Member Info for CheshireLad

Go fishing or start to cover....

tick tock

GLA

FOMO?

Over at WG new contract announced supporting Germany's offshore wind development. Berenberg downgraded WG but stated hold, they obviously have no more information than anyone else, therefore the lesson is here, is to ignore them.

GLA for tomorrow, I will add whatever the news tomorrow

FYI: Berenberg obviously didn't get the memo

https://www.woodplc.com/news/latest-press-releases/2023/wood-to-support-one-of-the-worlds-largest-offshore-wind-to-grid-connection-projects

GLA

I agree, they should be jailed or held to account, but nothing rarely happens. What I mentioned last night should be elaborated on in so much if, like myself, you are involved in financial aspects of a business, even relatively low down in the corporate structure, when you are dealing with multiple functions (tax, accounts, finance, treasury, pensions, HR) you are so interconnected that word gets around like wildfire, so no doubt leaks to external parties are bound to happen, however, you are never in receipt of the full facts, and they can be misinterpreted. Contrast this with the TenneT contract coming out of the blue, why, the same functions and everyday staff would not generally know or be involved with the operational/projects tendering process, only the highest level of senior financial management would liaise with such bidding teams on a need to know basis, hence there was, if you believe, no leaks regarding TenneT, although the SP did misbehave for the month preceding the Tennet announcement.

GLA

PaddiG, if a deal is to be or needs to done, any regulatory/monopoly concerns can be overcome. You don't have to sell all the division to one other company, parts can be sold to different groups, or if whole to a new player?

GLA

As we move into next week the anticipation will build, but I would add a note of caution regarding anything concreate regarding all the short-term liquidity issues being fully resolved. Will the 20th be a pivotal step change in the direction of PFC or because it’s so close to Christmas, simply a good day to bury bad news, who knows.

What is for sure, we will have a clearer picture of the intentions regarding the future direction of travel, although I anticipate not everything will be black or white, hence my posts today relating to future possibilities, which there are plenty of good options to protect stakeholder’s interests. My posts today have been more than usual as I now have time as I’m finished with work until the New Year and hypothesising regarding the future for PFC. My own thoughts are based on purely past experiences and should not be taken as advice, please do your own research and feel comfortable with any exposure you have with PFC, and any share for that matter. I’m well under with my PFC investment, and far more exposure than I would like, trying to catch that knife.

My own experiences relate to work involved in financial aspects of Amec, Amec Foster Wheeler, and now Wood, so if anyone knows the history, quite a lot has transpired over the years, so you get used to the financial apparatus of a business and the sectors they operate in. The financial apparatus is the living breathing part of a business, but rarely ever seen, until either good or bad news lands. Over time you get to know the indicators and tools at a companies disposal to correct, mitigate, and move forward with the company health, and as you can appreciate there have been many of these capital events in the companies I’ve been involved with, not so much the buyouts, mergers or take overs, but the smaller business units or divisions that periodically, and in fact very frequently get bought and sold at the whim of the CEO, board, and market forces. I’ve had to sign many confidentiality agreements over the years, I’ve myself been in closed periods of share trading activity on multiple occasions, and even had to sign the official secrets act, and I’ve never held any senior management positions, I’m just a cog in the financial conduits and workings of an O&G/EPC service sector company.

Therefore, I look forward to next week, and whatever transpires, and due to past experiences, I’ve got grounds for optimism in the future how this can play out for PFC.

GLA

If remember from others comments the value was a bit suspect due to short to medium timeframe limitations of the asset, but I suppose it's horses for courses if someone else believes the asset is worth buying? At the moment, I have everything crossed for a O&M sale and I admit we may not see any indication at all of steps being taken to sell O&M next week, that might actually be sometime in the early part of next year, if at all, and that is if O&M is genuinely available, like recent articles suggest? There may be a bidding war, hence the possibility for being made public, let’s throw out a line (for sale sign) and see what bites?

GLA

O&M has huge costs and the problems associated with staff etc, even though the margins are greater, is it worth it, especially if there is a different strategic vision to embrace the future. There is no need to dilute under this scenario. However, if the update appears to convey no solid determining vision with some, but not catastrophic dilution, I have powder dry to throw more in the ring for the long road back.

Every time COP comes around we always seems to be at a vital pivot moment. This years it seems greatly amplified by the macro events but also COP itself being held in the UAE and lobbying for vital word changes, and a push back, with doing away with fossil fuels all together and now a more balanced view acceptable transition was of achieving global emission and pollution goals, instead of the myopic mass hysteria of the push to net zero, without doing the necessary due diligence first of the impact of moving too fast, too soon. Common sense appears to finally prevailing. However, PFC are now, due to the balance sheet concerns at a potential major pivot point in their history, and it would seem to embrace the future and the way the industry is moving, is the correct time to fully pivot and reinvent itself. What better way could a CEO actually make his mark, albeit it will be the II and major private shareholders that will ultimately decide PFC's fate, not the little PI's or even schoolground bullies, who are all short by the way. I don't see any of the major II or cornerstone investors taking any ultra large reduction in holdings, and they will also not want their own holdings to be diluted rendering their investments worthless. The only acceptable way out, and protection, for all stakeholders is to correct the balance sheet with undue or as little, or even no dilution, by selling O&M and then go again, but under a different vision & strategy. A major dilution event only needs to happen if there are no other choices, of which there are fair few alternatives before arriving at the worst case scenario, I just don't see it, I don't believe any shorts believe that, they have taken their chance at the opportune time in the financial calendar and have ran with it. The music stops for the shorts next week, not the business.

