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Bearraider - the initial coupon (ie 0.875%) is what SMDS paid for the cash, even in these times of very low interest rates that shows a high level of market faith.The bond will trade and the actual yield will be a useful guide to the market view of SMDS's position.

At the moment high speed over copper provides a good enough service for most domestic needs and for smaller business needs, but if we are to plan for a world in which almost all domestic leisure is provided over the telecoms infrastructure (think no aerials, all TV on-demand, the internet of things (IOT) where your 'fridge orders fresh contents when they go off, everybody has a personal assistant , eg Alexa, Siri,all domestic security systems are linked,, all homes have smart meters which constantly monitor and adjust energy consumption and price, your electric vehicle awaits a a signal for cheap energy to start charging as does you self-programmed washing machine , vacuum cleaner, dishwasher etc etc then the existing copper will be inadequate. My guess is that a decade from now all premises will be accessing FTTP and traffic volumes will be many times current.Almost all small businesses will be directly linked to their suppliers, their customers, their accountant and the taxman.Remember the adage that we tend to overestimate the impact of change in the short-term and underestimate it in the long term.
By the end of this decade BT will have probably pulled (and resold ) almost all of all the copper.

HI Steve I think there is a strong likelihood of a divi cut , as its running at nearly 8% although roughly 1.5 times covered . A sharp increase in capex would make continued payment at that rate problematic. My guess(no more) is that a cut to the divi offset by a SP raise might get us to 10p pa divi and a SP of >200p ie around 5%. I would settle for that .

With all due respect Mr Clowes , if you're looking for coherent, rational , informed responses on the current position in respect of investment in SXX you've come to the wrong place, if on the other hand, you wish to write a story about dozens , perhaps hundreds, of naive people who invested in the hope of a fortune without understanding the risks/ probabilities then you may be where you need to be.

Hi folks I have just completed reading a report on UK TELECOMS MARKET DYNAMICS commissioned by the DMCS, as usual with these things it is long, repetitive and inconclusive. BUT what i can draw from it is this:
The report broadly suggests that to get FTTP to 15 mill by 2025(the Gov's stated target) will require "an enhanced competitive model" ie two or more likely three players ,encouraged to build out ~3mill links pa to premises . BT (through Openreach) are clearly identified as the major player with the expectation that they will deliver 60-80% of the service. Estimated costs are ~£32 bill, of which presumably BT will be expected to fund ~£20+bill (cf current cap ex of around £1.8 bill pa.)
I expect the forthcoming budget to touch on this and the associated Bumf to set out these plans in more detail. This together with recent GOV hints at an infrastructure boom is IMV extremely positive for BT's Openreach subsid. and as a provider of broadband services. I expect to see a twin revenue stream , one the direct provision of high speed broadband to BT customers (currently 37% of the market) and second a substantial (though controlled) revenue from charges to other broadband suppliers, primarily SKY (23%)and TALK TALK(16%) who piggy back off the BT network.
The costs of course are currently almost double BTs current annual capex but debt costs are low and debt:capital ratio is manageable.
I am investing here again after selling out a little over a year ago , fairly confident in the medium term future on the back of an incoming Gov under substantial , and self-imposed pressure to shake up the UK's data network . This IMV is one of the easiest "quick wins " available and I expect brisk progress

I suspect that CB holders are buying to close their shorts , but don't worry about them losing money 'cos the 2027 bond which was trading at $40 has just gone to $124.

The reason for the flood of RNs's today is that reporting rules are much more restrictive when in a potential takeover situation, they do not necessarily signal a change of holdings . What they do illustrate is that despite the oft-repeated abuse of shorters most were using shorts to hedge a position in the convertible bonds.At the moment the quants responsible for these positions will be scrambling to adjust for the probability of a sale or the possibility of a fail. Their activities will now be much more in the open than before.My ear to the ground suggests that some might press AAL to repay the CB's at a premium- I think there is a strong chance that this will happen, it will still allow AAL to reduce their cost of capital and to make their potential returns higher than was possible for SXX.
As an aside ,the takeover will be good news for almost everybody except shareholders, the local economy may well get the guarantee of a major long-term employer with several hundred direct employees , many more in support roles , a boost to the local economy , a substantial UK tax-take and the export benefits that SXX had proposed.If AAL choose to lean on the Gov. for a tax holiday or other easements (and in their shoes I would)they are in a good position to get them. All the things shareholders hoped for , except large personal wealth increases, are much more likely than before.

