Member Info for BlindPanic

I totally respect the rights of anyone to pursue whatever crusade they want to in the interests of getting explanations. At the end of the day the HSG members are paying for that right. I guess the concern would be that those less savvy get dragged in on some fake belief that they will recover back some of their losses. Judging by some of the comments on here some people shouldn't be allowed to play even with their own money (I cite the dude who stated that if a PLC CEO or chairman said that his company had discovered the cure for baldness he would invest without doing any other research!!! It is no wonder the likes of Madoff and Stanford find such easy pickings). I guess those people need protecting from themselves! Anyway, I think the answers to your points are: 1) Because the directors had concluded that the trading outlook would not improve and that they had no ability to repay the debt when it became due. To delay taking action in those circumstances would have left them open to legal risks personally. 2) Basically same answer as above. They were merely recycling assets that belong (now) to creditors and they were never going to reach a sustainable level on that basis. 3) There is no legal requirement for anything to be offered to shareholders. The lenders have lost billions on this and some probably feel like the shareholders deserve nothing on that basis whilst others will take a more big picture approach and will have thought about a "consent incentive". I've said before that the GS team on this was the same team that advised the BoD of Mouchel where they went through all the rigmarole of making an offer to shareholders (with all the timing delays and costs) only to have it rejected resulting in a pre-pack admin anyway. I suspect that experience coloured their view somewhat. At the end of the day it sounds like we're going to end up with that outcome anyway. Simple problem here was that this business couldn't be turned around in the face of stronger, more agile competitors. The lenders saw this a long time ago hence why the debt has been trading at a heavy discount to par for years. There really is a clear signal for shareholders when that starts to happen...

I'm pretty sure the board will have concluded that the company has no alternative to insolvent liquidation and therefore to protect the interests of creditors they will have to place the company into administration. That will be their legal duty. Haven't trawled through all the coverage on this but I'd expect them to have made that clear.

Hello all. Haven't been here for a whole but thought I'd pass by in a moment of boredness. People on here clearly haven't taken my advice to look at the insolvency act and directors duties. Hibu is insolvent. Simples. That means it can't pay its debts as they fall due. The directors of an insolvent company must prioritise the interests of creditors in that situation to minimise the losses of those creditors. If they fail to take action they face charges of wrongful trading and being liable for the increased losses of creditors. The BoD may be incompetent (they massively misjudged the market and their blue sky plans) but they were certainly well advised and couldn't have kept this charade going any longer. At the end of the day if any shareholder can put up a cogent arguement as to why and how the business will ever be worth more than the full value of the debt then I'll donate £100 to Help for Heroes. The lenders are looking to get back as much of their debt as possible but none of them thinks they will get it all back. It is true that the lenders could have offered the shareholders a token amount for consent but they tried that on Mouchel and shareholders threw it back at them and let the business go into admin. The lenders can put the holding co into admin and flip it into a lender owned SPV if they need to. Be absolutely clear that English Law prioritises creditors rights over those of shareholders and there is nothing you can do to hurt them. BoD could have thought about using Chapter 11 in US which would have given them more control but I suspect the same outcome would have prevailed. Move on this body is starting to smell.

OK - how do you know?

hibu turns down meeting with activist shareholders 09-Oct-13 hibu shareholders claim to have been snubbed by the company's board of directors when they tried to meet over concerns about the former Yell Group's restructuring, reported the Reading Post. Barry Dearing, the solicitor for the hibu Shareholders Group ("HSG"), said he was told to write to the firm’s lawyers when he tried to open up lines of communication with the directors of the debt-ridden business. The group is concerned about hibu's restructuring which aims to cut GBP 2.3bn of debt, resulting in no payment to shareholders and no value of shares, said the report. Dearing told the Reading Post he was rebuffed when he approached company secretary Christian Wells with matters he sought to take up with senior director Richard Hooper. Rather than receiving a response from the director, hibu’s legal advisors said the company was not in a position to meet with him. The company maintains it has kept shareholders fully informed in all formal communications, added the article. Dearing said that the HSG will now request an “extraordinary general meeting” of shareholders. The group holds about 30% of hibu's share capital, according the Reading Post. Last year, Dearing campaigned on behalf of shareholders of loan company Cattles, and secured a GBP 16m payout for shareholders of that company. Source: The Reading Post Size: > 300m (GBP) Grade: Confirmed Stake Value: N/A Intelligence ID: 1671734

So you invested solely on information provided by the company and none of your own research? Is that wise? I'm a Yorkshireman myself and much more careful with my money than that. I guess I find the whole thing interesting in a social experiment kind of way. I could explain to you what the snake oil salesmen of the Wild West were but think it is about time you DYOR....

Nope. Lets just say I'm taking pity on the uneducated. Particularly those vulnerable enough to be persuaded to throw good money after bad by the snake oil salesmen of the SHAGged.

No economic interest in this situation for me - a bit like the shareholders really! I think you'll find resistance from a load of uneducated protesters will turn out to be futile. What makes you think you are a special case compared to the hundreds of other companies that have ended up owned by their lenders because they borrowed more than they could repay? If you'd bothered to do your homework you wouldn't have ended up in this mess. As for the MPs - don't make me laugh. Bandwagon jumping. I'll bet not one of them knows the legal priority of creditors versus shareholders. And let me tell you one more thing. If you think shareholds should benefit at the expense of creditors how the hell do you think that is good for those thousands of businesses out there that rely on credit from lenders, suppliers, etc? If creditors get treated like shareholders then they will either not give credit (causing more businesses to fail) or they will want equity like returns for doing it which isn't in the interests of shareholders in general. So the Hibu shareholders should just take their medicine like hundreds of other shareholders before them have done, move on and learn from the experience instead of crying like babies that it's not fair.