GLA

SS2020, not necessarily a long road but once the decks are cleared and as Onwards alludes to a new vision, strategy, one with less costs, and more agile. I would then foresee the road being one determined by Enterprise Value, and get it cheap while you can?

GLA

But let's at least put to bed, PFC ain't going bust, don't let the shorts play of human emotions.

GLA

Even though I'm a WG guy, I have no inside information or knowledge of PFC operations, but if anything is to sold I see the whole O&M being offloaded, even if classed as core. What's left is the future and I feel PFC will be bought and repositioned in the renewable and fossil sector, with a greater weight towards renewable energy, a subsequent buy-out and/or move to a more acceptable and friendly exchange, possibly in the MENA region, with a literal change in the name of the company to something more energy friendly. That all makes sense, even the large II and just rollover and in to the new entity, those that don't will have to be bought out at acceptable levels i.e. after the balance sheet is corrected which with the O&M sale would be fairly quickly, possibly within a year of the conclusion of a O&M sale.

Just my own musings, and probably wishful thinking because I'm 60% down at the moment.

GLA

Correction WG SP at 160p as I type, possibly more investors backing the WG horse at the moment?

GLA

I don't think WG are immune for the market conditions at all. WG were shorted heavily in exactly the same way, however and like here, that occurred after the new CEO was installed and undertook a strategic review. One might be cynical but putting pressure on a new CEO seems to be game (SP to 130p), the upshot being at WG came the sale of the Built Environment business for $1.7 billion, only then did the shorts have to relent but not before trying again between the announcement of the sale and then confirmation of the sale a fair few months later. After that Sparta went public (SP 150p as of today) adding fuel to the fire and then the arrival of Apollo (SP moved to circa 220p with bids at 245p ish level), all after the balance sheet was cleaned up of course. Could the same thing happen here, possibly?

However, a note of caution if you look at the WG SP today (back down at 150p), even though the past week or so we've seen it increase, today the SP is roughly around the same level after the BE sale and Sparta got vocal, but WG have still pocketed $1.7 billion, go figure. It's also worth noting, as I've mentioned before, the debt pile at WG was roughly the same as the value attributed to the BE sale.

On the face of it WG undertook a strategic review prior to the heavy shorting happening, it would have to be really stupid and boarding on the act of corporate negligence if the new PFC CEO had not started a strategic review at the time he was installed. On the assumption that he/they did, by the time the large short positions started to move the SP downwards (no doubt based on some inside knowledge of corporate undertakings), PFC should have already known the position they were in and taken the mitigation to at least game out and plan certain scenarios. The only confidence I can take from this whole debacle is that was the case, and certain elements of the recent months suggest that to be the case. I have no doubt the large funds shorting would have some knowledge of corporate activities, but I stress would not have been aware of the full picture and took advantage at the appropriate time up until the next corporate event in the financial calendar, with the bonus that macro events helped greatly with that.

Even though the SP has fluctuated wildly the past 2 weeks, I have not bought anymore (50p average), even though it would’ve pushed my average down greatly, and probably more fortunate than most. Personally, I’m just holding until the update next week, and I’m optimistic of good news, but I’m preparing for a compromise and the long haul (next 2 years) to get back up to the 80p range, that’s if no bid for the whole of PFC happens thereafter, just like at WG.

GLA

One thing that may happen, and I stress may, if a dilution occurs, in whatever way, then once the balance sheet looks a bit better, at the expense of SH & Bondholders, then afterwards, and an unknown timeframe, an offer for the company may be made? The similar/same thing happened at WG. and it was only a couple of months after that Apollo approached WG. after their Build Environment sale of $1.7 billion.

GLA

Garcy you are totally wrong, in fact your figures are absurd and in realm of fantasy, just goes to show the narrative you are trying to push, "they need a billion," pull the other one. Your monthly wage bill estimate is even worse.

At most they will need a couple of hundred million to cover short-term funding concerns, which can be done or achieved in various ways, or even a combination of ways. Monthly wage overhead costs, more than likely £20 - £30 million, and not forgetting they are already meeting the covenant obligations.

I suspect we will see the same kind of trading days up to the 20th, may be a little pop up before on the anticipation.

Volume was healthy but roughly equal if you believe the trade reporting. Shorts increased for 2 reasons, in part to scare, and mostly to suppress in order for them to make a seemingly smooth reduction and/or exit prior to the 20th., without an inflated SP between now and then.

GLA

The balance sheet/accounts will I have no doubt change after the 20th if the CEO et al knock their heads together in sensible way, which it looks like they have been taking preliminary steps to do so, curiously since the time of the worst showed up on this board.

GLA

GLA

At present:

Min = 75p - 90p

Med = 90p - 110p

Max = 110 -125p

GLA

Spot on Paul, like we've seen in the Government backed bond markets, when there is a disconnect due to whatever event, LDI's here in the UK, even Corporate bonds can be adversely effected by similar events, but all very specific to the Company involved, hence it appears the BH may have been shorting to cover their positions, as they obviously had wind of the plans, which I think shows talks or formal discussions have been well underway for a while now. Hopefully fully resolved and outlined on the 20th.

There is always a bit of give and take, failure though is very rarely chosen as the last resort by all stakeholders.

GLA

FYI: https://www.bloomberg.com/news/articles/2023-12-04/petrofac-shares-bonds-fall-on-asset-sale-plan-to-raise-cash

GLA

Any thoughts on enterprise values of the non-core assets or each division?

GLA