Member Info for devonplay

So it appears insolvency is off the agenda after the FCA & Court's comments and move down that roads would push up their own personal risk as they are expected to balance the best interests of ALL stakeholders - no pun intended.. I can't see the 7.625% bond needing to take a haircut, so you'd expect the brunt of the pain to be with the lowest part of the cap. table. Either way it look likes dilution is on the way, with or without the existing scheme. Offering equity to the Scheme Creditors looks the most likely route. It avoids the potential conflict with secured creditors, bond holders, and gives SC, and existing shareholders, a share in the future of the business. Obviously that has some implications for earning per share, but it does substantially rebalance risk and offers a less risky form of restructuring. Follow that up with Rights Issue, that most scheme creditors most likely won't participate in, and it's all water under the bridge.
Calamari, last time I checked YTM was c14% so they are trading well off par.

Hi Mr Solo, I don't know if you remember, or followed, soi on the old ii boards. I understand he's recently passed away.
He was a prolific, smart and decent guy who was always willing to share his views and discuss the merits of a position. I'm sure he'll be missed.

Pearls ramping? Hardly! It's through Pearls hard work that we reached the conclusion that 2020 will provide "pitiful", to coin Pearl's phrase, performance and that the auctions are probably going to lead to terrible '21 results...hardly a ramp!
Personally, I hope this won't put Pearls off posting. That would be a terrible loss to shorter's everywhere.
I also agree with Carpe. Smashing purchase 2p or under, today probably over valued. I did encourage Pearls to jump ship at 3.95p, and I can see from Pearls posts "considered chucking the towel in" was clearly at hand.
Overall I think we have to thank Pearls for the bearish insights and for me personally, I have to say thank you for the stonking short that was Debenhams. I would have never done that work without out Pearls constant posting. Plenty on punters fed the bears on that one! ;)

"In fact '21 will be worse than '20 on Pearls assumptions? "

"It is my assumption as well."

Carpe- wouldn't surprise me for a moment, starting to feel that it might just be worse 21 v 20, that view would be supported by the downbeat RNS (1 April 21)
Although, Pearls is expecting over 20,000,000 and 9,000,000 of profit to be forecast in the June update as I understand it...could be colossal downward pressure on the share price if it's worse than the (limited) market expects. Although I don't expect anyone is going to be surprised, except Pearls of course. ;)

"No Pearls. They don't own the material therefore their earnings are the commission obviously"
Of course, doesn't that mean that if you use Pearls logic of divining '21 total sales from activity so far, then there's a further decline on the Pearls "pitiful" 2020 figure (est.). In fact '21 will be worse than '20 on Pearls assumptions? LOL

"58% of the equity which cost them £19.45m at the time." which is now worth 58% of 11m, but they can claw some value back by taking all the equity....as the loans in default...even you said it the other day remember! LOL

Do we need to remind you again? What they said a matter of weeks ago?
"The benefit of their achievements are however not just felt in the present."
"Despite increasing our spending on those initiatives which will help propel the business forward in future years, we are yet to do so."
"we cannot afford to take our foot off the pedal"
"We are hopeful that the relaxation of restrictions, combined with greater participation in the hobbies we serve and our hard work bodes well for our prospects. However we are under no illusion that this is guaranteed"
"We are hopeful that a vaccine led relaxing of restrictions is not only permanent but encourages activity levels to return at pace, however, this is hard to predict and we have plans in place if this is not how things develop."
"this is hard to predict"...they should have just asked Pearls. No problems providing a prediction there.....
You have to be very aware that in a company that's so heavily controlled by one entity of the "we have plans in place if this is not how things develop". That's not always shareholder friendly. It can also be a raft of not so friendly corporate actions, like conversion of debt into equity for instance, that would be a debilitation for anyone buying today...as you don't know what impact it would have on the share price or what price they could convert at. It could wipe 50% off at the blink of an eye.

"Devon, you don't watch the auction and you don't read the RNSs."
I quoted all the key points form the last RNS earlier this week, you chose to ignore it as it didn't
support your position. Are you sure you are reading them properly? LOL
I don't like to correct your calculations, but 87,000 lots of £150....isn't £87,000. Not surprising you struggle with balance sheet questions hahaha

Another day of small change? If we take an average lot as £150, then 87,000 lots might help... ;)

"Or the bond holders are asked to add funds, we are not impacted by that."
Unlikely, last time I checked the Bond holders were already more than 80% of the cap table. So, they really are in charge. Most of the debt is Super Senior Debt, so it's likely they'll expect Shareholders to provide Risk Capital. After all, that's the purpose of equity, it's risk capital. The equity element of the cap. table is under capitalised, so it's the most obvious recourse. If that's not the case, then you'd expect Bond holders to ask for something that's pernicious for equity holders, either very high interest rate or equity participation. As parts of the exiting debt yield ( to maturity) over 13% then interest for providing extra debt captial might be very high. The som of the debt is already in a distressed state.

