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Another thoughtful piece, AdamAnt, which I read, metaphorically of course, in the comfort of enjoying "the smoking of my pipe" and, so it would seem, no worry of ending up with worthless shares contrary to all repeatedly thrown at us by our resident prophet, not!!
There remains much intrigue and mystery over yesterday's, if not also earlier, events, particularly as to the seller. Yes, there is plenty to suggest included Schroders remaining 46M to which would needed to have been added a further c2.6% from one or a combination of other non disclosable holders. If, however, it was truly a single transaction there can only have been one source!!!? Against it being S, can they really have thought, when things were clearly going to be hotting up, this was such a poor investment prepared to take a hit of c20p (reassessed ave pps @ c50p) = £11M+ (out of c£28M) - somebody might be looking for a new job if that is the correct scenario.
One also needs to accept the realisation that the seniormost members of the family won't be with us for ever and a day and if there is no realistic family succession (JA?) to take over the helm why not have some foresight and look to form fresh relationships/collaborations that could better maximise the family wealth with some new thinking - sooner or later the block of control has to be broken up if there is no family to carry on, so why not prepare for a more orderly dissipation. Like or loathe his business methods, Ashley hasn't made a bad job with the value of Sports Direct/Frasers Grp. so if he can bring a different approach to what seems to have become a sort of stagnating business why not. After all I did say in my Post headed DISAPPOINTING (12/01) after last set of results .".......... needs some rocket boosters putting underneath it to try and unlock the apparent latent undervalue - maybe time for a Mr Ashley to enter stage left ......." I am not suggesting somebody heard me but on the face of it there isn't going to be much positive happening here, as is, for the foreseeable future or that as it seems to be to me.
All the speculation may start to unfold as early as 07.00 on Monday morning - set your alarms!!
As of 20/02/23 Shroders only held 46M shares = 9.985% (apols for misquote in last night's post) and I am not aware of any other disclosable holdings, so, if transaction involves the Alliances which side of the fence would they be on!!! 57.9M = 12.57%. One could now conclude something is going on but what!!
Thanks AdamAnt, it is good to see others expressing their thoughts and views in a coherent reasoned way and offering up proper challenges for debate. Yes, I may have been a little strident with some of my earlier comments but that, in part, comes from being irritated by the throwaway lines we frequently see from those who never put any flesh around or in support of their utterings, thinking what they say is gospel albeit unvalidated. And some, like claiming shares not owned by the controlling family would be worthless in the event of going Private, sounded like trying to panic the uninitiated into selling.
Of your posers maybe 1) & 2) are related in that it wouldn't be the first time a CFO has been outed if led up to the disclosure of some negative financial news especially if they were leading or prominent in what proved to be a disappointing outcome, and coming to pay nigh on £50M, certainly in my eyes, comes very much into that category. And the old statement of leaving to "pursue other opportunities/activities" is also often a euphemism for reducing the embarrassment for being booted.
Shroders position is an interesting one, as well, and difficult to fathom given :
- built up original stake July/Sept 20 with probably an average price of 40/45p
- prior to OO held 12.03%
- post OO, as per 2021 AA, held 12.35% implying took up all of entitlement, and a little more, @ 57p
- putting all together ave price of accumulated holding, at a rough guess, c48p
so now selling out at lower than perceived cost opens a few questions but portfolio management is often based on a mix of reasons.
That leads to 3), one plausible idea being the Alliance family have taken advantage of mopping up some unexpectedly available shares from a friendly source because consider cheap against a reasonably strong Balance Sheet even post the Allianz settlement though one needs to be mindful that trading is not exactly sparkling at the moment. Whilst one can also see could be considered a "defensive" move, maybe not so, as their biggest defence is that already control c60% so any potential onboarder has little chance except by acquiescence.
As to going Private, yes, with Shroders present 11.38% could get near to the magical 75% mark but somehow don't see that happening, not at the current SP given ones view of S's cost price and perhaps the muted motive for moving to AIM.
So having chewed the fat over many imponderables we must sit tight, like mushrooms in the dark, and wait to see what the future brings - hopefully an ever improving SP and a long lasting entity as a Listed Company. Oh, and no more one line numpty comments!!