But do you understand the difference between shareholders and creditors? When you put new equity in at the last rights issue didn't you understand that it would only have any value if all the creditors had been paid in full? I'm sure some on here fail to grasp this basic concept.

An auction of Hibu’s (previously Yell) term loan A is due to take place this afternoon (19 September) at 2pm, according to two traders. A USD 30m equivalent block comprising euros, sterling and US dollars is being shown by a number of banks, added the sources. A chunk of the TLA was on the block in April, when RBS roadshowed a GBP 20m piece at an asking price of 17/18, as reported. Over the past year the UK directories business has undergone a painful workout process, with the deal to be implemented via a UK Scheme of Arrangement, as reported. Hibu’s post restructuring debt will total GBP 1.5bn, split into a GBP 580m five-year bullet cash pay loan and a GBP 920m 10-year bullet subordinated PIK. The cash pay debt includes GBP 500m of debt sitting at the UK/US entities and GBP 80m at the Spanish entity level. The facilities will be denominated in GBP/USD/EUR and split pro rata based on existing holdings. ------- Banks selling their debt for 17/18% of face value. And shareholders feel aggrieved!!!!!

Judging by a number of posts on here some peeps don't know the difference!

You're buying a share in a business for a price. Before doing that shouldn't you think about whether that is a fair price? The same principle applies to deciding whether/when to sell. BoDs are legally truthful (most of the time) but that is no basis on which to invest. If you don't know what you are doing then you're likely to lose money. The banks have taken massive losses here. They lent £2bn+ to this company and they are going to be lucky to get back 25% of that. BUT the business still legally owes them £2bn+ and it can't repay or refinance that amount. This situation happens regularly in the private equity arena (ask Guy Hands about EMI) so again simple research should have pointed the way. Personally I think this management team is incompetent but that's not a crime. With a business worth less than 25% of its liabilities how should this have been avoided?

Please explain to me how this company was going to MEET the repayment of its £2bn+ of debt in 2015? Those are the only numbers that matter. I'm betting you can't because that is the reality of the situation. The company was insolvent and that made the BoD liable to the lenders for increases in the losses and criminally for wrongful trading if they had ignored the fact and kept the charade going. How could you ignore the signs when they were so clear. ALL THE EUROPEAN PEERS HAVE ENDED UP BEING TAKEN OVER BY THEIR LENDERS.

Relying purely on RNSs rather than doing even basic research of your own? The "scheduled" debt repayments were tiny in the short term but basic analysis would have indicated that with earnings on a one way decline there was no chance of being able to repay any meaningful proportion of the debt when it matured. Other basic research would have shown that the same fate has befallen all of the European peers. This might suggest that the leveraged model is no longer suitable for this kind of business. The definition of Insolvency in England is that a company has either: 1. An inability to meet its debts as they fall due; or 2. A deficit of assets over liabilities This company failed both tests and therefore the BoD were at risk of wrongful trading if they didn't attempt to address the situation. One of the ways to deal with that would have been to have filed for insolvency another would be to enter into discussions with creditors to restructure the debt. They have chosen the latter. The RNSs were able to be read in more than one way but only people who shouldn't be investing money would have taken them as a positive indication in the face of overwhelming evidence to the contrary. What really worries me is that some of the simpletons who invested in this will be exploited into throwing good money after bad.

No way would they offer 6x the current share price. And particularly not to incur all the costs and delay of a circular only to have it rejected as in Mouchel.

Maybe they should if there was a credible alternative to the same outcome other than just waiting. Fact is there wasn't.

Indeed I do (or did). I was agreeing that his (or her) maths disn't stack up and making a cheap shot that this is how that kind of maths got them where they are today. In fact I was wrong since Mille had undercooked the calculation by 10x I was the wrong way around. In convincing lenders and shareholders to invest in this pile of crap i think the management must have inflated their maths by 10x ........... oh no I've just fed the SHAGged bunch another conspiracy theory!

Lemmink - there is always going to be debt left in a situation like this partly due to maintaining a tax efficient capital structure and partly because many lenders will want to take the minimum possible write down on their debt positions. Don't disagree that not all current lenders have lost money as depends on their entry price and that there is arguably some benefit in retaining a listing. I think the Mouchel experience (failure to get shareholder consent for a shareholder payout) caused the GS team to change tack here. Not really surprising if comments from shareholders on boards like this are really reflective of the masses. They just don't get it.

Far easier to have offered shareholders a small amount to agree to a consensual deal. HOWEVER, that is exactly what the very same advisory team at Goldman Sachs did on Mouchel entailing a shareholder circular, EGM, vote etc and it got rejected so I guess they are avoiding that delay and cost this time. Make no mistake though the lenders will ONLY offer the shareholders anything for a more convenient implementation route not because they feel sorry for them. Fact is they don't and they have lost far more money on this company than the shareholders ever have. All the lenders can justify "their proposal to wipe out the shareholders" on simple economic terms - the business is worth a lot less than the debt and that will never change so the shareholders have no true economic interest any longer.

That's the kind of maths that got this thing into the mess it is in!