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Themuir – how am I running out of time? I will not lose money on this so I don't really care. I'm just telling you the facts
Egg – suppliers will not care about a pre-pack admin. In fact, they'll be glad because within 6 hours, the business will have a low amount of debt and they will have no more worries about getting paid. The business will have new owners and continue to run as normal.
Double – Not spouting any crap. It certainly IS a case of why would they let him. He can't force debt holders to accept 50¢ on the dollar, so I ask again: If he wants to negotiate a below-par buyout with the existing debt, why wouldn't they just say "Okay, but also give me the £60m you were going to give to existing shareholders"? Debt ranks ahead of equity. And that's leaving aside the fact that the lenders here will probably want par for their exposure, or at least 80¢.
Oh and I'm not altering or closing my position here so I don't particularly care how the price moves until we know what's happening. What I do want, though, is to stop you saying your BS about how "all companies have debt" and mislead others into thinking that there's no problem with the debt when there certainly is.
Themiur I was doing my job...I also didn't see any reasoned rebuttal to what I wrote just people shouting about how all businesses have debt which is a laughable argument at best.
Egg – lenders want a return, but they probably bought in at 50, which means you'd need to buy them out at at least 70, if not more. Why do you think MA would win in Admin vs. the lenders credit bidding if they want the business?
Why would the lenders let him pay shareholders £60m that could've gone to them? The lenders (who are hedge funds now) want the business, hence they want to do a pre-pack
"Just imo" well your opinion is wrong, because what you've said doesn't make sense.
You evidently don't understand the difference between enterprise value and equity value. If he just tenders for the equity, the lenders will (on Monday) put the company into a pre-pack and MA's newly-purchased shares will be worth 0.
The point is that he has to take out the debt at par, because the debt is due immediately upon a change of control. You seem to be ignoring this point, but it is the only point that really matters here.
P.s. he offered the money for MdN on a debt-free basis...
Licking his lips, huh? It moves the price he would have to pay for the business down by like £30m from £600m+ to £570m+
Still a LOT of money. By the way, how confident are you that he can use the SPD RCF for an acquisition this big? I assume you've seen the docs and checked the "Use of Proceeds" section? Have you checked the "Permitted Investments" definition as well to see if it's permitted?
Morning all
Special - it will just be the creditors that call the shots. Main business will be out of admin within hours and any non-financial debts (HMRC, for example) will be carried over to the new entity
I'm good HK, hope you are as well. And I agree, I'm not the enemy, just coming at it with a sense of realism.
Themuir – I have talked about the rights issue many times. The subordinated debt would have to be paying out existing lenders at par, and would put shareholders similarly out-of-the-money to the position they're in today (although I would expect a short term increase in share price should that happen). It would also require a large cheque most likely.
Thanks for your comprehensive legal analysis regarding directors' duties: "would be sud [SIC] if they did it and I think there would be a reasonable chance of winning"
There were people "sure" that IRV wouldn't be pre-packed 1 day before it was. Directors are completely fine, because the company is insolvent.
Yup, a subordinated debt instrument that takes out a significant chunk of the debt at par? Could happen, bad for existing equity, though.
Re suppliers and a pre-pack – suppliers will be VERY happy if this goes through a pre-pack. It will come out the other side with a sustainable (low) amount of debt and no overhang (just like Interserve). No fear of liquidation and they'll get their insurance back.
Do you really not understand what a pre-pack is? It's not a free-fall administration. It's over in a few hours. Done and dusted.
Selling down more shares, but not many
Thanks, Auson. Think I'm just going to ignore themuir from now on. If someone can't at least produce credible counter-arguments, they aren't worthy of anyone's time
Yeah I'm actually pretty free this afternoon apart from an ongoing analysis that I've been putting off all week.
Maybe I can come by and give you a lesson in corporate finance? I'll start with the very basics, as if I'm teaching a child...
Themuir – Lol your answers when you get schooled are quite funny
PhilGibson – I noted this this morning and people here denied it. I assume they can't read?
It's 5p or nothing most likely. Whoever said 0.85p was (i hope) joking
I say again, please enlighten me on the refinancing. Debt trades at 40 with a yield of 53%. No capital provider will refinance the debt, they will put half the debt on it maximum and at an interest rate of maybe 8% and they'll want it secured. SPD will have to pay for the rest in full plus fund any ongoing liquidity requirement.
Oh please. We had the same thing over on the IRV thread about how "revenue is so large, how is this business only worth x". Just shows a fundamental lack of understanding of how businesses are run and the pressures facing the industry / Debs itself.
"Easily refinance what he needs to refinance" – go on then, genius, try and refinance a bond with a market yield of 51% at a rate lower than 12%. Specialist in debt advisory are we? Raised much debt in your career? The only person who could refinance it would be MA himself, which would be paying the debtholders out at par and overpaying for the business with another public company's money (i.e. SPD).
Hahaha served them egg on a roll.......................
Faze how's this for logic: you don't know the difference between enterprise value and equity value, and you don't understand what rights the lenders have. Your post is completely illogical even to a snot-nosed 1st year finance student at the University of Dundee.
Something is weird with their disclosure. It says they sold down to 54,482,883 shares on March 29th (RNS April 2 @ 09:44). Then it says on April 1 they were at 61,200,000 shares (RNS April 2 @ 14:49) BUT that same form says their dealings were a sale of 2,754,900 shares, not a buy of 6,717,117 as you would expect. One of the two forms is wrong – unless I'm missing something