Member Info for DC2007

I reckon part of the problem is that it's went bust but 'Debenhams' still exists and continues to trade. I'm coming to the conclusion that it almost would have been better if it had been wound up an dissolved.

That would have been more acceptable to many small shareholders since they would less likely feel they'd been robbed compared to the conclusion we got.

"the company's still trading"

Not really at all - that's why holders have lost. The company (as it was) no longer exists because it was, or was about to be, insolvent.

I remember former CFO (Matt Smith) in April 2018 making a guarded comment about there being 'no problems as long as operating profit did not dip below £30m'. Not long after, he left. At that time, they were still trumpeting the estate and how that almost all of the stores were 'profit making', and that the rent per sq ft was amongst the lowest.

They must have been planning this since KPMG came in. Only they didn't bother to reveal the severity of things until the 'no longer valid' RNS and the 'no value for shareholders' one. They could have been straighter with holders. The institutions must be pissed off but they, I'm sure, will have been more in the know than the typical retail/small investor.

They [DEB] had wafer thin margins. Glue that together with a weaker pound on the back of the Brexit vote, a deserting customer base, failed trade credentials to buy on credit, and that was all it took to nuke their cashflow. They will have breached covenants on the debt that allowed the lenders to assume control. The cash cost of £80m or so on Redesigned contributed to the sinking too. Not only did it generate no net return, it, I think, actually caused a loss.

What is rotten is that the BoD were so taciturn about the impending situation and kept making positive noises to the contrary but without stating material falsehoods. The clues were there during 2018 that the situation was rapidly deteriorating. I wish I'd heeded my misgivings about the quantitative stuff, rather than the fluff Sergio and the BoD kept coming out with.

The BoD managed to kill a stodgy company in two years and in some cases - for now - still have jobs. With their revenues down even more like-for-like, I can't see how they'll survive at all. It is going to be another BHS/Woolworths.

2Pacalypse - You've bought in because you think a takeover is imminent?

[Although a few weeks ago we...had to...pursue certain procedures...to keep the business...on track....we were...er, pleased...to have completed this...successfully...and]...

"Debenhams is an attractive and cash generative business"...

[just like we said it was a little while ago. The changes to our 'corporate structure' in early April should...not concern potential bidders. These changes were...of a technical nature... and did not effect our operations].

Er Hello BoD! Do you remember us? We had this thing called equity which we bought from you. You used the money to do stuff; without it, the business wouldn't have existed. Except you done such a bad job that you lost all the equity to an insolvency process. You are responsible for that. Your fault.

But you kept stringing us along. You never said how bad it was or was likely to become; but it was you causing it to fail! Could you spare just a word for us? You know about the hundreds of millions you cost us? And why you thought it was okay to say it was okay when it wasn't? Can't wait for you to explain.

Congratulations on the timing sheltie. It's very sweet when it works out. Like you, I'm a bit confused about the sharp rise this has had over the past few sessions, especially as Blackrock continue to reduce their position. That the tranches are being taken up by another II could explain how the SP isn't tanking. If it was a new II or minor holder, this could be happening without them needing to notify the market.

The other obvious question is what are Blackrock reducing for? It's only partial so maybe they are reallocating assets and need to do so now; it doesn't rule out that they may see imminent upside here.

Atb

jedclampit,

Taking your points on then, this means you reject the Efficient Markets Hypothesis? Could you please explain more about the dealers - who or what you are referring to here?

Values of companies correlate well with their demonstrable earnings. Where those earnings are near nothing (like here), then speculation takes over. Rumour drives bubbles and busts based on hope and despair about a businesses' future possible earnings. Since opinions in a market vary widely when objective measures are few, the market value becomes very volatile. It could be £1 in six months; but just as credible is that it could be 10p. Neither value might be what the company is actually 'worth'.

Going back to your £1 a share. That's £1.5bn for the company. So how are you expecting your qualitative improvements to feed through into the metrics (earnings, cashflow, balance sheet etc.) to result in this? Can you talk us through your estimates of the numbers?

Thanks for any details you can add.

jedclampit.

Why, really why, do you think this business is worth £1 a share? Can you show some reason or calculation to justify this? It's very unclear what this will be worth in six months. Since you say it's undervalued at the moment, you're saying you know better than the market what it's worth.

I do hope others treat your posts with the caution warranted.

"Really, the biggest issue to me is why did bondholders want to wipe out the shareholders?"