Peakybinder on this Board & currencytrader1 on ADVFN sound like parrots given extremely close proximity of some of postings. And on the latter what a load of aimless/baseless utterings made by all sorts.
If so informed/knowledgeable I would welcome hearing, even with the Alliances current level of shareholdings, how it is thought they are going to take this Private and delist when need a min of 75% to do so. Do you think other shareholders are going to act "like turkeys voting for Christmas" to end up with "worthless" shares, as it is put. In any case, if that scenario arose wouldn't suddenly become absolutely worthless just not as easily tradeable. On the other hand, to acquire the necessary further 15% would cost another £20M+ assuming all could be picked up for no more than current SP, an unlikely prospect if trying to buy c70M shares either in a friendly manner or through the market.
Seems to me that, for many, the words ... brain ....., if have any, and .... putting into gear ....... need coordinating so as not to spew out some of the tosh I have been reading but, there we are, the sad world we live in where words are thrown about unintelligibly albeit trying to suggest to the less informed that are knowledgeable and should be listened to. This gives rise to Bulletin Boards at their worst.
Over the last 1/2 months there have been the following players in the market :
FRASER GRP/MIKE ASHLEY - a Disruptor or Spoiler, who knows!! He has in the past bought/sold or traded shares, often it seems at a whim but , currently, speaks for c5%. Intentions anybody's guess.
SCHRODERS - a long standing holder, have just dropped a little over 5.4M shares and now hold a round 50M (11.38%) which strikes me as a nice sticking/hold position. Interestingly, its 2 recent sales coincided with Lady H picking up similar amounts i,e 875K 13/01 & 4.5m 18/01 so looks as if friendly disposals - hardly likely to be giving away stock if something else known to be imminent which would escalate SP.
ALLIANCE FAMILY : at time of OO, late 2020, Concert Party (Lord A [40%] with brother Nigel, other family and close associates) ascribed as holding c52% since when Joshua has acquired c6.5% and latest buying (9.245M shares) of Lady H has picked up another 2%, so looks as if Family now control about 60%
Regarding the latter/the family, if you accept the move to AIM was an IHT ploy, why would you now, having just gone through the 2 Year Qualifying Period (ended 23/12/22) want to go Private or sell for cash/take on the ineligible shares of an acquirer to lose that benefit and then potentially have to pay up to 40% unless have mitigated in other directions. On the face of it these suggestions do not make sense. And if they did want to go down this route and say pay 50p per share (x460M) would need to raise finance of c£100M to buy out minority. With interest rates currently at their height, probably costing £5M+ p.a + repayments that would need to be funded out of a business, with not, in my opinion, the capacity to do so, at the moment, sounds an unlikely prospect, all round.
Looking at events I get the impression Shroders's selling was probably more part of some portfolio management activity and picked up by the Alliance Family as a protective measure from the likes of Ashley's possibly unwanted overtures Furthermore, I am also with Brighty's view are not going to throw the IHT manoeuvre away having just gone through the threshold. Maybe, then, some of those who make unknowledgeable sound bites, as if they can smell what is (actually isn't) coming should do a bit more thinking before go to the keyboard.
Finally, remembering DA is 91 & NA 88 the most likely scenario, to me, is nothing will happen with the family shareholding until one or other of their demise, more likely the former, and thereafter all will depend on whether JA wants to follow in the family footsteps and come to head the organisation. We could be waiting a year or two, yet!!!
DISAPPOINTING - quantum of Allianz settlement
DISAPPOINTING - outcome and woolly narrative of Trading Update
DISAPPOINTING - if viewed as a barometer for progression, level of unsecured cash position which is effectively unchanged from 12 months ago and as at Interim Report stage
DISAPPOINTING - share price decline of past months and especially against Open Offer of 57p 12/20
DISAPPOINTING - the ever distancing prospect of Dividend restoration
And some sound contented!!
