Member Info for BlindPanic

Hammo with 11 posts criticising a newbie!! Anyway - it seems to be getting a little tetchy on here. Be under no doubt these HSG directors will never get appointed. I asked a reasonable question about what they expected to achieve if appointed and the answers amounted to "ask some questions". Well that's going to make a BIG difference to the outcome isn't it. Come on. With all the illiterate venting of spleens on here this afternoon there must be someone who can have a better stab at an answer or even explain why shareholders should receive any recovery from their investment in this massively insolvent company? As a starter for ten the business is worth about £500m and has debts of £2.3bn so shares are worth how much? Tick tock....

Hello Piler you seem to be a bit bored and having to keep replying to your own emails so thought I'd join in. Am interested what you thing Big Bad Bob should have got out of the lenders for the shareholders. You see he had absolutely no bargaining power and was up against much smarter and more aggressive adversaries. It really wasn't a fair fight. Realistically to do an admin pre-pack at the group level will cost less than £1mill so would you have settled for that?

Khan - there's no need to be rude about KNIGELK having sold his shares before suspension ;) I'm doing some travelling on business and have too much downtime so it's either this, the Leeds United chat boards or the bar! I'm off to the latter now but keep your chin up. The truth will out and all that. DYOR as they say.

Jumeirah - I am absolutely certain that they have D&O insurance. Still need proof to make a claim though. Thee is a difference between incompetence and negligence. I think they are bang to rights on the former (which is why shareholders should have booted them out long ago and appointed a hard nosed restructuring guy) but the latter is much harder to prove and I don't believe you need directors on the board to investigate. It's simply not going to happen unless there are shareholders out there with cash to front it.

KNIGELK - I'm definitely not on the side of the BoD as I think they are a bunch of clowns who have wasted tons of money chasing Pocock's blue sky dreams to be a serious challenger to Google and a whole plethora of stronger, smarter and better financed businesses. They should have read the writing on the wall sooner and run the business hard for cash to squeeze out what they could. The paper debt 'haircut' is meaningless. When the lenders own the company they can choose to leave all or none of the debt on the balance sheet or somewhere in between. This is a balanced approach which shows some deleveraging whilst maintaining an effective tax shield I would imagine. The more important figure is that the debt is priced around 20% of par meaning that lenders really expect to recover around £500 million (and thereby lose around £1.8 billion). Doesn't matter who owns the debt now 'lenders' as a whole have lost this amount. As for the rights issue - I rest my case. Who in 2009 didn't see the end of this kind of business? Obviously the shareholders.

KNIGELK - the clue is in the words "to the greatest extent possible" ......... You're getting what the law entitles you to. How can you not understand that?

Piler - lenders have done this before (HMV, Mouchel, Connaught, etc, etc) and the law says they owe shareholders nothing. Put it the other way around - if the business was going great guns and shareholders stood to make super profits would you say to the lenders "tell you what as well as paying you back your £2.3 billion here's another £24 million for free"? No, didn't think so. Remember the lenders have lost over one and a half billion on this. My money is on the HSG directors never getting appointed. The lenders can't afford to have out of the money stakeholders dictating their outcome. As harsh as this seems it is reality backed by the law and the directors have to abide by the law in the face of this scrutiny. Instead of complaining about corporate misdoings shareholders need to take a reality pill. This company has gone the same way as ALL of its European peers. Doesn't that tell you something about the business model and it's suitability to high leverage or all they all guilty of dirty deeds as well? Owners of an insolvent company have few rights in law. And that's what you are I'm afraid.

A six year old article on something that has not transpired into reality isn't gong to bother anyone. Do you think that you can convince a decent law firm to take the case on on a contingent fee basis?

Wongini - it's not a sham. Shareholders invested in a company with massive debts and a declining business model (and arguably poor management). When this happens this is often the outcome (ask Guy Hands). There is a clear rationale for the lenders taking over and being in charge of their own destiny and there is no requirement for shareholders to receive anything. If you've a cogent argument as to why things should be different then I'm all ears. I don't think the lenders will be fearful of admin. It should be isolated to the holding company and not the companies that customers and suppliers actually trade with. There are plenty of precedents for this where the damage to the business is negligible. Customers and suppliers just don't feel as passionately about this as you do. Shareholders to Mouchel thought admin would prove a death knell but I hear it is doing very well under lender ownership.

They'll put it into admin because they want to get the restructuring completed. The appointed insolvency practitioner will investigate as I've said but if you want to fund something separate then that's your prerogative. I would just caution anyone who thinks this will change the financial outcome for shareholders. You won't get a cent unless you can sue the BoD personally. Which, if they've done wrong, I hope you do.

