Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Sorry but I just couldn't let this one pass. You are correct, they have debt but the debt, like all airlines, is against their aircraft. The sale value of those aircraft is considerably higher than the debt. They also have loads of cash just not quite enough to satisfy the Airport authorities and the credit card companies requirements for collateral. That's why Stobart' market value increased so much when they thought they could buy 30% of Flybe for £700k! I hope sanity is restored and the deal is stopped or we'll all be tied up in legal challenges for years to come. Be aware, our esteemed BOD :), who are trying to shaft the Flybe shareholders, are heading your way!
We're all listening! The problem is the BOD is not talking!
So much talk over Flybe being a Going Concern or not. It shouldn't make much difference to it's short term value because, if Flybe were forced to stop trading then collateral would be returned, aircraft sold off, along with any other remaining assets, and the cash returned to shareholders (27p by my best guess). If they were bought with the intention of continuing the business then the same value should be applied. If it's too much of a risk for the buyer at that price then tough! Why should the shareholder subsidise the new owner? I'm surprised that no Private Equity or Venture Capitalist hasn't put in a bid with a view to asset stripping. Or perhaps they have! This comes back to the BOD putting themselves, and their jobs, before the shareholders best interests.
One problem with the government becoming involved. Their interests are not going to be with the shareholder unless the reputation of the Stock Exchange is in question. For them, they'll just want to make sure that a vital component of the UK transport infrastructure remains intact and if that's at the expense of the shareholder then they'll say, all shareholders know the risks of investing in any company.
I wish I knew that for sure and would be happy to bow to knowledge. They just sold two Gatwick slots for £4.5m so whilst they may not own all of them, perhaps some may have value. Who would know for sure?
Searching for the value of Heathrow slots, I found this which may be of interest:
Two recent slot transactions show you how much Heathrow slots are still valued.
Back in February, Etihad paid $70m for three slot pairs from Jet Airways of India. Ironically, Etihad has no interest in using these slots and did the transaction as part of its deal to acquire an equity stake in Jet. They are currently being leased back to the airline.
Meanwhile, last month Delta Airlines of the US revealed in its accounts that it paid $47m last year to acquire two slot pairs. It used these to add an extra daily flight to New York and Atlanta.
These prices are actually well short of the peak prices achieved a few years ago. In 2008, Continental of the US paid a record $209m for four daily slot pairs. Two of these came from GB Airways, one from Air France and one from Alitalia. This deal was done just before the ‘open skies’ deal on EU airlines flying into the US (and vice versa) came into force.
https://www.headforpoints.com/2013/05/18/what-do-you-think-it-costs-for-a-pair-of-heathrow-slots/
Let's no forget that Flybe may not have had enough cash to continue as a going concern but it wasn't broke. Far from it, it had £60m in cash, valuable LHR slots and 78 aircraft. I appreciate it also had debts but its debts were against the aircraft so even if they were all sold or returned, and the slots were lost, it still has the cash. So anything below 27p is a rip off.
I don't mean to be rude but what do you mean by 'All things considered'? Do you know something? Because 'All things' is exactly what we're trying to find out!
Have you looked at the accounts for H1, do you know what LHR slots are worth and how many they had? Do you know why Flybe was facing problems when they had £60m in the bank? Do you know why they forecast a loss for H2 when they'd made a profit it H1, removed their loss making routes and had seen the fuel price drop?
These are the things I want to know about and BOD hasn't told anyone !!!!
I've been tempted to sell mine, especially when they nearly got to 3p on Friday but I sincerely believe that this story is far from being over and the price will surely rise on Monday. That said, and unless it reaches my average, I still won't sell until the Fat Lady Sings!
I think Hargreaves Lansdown accounted for just over 4% of the shares in issue which included my holding. Of course that may have changed significantly since the announcement. As with many traders, the shares will be in the nominee name of the share dealing service. So, I've asked HL to support the Hosking Ptns action and would urge all other share dealing service users to do the same.
Forget the market value, the fact is, had Flybe gone into administration, ceased trading and sold off its assets, it would have resulted in significant value being returned to shareholders. However, it was worth much more alive and kicking because of its valuable LHR slots. What the BOD did was to totally disregard the interests of the shareholders and, in their eyes, do what they had to do in order to keep the company running. Flybe is an important component of the UKs transport infrastructure and I wouldn't be too surprised if they were encouraged to act the way they did by HMG. Anyway, the reason I'd short STOB is simply because the same thing could happen. The rules have changed, forget all you think you know and take a good long look at your BOD and ask yourself the question, who's interests are they working for.