Just listened to the AAL call setting out heir reasons for making the offer.
First, I was stunned by how little research they have done - they seem to have taken a punt on a distressed seller and hope they have bought a bargain.They really do not have a plan other than to take SXX lock, stock and barrel (and that includes all the staff, all the existing contracts and the current plan)
Reading between the lines ,I speculate as follows: they have several big earners in politically unstable areas, they are at risk of currency fluctuations and they are not very "green". Therefore a green product in a stable environment , with costs in either sterling or dollars and sales in dollars is a very good fit for their remodelling of the company to meet the pressures on miners, they postulate a growing population and a growing need for food(as an aside they are wrong , the world pop. is likely to stabilise much sooner than most people think).
They are in the process of transitioning away from coal , probably diamonds and seeking to polish the company image and thus SXX is a good fit .

IBAB in this case It gives AAL a lever to reduce the bid price if bondholders or Gina H play hard ball.As I said I think AAL will be aiming to extricate themselves from the financial shackles on SXX. IMV all such players will probably negotiate the best possible deal and walk. It will also be the case that AAL believe they can drive down build costs by pressuring existing contracted suppliers, after all a contract on reduced terms for the likes of Strabag et al , is better than no contract.

Appy...If the AAL offer is approved then they (AAL) take on all sxx's liabilities and assets . In that case I would expect them to negotiate a deal with all bondholders to pay off the bonds , as they(AAL) can get much cheaper finance. Once such a deal is in place all bonds will be repaid.This is one of the reasons for the statement "reduce the offer by the amount of any dividend or other distribution......" in the "takeover" RNS and is the reason why 5.5p is a probable MAXIMUM.

Yuri My first cut calcs. are based on SXX published figs , but assume sharply lower cost of funds , I estimate AAL can borrow cash at ~3/4% , (they have cut their debt sharply in recent years), they are engaged in a massive share buy back exercise which will significantly improve their ROE,they already have sales, marketing , major customer contacts and thus their non -mining cost will be much lower,I expect them to abandon/sell their less profitable revenue streams eg thermal coal interests ....etc etc
My figs were broad brush estimates and are based on the above and a streamlined , cheaper implementation at Woodsmith . I will do some e more homework and publish here in a while.

Having read some (but not all)of the posts here today I feel the need to explain what is going on.
First the form of words in the RNS is standard " a possible all cash offer " allows both sides to walk away if necessary.
For SXX that would most likely be suicide as, since the review process began on 17 Sept, this is clearly the best (probably only )offer on the table. For AAL it allows them to walk away if any skeletons emerge.I suspect AAL's major aim before committing will be to negotiate a deal with GINA H to buy her out of the royalty deal, even if that cost them a further £300-400 mill that would be worth it.FWIW I think she will bank a profit and walk.
Both parties are no doubt aware that this is the only game in town and shareholders (ie you )need to disabuse themselves of the thought of higher offers , or a bidding war .Remember AAL's big risk is not the cost of buying SXX it is the further~ £3bill to achieve production
The next steps are likely to be a formal offer by AAL for all of the paid up share capital (ie all of the shares) at or about 5.5p to be voted on by all shareholders and requiring 75% in favour to proceed.
If you want to vote you will need to notify your broker of that and he will arrange for your votes to be counted on a one share, one vote basis.BUT be aware that the strong likelihood is that the vote will be in favour, the big holders will have known this bid was coming, will ahev talked to both SXX and AAL and have probably already agreed to vote in favour of a takeover. When that happens you will be paid 5.5p for each share you hold with no dealing costs incurred.If you vote against it will be made clear to you in material yet to be published by SXX that the highly probable alternative is a company winding up in which you get nothing.
Despite all the conspiracists here there is no dishonesty involved , perhaps incompetence , naivety, over-ambition or misfortune but the responsibility lies with yourselves . Investing is hard , it needs hard work , patience and the willingness to understand what you are getting into.It should not be treated as the quick way to a fortune.The naivety of many of the questions asked today illustrates just how little some understand of the environment into which they placed their hard-earned.
I will be investing in the Woodsmith mine again , having looked at AAL I see that a successful bid and implementation of the mine will add (by my estimate) 20-30% to AAL revenue in the years to come and my investment there, upon completion of the takeover, will be aiming to return >50% over 5 years .
I feel for those of you who have lost much money , have suffered great emotional distress and now some bitterness , my final comment , unwelcome as I know it will be, is that I and a few others strove to highlight the risks inherent in your investment, it was ignored.

