The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
They also accepted that two risks also exist should they get the £45m. 1) the risk that shareholders don't vote for RI. 75% holder support required. And then 2) the risk that those who did vote for it don't follow through with supporting through injecting cash. If someone was to acquire 20%, they technically only then need 55% from the remaining holders to support the vote and any funds raised a bonus.
I also heard a comment that they are aware of the boards so they are probably reading this... if so Hi!
The one main takeaway from me is that they were called out on the constant "we will push the business into fallback at any time" nonsense. Although they didn't verbally say "yes", there are clearly more steps before the wind-down button is pushed, as Daniel pointed out on the call... even without the £15m into the scheme the creditors would still be better off than pushing it into fallback.
They also made a point about the FCA process and potentially expediating the ownership sign off process should a purchase of 20% or more of the company take place. There must be some substance behind that point. I'm not trying to pump or speculate, Danny openly explained that consideration without any prompting.
They can't discuss any changes or anything whilst conversations with investors remain "on-going" so they clearly are holding on to one last straw...
Operational cost saving and more profitable loans if they trim the product focus to just sole lenders. Closure of Ireland business also.
The keep banging the fallback drum but theyre yet to push into fallback. I think they know they can work with the minimum of £25m. Must still be an investor or two where they think a deal could be done for the rest or why would they keep prolonging. Quicker they get that 15m more they can lend
Wednesday is one of two things:
1) they announce fallback and its done. I'm sceptical on this happening as think we'd have known by now.
2) they table a proposition to move this forward and announce a plan based on what they've managed to secure commitment on.
As of Wednesday, with the Easter and May bank holidays, it leaves around 48 business days for them to get this done.
valid points. It could be that they will use this as an opportunity to set some indicative timelines. As you say there must be a specific time period allocated for actions such as a shareholder vote and a specific period where shareholders participate - IF that is their intention.
At some point they have to draw a line and accept what they can/can't get from investors. Maybe the update next week is them crystallising a final position and communicating an idea on what the way forward looks like, ahead of a vote later in the month.
Having listened to the meeting again over the weekend, the next steps were set out by Danny as follows (14mins 50seconds);
1) Convert potential interest to binding offers and secure offers for the remaining shortfall.
2) Issue prospectus to shareholders and call general meeting at which shareholders will be asked to vote (75% vote in favour required).
Can't help but think it's too soon for step one to be completed by next Wednesday? Anticipate another GM to be called late March/April if so? Anyone else have any thoughts on this?
Stevielad, it was only last week you were calling out Franky for his comments about claimants. Yet here you are yourself having a snide dig at claimants and Sarah? Weird behaviour.
Base scenario - business plan assumptions
The Base scenario assumes that:
• the conditions of the Scheme (explained above) are met in the required timescales
• balance adjustments and refunds resulting from complaints in the Scheme are consistent with the assumptions that underpin the complaints provision reported as at 31 December 2022 (see note 2.2.1)
• at least the minimum committed amount of £112.0m is paid out as cash redress in the Scheme, being £97.0m from existing resources and future collections plus an additional £15.0m following the equity raise
• additional new funding is received beyond the equity raise to facilitate future growth of the business
• collections on the existing loan book continue in line with expectation
This scenario indicates that the Group will have sufficient funds to enable it to operate within its available facilities and settle its liabilities as they fall due for at least the next twelve months.
Am I reading this wrong or should that say decreased on an underlying basis? 347.5m in 2022 and now 192.8m?
Complaints provision year on year reduction of 44.5% to £192.8m (Q3 FY2022: £347.5m), reflecting the sanctioning of the Scheme. This provision has increased on an underlying basis since the half year number of £191.4m largely as the result of a higher expected uphold rate, revised in line with observed third-party decisioning. The increase in the provision substantially accounts for the income statement charge of £15.9m.
I do wonder if negotiations were just proving to difficult without the fine being known, they always said the investigation and fine position would need to be known prior to any raise so that all parties know what they're signing up for. Initially the no fine position was seen as a positive, I cant imagine many negotiation scenarios baked in the possibility of a nil fine.
Hopefully that confirmation allows them to get contracts signed, with an update on Thursday to confirm a syndicate or whatever has been found with more information made available to shareholders in early March.
The full lending license, processes that support the new regulations, a clean slate from any historic issues, experienced staff in appropriate roles, lending 1m+ a month.... its all set up so why push it into fallback... as said below only 15m is required. Had they not messed everyone about 15m could easoly easilybe raised if the sp was around 8p.
Fca lending deadline is next week, after that the FCA have no further say in the matter. The message of the business being pushed into fallback is no different to them reiterating the importance of customers voting for the scheme, then them moving on to the importance of relending approval.
They wanted the nice fancy package because they had tike on their side, now time is ticking they meed to just get the package toegther that puts the 15m into the scheme
Its not even being positive. Its just pointing out that the risk has always been there... the fca risks have all but fell away so the final risk that ****s this whole scheme up is them failing to raise... and I can't believe after being let of a 72m fine that they can't find some support
The regurgitation of the wind down wording could just be a note to new investors. We always knew that, the fact they say its from last year and this is just discussion only... strange thing with all of this is that if they were a bit more positive a higher sp would mean more could potential be raised through RI...