I doubt that motivated them. They acted in their own interests as they were entitled to in their role as lender; they're probably indifferent to the effects caused for others. They wanted to get their money back and avoid losing more/all of it.

Atb

I think it was that some time ago. But that generation decreases, and to the nascent generation aged 50ish Debenhams is invisible or irrelevant. They have no brand value left and can only compete on price. M&S and John Lewis still retain some identity and therefore value in their respective brands.

MA got outmanoeuvred. Maybe he'll threaten to threaten suing. Whatever plays out legally, if anything, nothing can reverse the equity wipeout for former shareholders. That's done and dusted.

Terry Duddy sums up Sergio's tenure thus: "Debenhams now has a clear path towards a viable and sustainable future and we have Sergio and his team to thank for that,”. Sounds rather pleased at how it turned out. Not even a thought for the investors they trampled to get this wonderful result.

For what it's worth, I don't think DEB can survive long term. I base this on asking myself a simple question: who is Debenhams' customer? There is no obvious answer. For retailers, that's a killer.

I doubt MA will properly rock the boat since he'll still be looking to buy bits of this. The full letter from the administrators was published to DEB IR site a little while ago. In it, the authors invite former shareholders to contact them if they are aware of there having been any wrongdoing by directors. They mean criminal or civil wrongs. The directors will probably have been careful enough to have done neither.

There were so many bear signals. The new CFO didn't buy even when the shares were a 'bargain'. Who better to know know a £50k or £100k tranche was likely to go up in smoke? I hope Sergio's last purchase was at least done in good faith. He's hardly lost though - £2-3m in salary less £200k in shares bought is okay for 30 months' work.

Losing is bad but getting fleeced is worse. The final insult for former holders would be for Debehnams to be floated again in the next year or two. It can't be ruled out.

I explained my motives in the post; try reading things properly. Your knowledge of TCG has not dazzled.. You chase share prices like a Labrador after a mouldy sock - wherever it goes you bolt brainlessly after it.

Anyone know what they are trading at?

Hope the long works out Bluelight. Continuing the fairness, I've no current or past interest, direct or indirect, in TCG.

I like the Russell quote Randfontein; it was one I'd forgotten. Shares and the business they relate to act like a decently behaved emulsion - yet under strained conditions they'll separate out. This looks like an example since, as you say, the fundamentals and SP have decoupled.

It makes reasonable prediction impossible to me and I put securities in that state as a near random bet. All the second, third, fourth...guessing, it's too much; more contingencies and conditionals than can be considered without bias sneaking in. Others might have a knack for calling the next move, assuming they keep track of their hits and misses. Atb

Hi Bluelight,

You claim everyone has a vested interest in posting yet you don't say what yours is. TCG is on a watchlist of mine hence my postings today. I looked over it again after it was in the news at the weekend and it looks even worse now than last year. It's a terrible investment.

I thought some may know TCG in better depth and be able to make a case for what a good business it is. But so far nothing. There's mainly fixation on the share price: what it will or won't do; what it can or can't do; what it should or shouldn't do. That means people have no idea and are simply guessing.

Net debt is a fudge, as net this or that often is. It grates when companies aren't straightforward about what they owe.

If they've really got spare cash sloshing around in their account, why haven't they paid off the debt? Because it's encumbered, i.e. they absolutely need it to manage their working capital cycle. Cash won't be that high all year, but the debt most likely will. Until it's paid back, it's still debt, so the £368m is spurious.

Turnover, even £9bn, is irrelevant for debt repayment since they don't make any profits. They service the principal, just. On that basis jed, the debt (even at £386m as you prefer) is hardly a snip.

Lots of people here lying back dreaming of the stars instead of waking up and smelling the coffee. No longer is this investible, but gamblers may make a few on the pops and drops.

Or, seer, they could have been already told to keep quiet because they are not fully calling the shots any more. Are the BoD at TCG reliable and forthcoming? If the opaque tangle that is their annual reporting (net profit of the airline anyone?) is anything to go by, I doubt it.

You're right, this is a business in trouble. Every year since 2010 has been loss making. As a distressed seller, they won't get as much for the airline if they can divest. But that part has to be cleaved off to allow the rest of the business to be taken private. I doubt this will give a very good exit for shareholders but it's better than nothing.

Atb

Hi MPO, I echo your caution about TCG. But with Fosun, their astuteness has to be in doubt since they must already be well down on their position. By definition, they've already overpaid. Do you see that differently?

Atb