The best news BT have had for several years is the departure of Sharon White from Ofcom. It is now clear that Ofcom are going to take a much more pragmatic view of how to get fibre distributed across the UK, and if that means that it must allow BT and it's rivals to make a profit then so be it. The nett effect will be positive for the UK as a whole.I expect to see sensible proposals emerge which will speed up Full fibre and 5G roll out and to see BT's bottom line improve as a result. I am adding.

hi folks, i have held RR in the past but sold when the reliability problems with the Trent engine surfaced. They still do not appear to have resolved this with many engines out of commission and the fixes not entirely reliable. In addition they have recently set about streamlining their supply chain with some negative side effects on supplier confidence, they are also in trouble for failing to pay suppliers on time , all I suspect, as part of a desperate effort to achieve their touted free cash flow targets of £600 mill this year and £1 bill next year IIRC . I have them on my watch list and did have a plan to buy at < 700p but will hang fire until better news is offered on the points above (or a collapse of the SP into distressed takeover territory)
GLAH

"Why sometimes I've believed as many as six impossible things before breakfast"- the white Queen from Alice in wonderland, ............. and most readers here.
WADR to Sorcerers post and Shep's repetition , the premise contained within it is fundamentally flawed and is NOT the way prospective investors will asses a position. I'm out for most of the day so haven't time to dissect it, but see my comments last night about the unreliability of NPV's as a basis for investment.

HI wwg.. A couple of points - you are correct in identifying that the cash so far raised and spent by SXX is now far in excess of the market cap (or the cash in the bank) but in truth that is irrelevant, that money is gone and has no relevance to the SP now or in the future. When dilution is considered in relation to an equity based cash raise it is as a dilution of the value of the existing shareholders base, as per my sample calculation earlier this evening.
Similarly the assets of the company , accounted as worth £1.7 billion in the last half year accounts are irrelevant. If I spend £1000 on a high def. TV it ceases to be worth that the moment I plug it in , it is worth what I can sell it for, and at the moment SXX is "worth" ~£250 mill.
Secondly NPV's are, as I have said before, a product of a broker , whose services are paid for by SXX, and who earn revenue from share transactions and such NPV's depend far more on the choice of a few key parameters than any realistic projection of future value.A sharp rise in interest rates could halve SXX's NPV at a stroke, as might a shift in exchange rates , the rate of inflation , the UK tax regime.......
I am not saying that SXX cannot become a successful company, nor that it cannot in time earn substantial revenues and reward investors. I am saying that , at the moment , the risks are heavily skewed to the downside,and unless and until that is resolved it is uninvestable. It is a gamble, as you recognise, a gamble where the odds are getting longer as time passes, and the likely rewards are diminishing as quickly.

Hopo...the clue is in the expression dilution, ie weaker.
If the finance deal includes an equity element ie new shares, probably a significant number(remember all 7 billion existing shares are deemed to be worth ~£250 mill )and almost certainly at a price below (maybe well below )the current SP,then the direct consequence of that should in arithmetic terms be a fall represented by 7bill.x 3.5p+ the no. of new shares (say 7bill ) X the issue price (ie 2p) divided by 14 bill. That works out at a new SP of about 2.7p, and incidentally only produces £140 mill for SXX(less after costs)
Holders have to hope that such an equity issue is accompanied with a clear and affordable path to funding the full build - the relief at that circumstance should engender a SP rally , But from 2.7p you need > 30% uplift to get you back to the current SP. A 100% rise after such a funding outcome would produce a SP of 5.4p. That's why the optimism here is misplaced , the risks are(almost ) ALL to the downside and even after a successful equity injection the company still needs to find and service a probaly high -coupon debt of nearly ten times the market cap.
To be very blunt, SXX's current position is extremely precarious and no-one should entertain hopes of a double figure SP in the near or even medium term.

The new appointment is pretty high profile, a long career with BG in the Sahara, Nigeria and China, it would seem she is a NED who understands the oil business.I see this a a positive event as she appears to be the sort of person who doesn't expect to be associated with failure.

I don't think Unilever has a big substitution problem as , for of its most profitable areas, eg SE asia , Africa it's brands are seen as aspirational, the goods to buy as you move up the wealth scale. In addition , there is much less competition from generics who find the logistics of distribution expensive, the benefits of scale work in favour of the mega corps.

FAO Yuri f . There is the possibility that there are several interested parties, BUT experience (and a degree of cynicism)tells me that they would not engage in a bidding war, rather what happens is a "Gentlemans agreement",(though of course these guys are not gentleman in any sense we would recognise!!)would see all but the most committed drop out and leave the field clear. Surprisingly enough, when the next cherry, ripe for picking comes along another of the "Gentlemen " will find themselves as the only bidder. The days of the fiercely contested bidding war have almost disappeared. The last I can recall (on which I made a good sum) was the successful Comcast bid for SKY and that was driven by a desperate need not an opportunity.