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Yeah, I mean IF what you said is true (and not just some huge conspiracy theory), why would you ever buy individual shares in any company? Why wouldn't you just buy the index, or better yet, buy a basket of bank stocks?!
Sorry, can someone please explain what was fraudulent?
Dude, game theory is all well and good, but if your inputs are wrong, it's just a garbage-in-garbage-out exercise.
Go on then, enlighten me. How did you reach your probabilities?
LongerShorter, that's a funny post, you almost had me for a second.
Somehow I seem to have entered a parallel universe where python can estimate the probability of outcomes with complete success! Fancy that?! I mean, that never even made the news!
If you really understand the stakeholders, the debt conditions, the cash flow generation, the leverage, the timing etc. you would understand that the probabilities are far more weighted towards a 0 (or close to 0), and the probability for the share rebounding to 30p on its own? 5%? Am I really supposed to take that seriously?
Don't waste anyone's time with that rubbish.
I disagree.
Amongst many other reasons, shareholders receive a borrowing fee to compensate them for the share being loaned out (and in your broker terms, you will have agreed to allow it to be lent. you can opt out with many brokers). Let's say a bunch of people short a company for no reason (and the earnings are actually great), forcing the price lower. Number 1, those that lent out shares are compensated through borrow rates. Number 2, it creates a huge arbitrage opportunity for people (even traders) to buy the stock as the earnings support a higher share price. They should then buy the share and force the price back up.
LongerShorter you couldn't be more wrong. You're trying to make the argument that (i) the bid was a likely outcome and at 3p the risk/reward was good and therefore (ii) faced with a large number of these trades, you'd win on average.
This is plain nonsense. Every fact in this case pointed to this outcome as the most likely, with a bid being very unlikely. I most certainly did not give the wrong advice. I gave the right advice which was to sell. I gave the same advice with Interserve and what happened? Same result.
Don't try and dupe yourself into thinking this was just an unlucky trade. This was a clear 0 (or at the very least, a near-0 in the case of a dilutive rights issue). We outlined exactly why based on facts and logic, and that ended up being the result.
He's just buying them back because the share price has fallen so much.
Make no mistake, DEBs shareholders will not be compensated. Meta is spot on. There wouldn't be a debt market if it didn't work like this. And to people saying that they didn't expect it to be de-listed so quickly, Meta and I were telling people that April 8 was the deadline for so long. And yet, Applegarth was (and still is) on here harping on about the 22nd, waiting for a bid that was never coming. I'm sorry that this happened to you guys, but this is the risk in what you do here. Some of us could see what was coming and tried to communicate why that was. Again, hardly anybody listened.
I hope that some people did and got out before it was too late.
The courts can't just force bondholder to take a write-down like that, that would completely undermine every single aspect of company and contract law that we have in existence. You must be joking right? It'd be like you not being able to pay your mortgage and your bank being forced by courts to write-down their loan instead of foreclosing on the house. Sorry, you lost the house, as per the agreement you signed.
SilverSpoons – why should bondholders take even £1 of haircut when existing shareholders keep some of the value? You do understand that equity ranks behind debt right? That in an insolvency, debtholders have to be paid in full before equity holders get anything? Some of the lenders were still the original par debt investors.
I understand that it's a commercial deal, and that all points are negotiable, but that is entirely within the bondholders' and RCF lenders' control. If they want the waterfall to be respected, they are completely within their rights to do so, and you can do nothing about it. You can cry all you want about "shareholder protections" but it's the same as every other jurisdiction in the world. Debt ranks ahead of equity.
Yeah of SPD shares, not DEB lol
There are so many reasons why this is waaaaaaay off the mark. Maybe when I get to my desk I’ll type them out, but I want you to think really hard as to whether you think shorting actually caused DEBs to go into Admin. I mean really think about it.
Are you clinically insane? If you think that shorting caused Debenhams to go into administration you may need some kind of psychological help. And I say that as no joke.
Sorry Apple but we’ve tried to explain it to you, but you just keep posting the same thing. Good luck in your outrage
Pearls, I ask again: can you give me a source that says a company cannot enter administration while a potential offer is in place? Like a precedent where this has happened, and the courts said it wasn't allowed? It sounds to me like you're saying the High Court ignored the law, which I really don't believe to be the case.
Plus, Pearls, you're still missing the point that MA was not seriously going to bid...
Required lender consent. Wasn't granted. Shareholders must've known that this new money required lender consent right? Surely shareholders read the public debt documentation before investing?
KNIGELK – SPD held 29.7% and upped it to 29.9% presumably because he thought he would get his EGM. I raised this point and everyone shouted me down (it was a couple of hours before the board announced that he wasn't getting his EGM).
Companies can approach boards asking for NDAs about possibly making an offer anyway, it happens every day. Shouldn't need to inform the market until you know you're going to make an offer. That's my view.
It's not hindsight. A lot of us were claiming that he was not going to bid long before. Why? Because it doesn't make rational economic sense. It would be throwing money away. It would be like going to see a house you like, and it's been valued at £500k, but, even though you know the owners are going to sell it to the highest bidder soon, you offer them £1m for it just because you want it. Doesn't make any sense.
Re £1bn "war chest" RCF – (i) how do you know he could use the proceeds to make an acquisition this big? (ii) how do you know he could pay higher than fair market value for it? (iii) what makes you think this was for buying DEB? Have you read the docs?
Also, the board stated it was April 8, so why on earth would you think it was April 22? There were 10 or so of us on this board literally screaming at you that you had until April 8 to get out before it was over. I have no reason to believe the takeover code can prevent administration.
KNIGELK – I actually agree. I think the "possible offer" thing is a ridiculous part of the code and should be removed.
Apple – three things:
1) I'm not sure the Takeover Code supersedes insolvency law – can you point to some precedents for this?
2) Even if it did, the line "if the board of the offeree company has reason to believe that a bona fide offer might be imminent" is probably key. They gave MA plenty of time and he did nothing. If SPD had provided evidence of committed financing or even evidence of such discussions, that would be a different story, but they clearly never did.
3) Leaving points 1 and 2 aside, I think you're missing the most key point. MA was never going to bid. It was all a ploy to try and derail the restructuring process and put pressure on the board. He was never seriously going to take out the debt at par. Do you really not see this for what it was? He even now has the option to bid for Debs on a debt-free basis for less than he would've had to pay if he paid 5p + debt at par. Why would he choose the more expensive option? Just to help out other shareholders? I don't think so. The bid was never coming.
As well as the covenant issue (which may or may not have been breached), when the new £101m came in, it came with certain conditions and milestones which, if not met, would've constituted an event of default.
At that point, it's not a rental payment or supplier you need to pay. It's the debtholders. So they were calling the shots
Callit, no-one sold the shares issued by Debenhams Plc. Debenhams Plc sold its shares in Debenhams Group
Holdings Limited and a few other holding companies.
Takeover code means nothing in the face of Administration, sorry. Also, MA was never going to bid 5p