Member Info for devonplay

Just out of interest, did the Board request the rights to waiver premption rights at the last shareholder vote?

"Also , the IAG shareholder got a option to sell their Rights, they receive money in return, hope this applies to PMO."
I'm guessing as time is very tight, that's of course unless the creditors agree to extend not testing covenants AGAIN, that it will be an institutional placing, so not a rights issue, there will be not rights to sell, just dilution from a discounted placing. That's once they are in a position to start book building. I may wrong, but I don't think they can do that until creditors have voted on the Stable Platform Agreement.
I don't think Company has the time or relational capital to go for a rights issue, I suspect they will take the easy route and just deal with corporate investors. It's just a lot less messy. Only my opinion of course.

"You seem to be trying to scare people, what’s your motive?"
This is what the Compamy says:
"In addition, since 8 July 2020 the Group's leverage and interest cover financial covenants for the testing period ended on 30 June 2020 have been deferred under the terms of the Stable Platform Agreement. Without the deferrals contained in the Stable Platform Agreement, the Group would have breached the financial covenants contained in its financing agreements in respect of the testing period ended on 30 June 2020. In the event that the Proposed Refinancing is not agreed or finalised by 30 September 2020, if the Group is unable to obtain a further deferral or waiver of the financial covenant testing for the period ended on 30 June 2020, there is a risk that an event of default may arise prior to May 2021. If such an event were to occur, the requisite majority of the Group's creditors would have the right to vote to declare the Group's debt liabilities immediately repayable. "
So even they acknowledge there is a chance of a credit default. And the group would be required to return several magnitudes of cash greater than it's market cap. How quickly that comes is up for debate. Certainly it reads as if they are going to default on the credit issue arising on the 21st May . Thats what ever is left of the £150m 6.5% notes. That's a significant issue for the company to put in an RNS release and draw it to shareholders attention. The debate is what happens after the 31st of September when creditors know there's a hightened possibility of a credit default within 6 months and the potentila default issue with the 6.5% notes.
Yes of course I understand there's a process, but here's the neat thing. Creditors can, if they choose, appoint Administrators and then Admiistrators role is to protect creditors, it's a business continuity device not a shave the shareholder strategy.
For the recored I'm "long" with my holding, but I'm also practical, so this is just 0.3% of my portfolio. There's an offer on the table of 44% YTM, in my case over 50% I bought at a lower price, so I'm up in capital terms. But, when investment grade debt comes along with less than 2% yield, and bank deposits even less, I have few expectations.

Does anyone know if it would be possible to structure PMO in such away that they could sell the 4billion tax credit, then use the funds to pay off some .
Yes, sell the equity at a discount and have the acquirer agree to service the debt obligations. If they had relevant need for tax relief that would be a way, but as the company is so highly leveraged, then acquirers will look at the debt obligation before the equity value. In relation to the debt the equity is just noise. I haven't bothered to look at any more recent figures, but last time I checked, market cap c 190m v debt obligations of c1.9b. If you'd got to service all that debt why would you want to pay premium for the equity? Even with a tax credit which is only useful if you've got the profit's to offset. You'd need some one without their own load of debt obligations and a lot of profit that needed to be offset. Problem, I believe, is the debt might have a "change of control' obligation that requires anyone new holding more than 50% of the equity to make an offer to pay the creditors off at par. I think's it's in the PMO1 prospectus which is derived from the 500,000 Euro issue. You'd need to know how much of that is still out there, and what the terms of the RCF, to make any sense of trying to restruture to sell the tax credit alongside with the business. I don't think it's possbile without dealing with buying the company and satisfying creditors, and given the possibility of a haircut, can you really see creditors accepting anything cushy for shareholders.? Anyone one acquiring equity on day one, might have to deal with creditors calling in debt on day two. It's high risk which ever assest class you are holding.

https://www.londonstockexchange.com/stock/PMO1/premier-oil-plc/company-page
Pre stabilisation deal PMO1 has a yield to maturity (YTM) of 44.642% - calculation provide by the London Stock Exchange.

