Member Info for danl90

"danl90 - if you want to comment on facts then be balanced about your comments. Stop helping the doomers and gloomers."

How is it balanced? ha

@rag indeed! I realized at 370p "what is the short term gain here?" £4? well that's <10% and can be made far quicker else where

Since fleagate this has gone from 370p to 310p while the rest of the market has flourished. This stock will go sideways for quite a while as the transition to Debs marketplace will be immaterial for a while

Also the core boohoo brand is having a shocker! that will make the stock collapse on results even if the overall beast grows

Can’t hide from the facts

You’ve seen 370p 2/3 times and all held out for £4. Now you’re back at 315p

The opportunity cost of having your cash stuck here is huge

They have done a bloody good job! This is near 310p!

@cta how much do you want to raise from an RI? what do you want to spend it on? and what are you going to do with the cash when stores reopen and EBITDA is £80m again?

Any one know a good site for seeing the copper price as a tonne?

Used to use business insider but they have change to lbs

@megla so let's do the maths

Today £90m of debt. The bank wants 3x EBITDA (2x when life is back to normal). EBITDA is currently £5m (but was £80m pre-covid)

So we are allowed £15m of debt so a RI to raise £75m. OK sorted

Post covid stores open and EBITDA returns to say £60m (some goes to helping invest in online). At the end of that first year you'd have £45m net cash

- what do you want to spend it on?
- the year after same problem what to do with all the cash?

At an EBITDA of £60m and debt of £90m this would be one of the lowest geared businesses out there

This is not a debt issue. Its a lack of trading issue. Last year card paid down £29m of debt even with stores closed

@megla why? What amount and what do you want to spend it on?

I think the circling bit means they are hoping to be called to make a deal or buy the current debt as an option

Where did you hear re the £80m?

To me this isn’t an issue. There’s nothing new here. We can RI if needed but I really don’t see the point

£6m on the way and gov doing fully backed £10m loans. That’s enough to bridge

I mean when you think about it we know there have been two months of waivers so why wouldn’t we have drafted in experts to help our negotiations?

The positive here are
1) banks are positive
2) we are so close to reopen
3) distressed debt available for the bridging if required. Will be expensive but it’s there if we need (restaurant group got an amazing deal recently)

Yeah you might be right. I just don’t see why banks would end this?

Awful for PR so close to the reopen
This business has always been profitable
The debt isn’t that bag compared to historic profits
The company has done the hard yards with online
New ceo

Why lose your relationship for a client that can pay interest for years to come

In my view it’s because the company doesn’t have a debt issue but rather a low EBITDA issue. Pre covid card was permitted to have 2x debt to EBITDA. At the moment it’s 3x

Pre covid EBITDA was £80m. So when stores back open we are 1.1x (debt is £90m)

Current EBITDA is £5m so we’d need to raise £75m on a RI. So only £15m debt

So post covid a business with only £15m debt and (on a prudent downside) let’s say EBITDA is 30% lower so £55m the question is then. What on earth to do with all that cash?

Looks like a debt deal is likely. Perhaps we will have to take some rather expensive debt for a short window of time but that’s fine we will get there without equity

In part, with the price where it is, a placing might not be terrible as it puts a floor under the price and will lower the amount of debt we need and make a transaction even more likely

As stores are so close to opening you can see this as appealing to lenders of this type. Also with furlough extended we can keep less active stores closed if needed

Lease liabilities and rent arrears are sort of double counting. IFRS 16 makes you recognise operating leases as debt when in reality they aren’t it’s just the rent you owe. Any deferred rent is just included in the lease liability

Assuming rent has been paid then no issue but the accounting of recognising “lease liabilities” is also just accounting noise. Most bank covs just back the lease liabilities back out as in reality they aren’t debt

You’ll note in the results they refers to results excluding IFRS 16 and also EBITDA as basically the whole world agreed the recognition of operating leases on the balance sheet is just daft

In terms of other items we have £6m on the way so that should sort that out. Also hopefully we can get one of these £10m gov loans

Carllapos on what basis is the balance sheet a mess?

If the core boohoo brand has shown a material slowdown in growth?

PLT likely to be the bigger brand now?

the board were asked about cotton and said that the vast majority of the boohoo/ plt "trend brands" clothing is poly and not cotton

Always worth listening to the board

Boo pushing very very hard on social media atm!

@make a refi is a huge positive. Debt raised rather than equity.

Also you have to look at the debt market atm. Restaurant Group have been given an insane package with 0 covenant tests for 15 months!

Markets are always forward looking hence stocks trade to expectations and your stock moves based on beating or hitting those expectations

Right now why would you not look into the future? You can’t look at this stock on last 12 months as the world will be very different in 12 months. Wait till then?

I invest in copper you buy when you see demand building (as price is low) you don’t want to be buying when demand is peaking as the price is now sky high

I don't see the share price as too high IF you are looking forward. See this business in 12 months time, where will EBITDA be? £40m - £50m easy and that's probably low as we know cards are an emotional purchase which people love to touch and hand write. Also we know that people are desperate to shop

Markets are forward looking. If you see the £50m EBITDA and a low 8x multiple this is £400m EV less debt that's market cap of £310m where market cap today is £245m

In reality our "poor" trading performance was £80m pre-covid and 8x is a low multiple given a number of our high street competitors have gone or scaled back and card factory can now grow online

Look forward not back

@Tank this was making £80m EBITDA a year before stores were closed. It’s has debt today of £90m (and £6m of that will be taken care of by Rishi). Card, when things are back to normal is 1x debt to EBITDA. Most companies are happy at 2x

There is not going to be a rights issue. Restaurant Group got handed an insane debt refinance yesterday. With 0 covenant tests until June 2022!!!

The debt market is there in droves atm. There are loads of debt funds that will take long views on this company and hand us the debt. This isn’t a debt problem. This is a low EBITDA problem. We only have a low EBITDA as stores are closed. Stores open and cash will come flooding back