I'm a Flybe shareholder and have no gripe with STOB shareholders. To be fair, we're all in the same game. Some you win some you lose. To miss the opportunity of an invited smash and grab raid would be foolish and, as things have turned out, it's in the interests of the shareholders of STOB. Clearly, value has transferred at very little cost hence the rise in share price. I wonder if same people who came up with the plan are on your board? In the meantime, I thought of shorting STOB.
Flybe used to be audited by Deloitte, then, back in September they suddenly resigned. The only reason given was that Flybe had put the job out to tender and Deloitte decided not to bid. PwC then took over. We'll probably never know but did Deloitte know something and didn't want to be part of it?
Documents relating to some of the actions of the BOD can be found on their site. I think they've been very clever and have covered themselves well. Let's hope that someone with a good corporate mind can study the detail and find something to base a case on. Unfortunately, I'm no expert but the starting point has got to be an examination of the Articles of Association and the rules defined therein plus any additional agreements that form its constitution. I understand that given the power, the BOD can pass a resolution based on the attendees vote alone, it may not have to be a percentage of all 212m votes. For instance, if the meeting is quorate and two shareholders are either present in person or by proxy, the resolution can be carried by majority of those present. This explanation may not be exactly correct but I believe it represents the basic idea of how the BOD has legally got what they wanted.
Shrouded in mystery for sure. Another equally curious point is the expected losses they'd reported. The accounts report a profit for H1 and lots of optimism for the second half. The accounts also talk about whether Flybe is a 'Going concern' and PwC have added their own cautionary note. But, the difference between a company that's not a 'Going concern' but has significant assets and a company that's worthless are two entirely different things.
And, one last point. The accounts don't appear to mention LHR slots. I'm no accountant and perhaps they're hidden in there somewhere but if the company went into Administration the slots would probably be worthless but in a 'Going concern' who knows, perhaps they're worth as much as £100m??
They were heading for £800m revenue, buying new planes and axing less profitable routes. Make your own mind up on that!
Apart from the 31st Sept accounts where they state £16m ringfenced, I haven't seen anything on how much cash the credit card companies were demanding. Someone on this site mentioned 100% collateral but I don't know 100%of what. Someone else mentioned that the Airport Authorities are demanding companies who use UK airports to have £30m set aside. I've no idea if that figure is dependant on their size of operation. I also don't know who is making the demand, whether it's EU regs or if it's a new demand.
Reading through these blogs, and I accept I'm no expert and have limited knowledge, one point is not being discussed and that's the story behind Flybe' cashflow. I think they had £50m in the bank, but of that amount, £16m had been ringfenced for credit card collateral. The airport authorities and the credit card companies demanded that much more cash be set aside, cash which Flybe didn't have. It's anybody's guess but I'm thinking they needed to have at least £70m set aside, still in their name but cash they couldn't use. So, they sold a few assets and raised another £10m but still needed another £10m otherwise they'd have to stop flying. That means, and never mind the other assets Flybe had, they sold Flybe for £2.2m knowing that they had £60m in the bank. And, don't be fooled, the value of the other net assets were not negative. Sure, they had debts against their aircraft but their net worth, according to their accounts, was actually £108m at the end of September.
If anyone knows of a bank account with £60m in it that I could buy for £2.2m, please let me know.
As I'm sure you are already aware, the BOD of Flybe has deceived us all and have arranged for the sale to go through without a shareholder vote. One could describe their actions as very clever or the only option open to them in order to save the company but we all know that's hogwash. If we knew of the cash flow problems they were facing, a rights issue would have been the obvious way forward. I can see why administration had to be avoided at all costs because the valuable Heathrow slots would have been lost without compensation. The fact is, Stobart, Virgin and Cyrus have gained a valuable asset at very little cost. No wonder the Stobart shares rose so much when the announcement was made. At the end of the day, apart from my cash losses, I'm even more concerned that my trust in the market has been badly damaged. If they can do this, what's stopping any BOD from doing the same? Perhaps I should sell my other shares now while I have the chance. I wonder how this will effect the stock market generally when the story finally breaks? Of course, it's clear now why they chose this week to play this game!
Just maybe, someone with money behind them can challenge what they've done but I'm not holding my breadth!
https://www.flybe.com/investors/strategic-review-formal-sale-process
They've just sold two Gatwick slots for more than twice the sale value of the whole company. That means Stobart/Virgin are being paid £2.3m to take Flybe off the shareholders hands!!!!!!!!
You couldn't make it up.