Whilst business looks unlikely to fall over in the short term needs some rocket boosters putting underneath it to try and unlock the apparent latent undervalue - maybe time for a Mr Ashley to enter stage left but against the shareholding strength of the controlling family difficult to see how in a meaningful way.
o0owill it is clearly good management to maximise ones finance by using less productive cash balances, when not immediately needed, to keep other interest costs lower/improve margin by, temporarily or otherwise, reducing debt facilities but my point was about the comparable cash/resource availability from one reference date to another in a simple mathematical calculation to try and judge operational performance.
In the Interim Report RNS clearly states as at 27/08 had cash of 47.2m + Unutilised Sec Fac of 45.5 = Cash/Resource Availability of 92.7M over and above other designated unused facilities (100M). Today, state, as of 31/12, had Cash of £82.9M = disclosed Cash/Resource Availability of 82.9M over and above other designated unused facilities (112.5M). As have not,on this occasion, specifically stated what the status regarding the Sec Fac is, not unreasonable to assume now fully drawn or with little meaningful to spare, So, if I am correct, and all else has remained the same between 27/08 & 31/12, there has been a cash outflow of c10m (92.7M v 82.9M which, with the latter, includes what has now been fully drawn out of the Sec Fac, ) which further suggests in the last 4 months have not generated any cash from trading operations, indeed the reverse. If, however, still have 45.5M, or some worthwhile part, of available Sec Fac to draw and also have accumulated Cash of 82.9M, must have had a stonking/pretty reasonable last few months and generated anything up to 35M, way above previously forecast numbers. I would sincerely hope the latter is right but in the most recent environment ...!!!?
My thought is that the 82.9M includes a fully or largely drawn Sec Fac pulled together to pay the nigh on 50M to Allianz, otherwise would have had to draw on other unutilised facilities. Only c60 hours to find out.
Whilst clears the deck I would have thought the quantum being settled disappointing implying principal culpability. As to cash position, yes, currently affordable but is it as strong as some think, when looking at comparisons :
27/8 31/12
NET CASH 47.2 82.9
UNUTIL'SD SEC FAC 45.5 Not Disclsd
UNDRAWN BANK 100.0 112.5
TOTAL 192.7 195.4
Were projecting Adj EBITDA of c£30M H2 suggesting should have generated add cash to end of year of at least £20M but if the previously unutilised Sec Fac, which has not been separately mentioned, is now fully wrapped into Net Cash have actually created little or nought last 4 months. Could be smoke and mirrors - ANSWER - 07.00 Thurs 12/01/23
Wasn't exactly made easy to participate in the RO - my WM, despite their pedigree, wasn't "qualified" to effect an order with this bunch. The way it was all set up strikes me, like everything else recently, as if PI's were being regraded as an irrelevant inconvenience to be ignored as much as possible in the process, so I'll take my chance in the market foray next week to see if I can get some cheapos to try and help towards redeeming a sorry tale.
Would have been "unambiguous" if had said ....... all agreements ....... whereas says all ...... underlying material .... which is, in my mind, a qualification. Some might say semantics but nonetheless, in its truest sense, I read it that there are still things to complete. Little spanners and all that!!!!
https://www.telegraph.co.uk/business/2022/10/22/mike-ashley-snaps-stake-struggling-asos/
As scattergun as ever or part of a devious plan? Where does this lead to in respect of BWNG - anybody's guess!!
https://www.telegraph.co.uk/business/2022/10/13/boots-sales-boosted-new-own-brand-viagra-rival/
Interesting article - at least shows still plenty of demand, or things are on the rise!!! Mind you, with pharma you never know what is around the corner, so hope we don't get to the party (too) late.
https://www.thetimes.co.uk/article/frasers-group-grabs-stake-in-fashion-retailer-00zxq0bc0
Interesting/intriguing!! Whilst retail has its challenges at the moment you would, in my opinion, hardly call BWNG a distressed business or a broken project so maybe an attempt to get into a "decent " underlying business at an opportunistically low price and use as a platform for his next venture. After all, with Ashley having himself stepped back from Frasers/Sports Direct, people like this don't then sit around twiddling their thumbs doing nothing.
