bought 8% by close of trade 31/7 which means he paid 5.5p at most and quite likely has a sub 5p average. He has not submitted any further holding updates so the options are:
- He has bought more but less than 1%
- He has bought more than 1% but hasn't bothered to submit (less and less likely)
- He hasn't bought any at all
So as SP is more than twice the price the supposed white knight bought in at and there's no news on his further plans the risk rises. Normally you would expect massive further gains in SP can only be made if either there's an RNS which indicates more buys by NK/another big player or NK releases info on how he plans to save TCG in a way that shareholders are not diluted. But then again it gained a lot this morning without RNS or news so the hope train may keep it going a bit further.
Puss, shifting slots is not that easy as you do not really own them as such. It is achievable if you already have an AOC and just take over an airline and assure you keep the slots filled. Of course only if you aren't doing that to create a monopoly (that was one of the drawbacks for Lufthansa in the Condor take over, they risked being forced in having to let go of some of the slots). Note also that TCG Airline contains 4 airlines of which TC UK Airline is just one of them. You also have to fix TC Scandinavia, Condor and TC Balearic. Scandinavia and Balearic should be easy enough to get rid of as the fleets are small (Scand has 3 and Balearics 6 planes) but Condor is big.
Paul, it doesn't happen a lot given the idea is no one is going to try and cheat. But CargoLogic Germany is an ongoing example as Lufthansa is annoyed and will quite likely challenge the AOC eventually if things stay as they are (CargoLogic Germany is in essence controlled by Russia's AirBridgeCargo). They have applied for AOC (unsuccesfully) since 2017.
Also I'm not backpeddling. If it is majority operated and controlled by Europeans it is possible. I assume that was clear from the start. Setting up a holding company that you control yourself is obviously not allowed but in case of a small airline it would take some time before anyone would bother to investigate. As such while the Azur Air set up was fairly dodgy I doubt anyone ever really investigated it. An airline the size of TC would require something of an entirely different magnitude.
Essentially as I said from the start: He needs European allies and either he comes out with whom it is soon or he'll not at all. But support from Turkish government or Turkish Airlines doesn't solve his problems.
Paul, they HAD an AOC. What part about "ceased operations" do you not get? Also, an AOC can be challenged if competitors deem it necessary. The Azur Air one was quite likely dodgy but given their negligible size no one bothered to challenge the Dutch Holding company's validity. Azur Air Germany wasn't worth anyone's attention, it was not threatening to anyone's business.
Paul, I already linked this: https://en.wikipedia.org/wiki/Azur_Air_(Germany)
Full story is: they had Azur Airlines (together with a Dutch holding company to get the AOC) and ran it into the ground in no time at all:
Commenced operations: 4 July 2017
Ceased operations: 26 September 2018
Took them less than 2 years.
Puss, if the guy has the ability to give away slots to whomever he wants. Sure. I guess he's also capable of allowing Turkish Airlines to just fly between Germany and Spain at will? All without precedent but maybe he has all the European Aviation Authorities in his back pocket and we just don't know?