"that shows SGI haven't the faintest idea what anything is worth."
More to the point, they are going to need a lot of that when most items are in £100-10 pound range, won't make much dent on £13m of debt LOL Still, it's always a giggle watching the pumping hahahah

Because it's pointless. It's like suggesting I watch people shopping in Tesco's. It tells me nothing when comparing it to what the Company has said. Do we need to remind you again? What they said a matter of weeks ago?
"The benefit of their achievements are however not just felt in the present."
"Despite increasing our spending on those initiatives which will help propel the business forward in future years, we are yet to do so."
"we cannot afford to take our foot off the pedal"
"We are hopeful that the relaxation of restrictions, combined with greater participation in the hobbies we serve and our hard work bodes well for our prospects. However we are under no illusion that this is guaranteed"
"We are hopeful that a vaccine led relaxing of restrictions is not only permanent but encourages activity levels to return at pace, however, this is hard to predict and we have plans in place if this is not how things develop."
"this is hard to predict"...they should have just asked Pearls. No problems providing a prediction there.....
You have to be very aware that in a company that's so heavily controlled by one entity of the "we have plans in place if this is not how things develop". That's not always shareholder friendly. It can also be a raft of not so friendly corporate actions, like conversion of debt into equity for instance, that would be a debilitation for anyone buying today...as you don't know what impact it would have on the share price or what price they could convert at. It could wipe 50% off at the blink of an eye.

"There's no sign of 'muted' interest whatsoever, in fact bids seem to be going for multiples of the estimate."
Oh dear, how many time have we heard you say this kind of thing? What was your estimated for 2020 again? Was it £15m at one point, and then it was £11....a reduction on 2019, even thought you spent tmost of 2020 saying "sales are booming under Covid"....then over £20m for 2021. LOL

"Rubbish Devon. Commercial history is littered with companies who have suddenly had creditors pull the rug out."
Nonsense - debt is a contractual obligations, but it's at least one thing that you've accepted that it's commercial risk and SGI could find itself having to deal it , as you say "history is littered with companies who have suddenly had creditors pull the rug out"....

"It is June's full year update plus forward looking statement that is important here, and that should be a lot more positive now the country is opening up again and London is showing signs of life"
You've missed out that you are expecting the sale to have reduced to £11m. I believe the term you used in a previous post was "pitiful".. We should also expect the profits, or lack of, to have moved even more sharply into a loss. I doubt the company is going to be providing a glowing forecast, that wouldn't be in line with the last update and they will likely need to reflect the growing inflations risks, that's rattled to markets today. Inflation is very bad for disposable spending like stamp. So alongside people wanting to spend more on "going out" you have to inject inflation risk into SGI forward projections. I'm expecting muted at best.

"Devon, most companies who have creditors are in that position."
That's utter nonsense. Only companies in default, like SGI, are in that positions. It's once you are unable to service your debt, like SGI, or in breach of those covenants that you you are only one Board meeting away...like SGI.

"it is important to note that at the current time the business continues to be cash negative, while trading conditions and the impact on our longer-term funding position remain uncertain with the latter influenced by our negotiations with our long term creditors."
Horrible place to be. Only ever one Board Meeting away from having the plug pulled...

"There is a common theme to Pearl's investment strategy emerging here...."
It's not really a strategy Carpe, it's not even investing...it's clearly just gambling with very little insight. You should have heard all the complaining, nonsense and hysterics over the total loss at Debenhams. Along the lines of it's a" big loss for me", "more than I can afford to lose".... All discussion about insolvency at Debenhams were, in the usual fashion, pushed aside. I cant even count how many time I had to explain how insolvency worked and the structure of debt finance. Usual direction of travel "Devon you obviously know a lot about debt, but...."
It's just gambling, some will come off, some wont. One day your 100% up, next 100% down....

"Calling it tumbleweed is an insult to tumbleweed, no wonder"
I've always said there's a substantial liquidity risk here...Pearls believes the opposite, of course.

Another good day on the markets...SGI....not so good, usual tumble weed.
Perhaps a new found BEAR is right. "Pitiful", indeed.