On the other side, do the Alliance family really want cash at this time, remembering, if the theory is correct, part of the move to AIM was an Inheritance Tax manoeuvre, the 2 Year Qualifying Period not coming up until 23/12/2022. So can't see them wanting to liquidate now or indeed in the near future if trying to stave off filling the Exchequer's coffers unless have used other techniques to mitigate potential death tax liabilities.
One to watch, hopefully for the benefit of my pocket, also!!
Depends what is meant by .... "more security ....." or as the RNS says .." a preference for physical asset backed security". Under "financial assistance" as per The Companies Act a company's asset(s) (cash or property) CANNOT be used for or to back finance being raised for the acquisition of its own shares. Consequently, anything owned by Iron cannot be used by Grosvenor to in any way facilitate its equity injection, they must, therefore, provide some external security of their own to satisfy their proposed lenders. No wonder this deal is getting ever more complicated.
I have only held stock for the past 12/18 months and have only looked at more recent and immediate past history but, coming from a banking/finance background, I have often wondered why, if hold such a valuable mining asset, hadn't been able to organise own finance for extraction operations (maybe somebody with longer knowledge may care to elaborate). Equally, if, and after this length of time remains a big IF for me, Grosvenor could get finance to put money into Iron why not the company doing it directly itself!! Always seemed a bit of conundrum, to me.
With in ground mineral value and a smelting facility in hand surely have enough assets to sort out own finance, the question being would Grosvenor's (or alternative finance) £8M be enough. With £5M deferred over 10 years, needs before any sales monies come in would look like this :
£M
- initial outlay 0.75
- Refurb costs 3.20 (max)
- operating/extraction costs + working cap ?????
(8/9 months min/possibly 12 months to be safe)
If 9% of existing shareholders are convinced have a viable deal to proceed to operations, going down the equity raising/loan capital route would seem the most logical, so away with Grosvenor I would say - they have had their chance/maybe they were just used as a "stalking horse" in the first place!!! The only caveat is that ALL shareholders be given the opportunity to participate in any fundraising and not just a Placing with/for Mates. Any other thoughts?
Even in financially straitened times and with general economic pressures, EBITDA of say £85m FY 2023, positive cashflow, reducing debt Y on Y, bags of cash/facility capacity doesn't sound too bad, hardly striking one as a dummy business. Maybe doesn't have the buzz or supposed glitz of an ASOS or Boo (well that might have been the case until more recently!!) but staid could prove to be better longer term. Whatever your view, surely all can't be as bad as being portrayed by the market. And if one is concerned about peoples abilities to purchase product with tightened pockets, think on this - buyers with less spending power are more likely to move down the value chain and purchase more at the lower end(s) of the market than be able to continue to afford higher quality/cost goods which could be more an opportunity than a negative. Time will tell!!!
Should have had £1m put into a Non Refundable Escrow Account which would shown there was real intent/focused the mind and the pocket - poor negotiations!!!
This BB goes from bad to worse and has become like children in a kindergarten - all akin to throwing tantrums and "crying to Miss". 29 posts today and barely a stitch of substance or investment value spouted. Grow up the lot of you and for some less of the self gratification/adulation, it gets tedious. Informed information is what these platforms should be used for not the banality of late.
No wonder these Boards get inundated with unnecessary comments/messages when one reads some of yesterday's postings .........
1) "... So what is actually new today ? Surely the deal was already signed ...."
In this respect RNS 21 December says ....
" .... agreed subject to contract .... and "..... which if completed ...."
so perhaps being told, as per RNS 27 January, ...... "the Luge transaction ............. has now been finalised and signed." is a fundamental change for the better!!
2) ".... looks more likely deal will be signed ...." and " ....... I'm inclined think more probability of being signed off."
As per above did not yesterdays RNS say ...."now finalised and signed" ..... so what more do you think Iron have to do - to me nothing other than await payment.
Keep abreast chaps.
Looks like the rabbits are staring at the headlights again and being frightened to death!!! Yes, a nice earner for the provider but ask yourself would you lend somebody something if you didn't think you were going to get it back, assuming you intended to see the loan drawn against, in the first place. The wise don't wantonly throw money away especially when not asking others to share the risk.