Firstly, I come here out of curiosity. I'm interested in why people would invest in this pup when it was clearly heading towards insolvency like all its European peers. I'm also interested why shareholders think there is some sort of special case here and somehow they should be compensated for their losses when basic research would have mitigated or avoided them. It's a public forum so I presume a reasonable place to explore these points. Secondly, as I have already posted the shares in the US business are pledged to the lenders as security for the debt. This means that the BoD would need the lenders approval for any sale and all the proceeds of any sale would go to the lenders. The price you suggest would give lenders roughly a 50% recovery on their par debt when that debt is trading at about half that level. Therefore I'm willing to bet that there was no real prospect of a sale at that price. As for Polaroid, I have no idea as I don think it is relevant to what happens to Hibu. If you have evidence that the BoD of either company have done wrong then sue them. Still waiting for someone to give a credible explanation of what the HSG expects to achieve by getting directors appointed to a massively insolvent company in a legal environment where shareholders have no right to any control over the outcome.

Thanks Piler. I think the current BoD concluded back in the summer (far too late in my opinion) that the company/group had no prospect of being able to repay or refinance the debt as it fell due and were essentially forced to accelerate talks with the lenders. I think this is actually one of the least incompetent things they have done. During those discussions the lenders will have made it clear that given the current and future valuations of the business there is no prospect of equity value and they expect the directors to do their duty and protect the value of the creditors. The lenders are offering to buy the business for the value of their debt and the directors will have concluded that no one else would be prepared to offer a better price therefore the directors have no alternative but to sell (or hand over) to the lenders. As I said I think the directors have been poor in their strategy in recent years but in his final episode they are being properly advised. As for putting "the whole group into admin" I don't think that will be the case. They should be able to do this at a holding company into admin and then the administrator will sell the businesses beneath to a lender owned SPV. The fact this hasn't happened yet suggests to me that the preparation hadn't been done quickly enough (there are many tax and structuring issues to work around in this kind of thing) but there will generally be a way to get it done and I'd fully expect it to happen before the 4th. The BoD simply have no alternative. If you want answers about the conduct of BoD then insolvency will require the IP to prepare a report on the conduct of directors including conflicts of interest, previous decisions made, etc and that may enlighten you. You can also launch your own law suit against the directors if you so wish. I'm sure the prospective HSG directors have a plan don't they?

All that rant and you haven't answered the question. I am certainly not pro the BoD and have stated that I think they have been incompetent many times on here. I also warned that this company would end up here in August 2012. Did you listen? Did you? Nooooo to busy with your head in the sand not doing your own research. So, I still appeal for someone, anyone to put up a credible and plausible answer to the question. In light of the corporate and insolvency laws in this country what will the HSG directors ACTUALLY achieve. I have no other reason to ask this question than an interest in the broad topic and a strong belief that people are joining te HSG in the belief that it will make a difference. Maybe you should get Guy Hands to talk you through his EMI experience and explain why it won't.

"Quite simply a better job than the old directors." doesn't answer the question. WHAT will they ACTUALLY do? If they don't change the course of the Financial Restructuiring then they won't be part of the future of Hibu. The running of the business will be down to the new shareholders and it is up to them to operationally restructure the business. I don't think they'll be too worried about this as they have run plenty of non-banking businesses between them. Come on, surely someone can do a better job than this (one of the prospective directors maybe - there must be one on here?). What are you ACTUALLY going to do that is going to make a difference because I'm willing to bet that it amounts to nothing.

Other than asking the old BoD questions about their personal dealings, etc what will these people actually do? Please don't say "drive a better deal for the shareholders" as that's not going to happen under our legal regime. Something a bit more intelligent would be nice. Interested in what advice they have had about being directors of an insolvent company and the laws around wrongful trading as well.

Because I've a feeling people are being misled.

The HSG resolutions WILL NOT delay the restructuring. Either the lenders of the current directors will appoint an administrator to transfer ownership to a lender SPV. The lenders have nothing to fear from HSG as you cannot hurt them. Your anger should be directed at the BoD over the last 3 years. They are personally worth more than the market cap on suspension so you should be going after them if you can prove wrongdoing. All this HSG stuff is a charade. Read corporate and insolvency law and tell me I'm wrong.

How could it possibly be in the best interests of "creditors of all kinds"? Please explain.

Well Forest Gump ended up a very rich man so if the cap fits..... I don't know all the statements made by this board but I do know that a bit of simple research around the market and this company's financial position might have led you to bail out sooner. Mind that would have required some schmuck to buy this so who knows. I guess a market needs all kinds. Anyway, if this bunch have done anything illegal I hope you take their houses from them.

32% of value of lender debt is not a credible level to achieve anything. I haven't seen that but I would be surprised if it were true. As for BW if he has indeed bought debt then that would be most unusual and certainly worthy of explanation by him. Not sure it is illegal though. He would, of course, have needed to have a fronting organisation to be the lender of record as he couldn't have held it as a LoR as an individual. He certainly wouldn't have had a seat on the lender co-com but probably easy to argue a conflict of interest. As for MP selling the US business. He would have needed lender consent for that I think as shares are charged to lenders. It wouldn't have changed outcome for shareholders. If the HSG can get these guys on a charge of misleading information then I suspect few will shed a tear but I'd expect they have been well advised along the way. Goldman, Greenhill and Herbert Smith aren't cheap!