If creditors were to call in the debt why would they Take on assets unless they believe they can cover the debt? Surely they will take more equity but leave the debt in the hands of the company? I’m not very clued up with corporate finance tbh so genuine questions, I just don’t see why they would call the debt in? They won’t want anything to do with assets etc imo.
Also if this was the plan to strangle us into submission why would they close such a large percentage of their short? I know we paid for it but it’s still another large long position they have an incentive to grow.
if the creditors called in the debt on the 30 September, then the compamny may be technically insolvent, so they could seize assets as a way of satisfting the debt obligation. They may take equity, but there's no guarantee that they will use the same vehicle, so it could result in existing shareholders not being involved in the future. They could call debt in for any number of reason, including a direct intention to seize the business to ensure it works only to pay debt, so there would be no future benefits/growth to share with shareholders. It ensure they are directly controlling the business as they appoint their own Board, Directors etc. That ensure no more ex*****ve growth plans and the business plan concentrates on deleverage and paying coupons. To the poin that it's deleveraged and reselleable. You'd have to consider any short position in context to any long position. It's a pretty normal strategy to hedge a long debt posistion by shorting the companyequity - and visa-versa. Without know what they hold in the cat. table and their post-transactio profits, obligations etc it's only ever speculation. None of that might come to pass, but it's still possible. In simple terms they may not want either equity or assets, but just ensure the business is run to service it's debt obligations. That limits the future of the business, but for a debt holder there's both a cash flow stream, redemption of the debt at par. If you take PMO1 as an example, that would give you a yieled of to maturity (buying at lows) of around 50% (TYM). Debt doesn't need growth, unless it's venture debt, it just needs coupon payments and redemption. You can still make a considerable capital return buying it as an asset when it's dIscounted from par.

I should say of course I've got a higher YTM as I bought them at a lower price, the present YTM is just below 16%

I've just checked the current yield it's 11.7%
And they appear to be trading at 75% of the issue price (par) that's 75 per 100 quid issued.
ISIN GB00BYY8MM32 unsecured, but I seem to remember there are parent guarantees, those are of course not worth anything if the company get's into the mire in any practical sense, but we are more senior than shareholders in the cap. table.
The bonds are unrated with any credit agency, but I seem to remember https://www.guybutler.co.uk/ Guy Butler has a desk note on them.

How does this yield to maturity calculator work?
Annual coupon/ interest payment (ACP) in absolute value (NOT as a rate).
Bond’s face value (BFV) which is the nominal value.
Bond's current clean price (CCP).
Years to maturity (N).
Yield To Maturity (YTM) = (ACP + (BFV - CCP) / N) / ((BFV + CCP) / 2)

You want the current yield? 11% ( or there abouts) YTM is 17%. The revised coupon, with the extended maturity, is 8.75%
So you can see they are trading at a discount to issue price, the YTM takes into consideration the current yield and the capital gain you get at maturity/redemption. In this case, REA also offered bond holders warrants at a fixed price over the next 5 years to buy ord. shares. and a small payment for revising the terms of the prospectus.
On a broad basis my high yield junk portfolio has a running yield 20% and a YTM of over 60%....if everything goes me way LOL .... and it wont. Over the last 9 months I've still had most of them pay me, one default so far, I should be getting a payment from Intu over the weekend! but some of them have suffered very steep capital declines, but the portfolio overall, income re-invested, hasn't lost any capital. Most have appreciated in value. I've just taken bets on some very obvious distressed companies and that's skewed performance. But I've attempted to do that with a view to replacing very high risk bets from the portfolio's cash flow very quickly. That's not a very common strategy.
How to calculate YTM can be done using online calcualtors https://www.thecalculator.co/finance/Yield-to-Maturity-Calculator-496.html
And if you want to know more about retail bonds you can find info here:
https://www.fixedincomeinvestor.co.uk/x/analysis.html
And institutional bonds here:
https://learn.wisealpha.com/ they are offer a free accredited coarse.
And this is a good source for all things fixed interest https://www.bondvigilantes.com/ - it's from M&G.
I hold my REA bonds via WiseAlpha, buying them via a broker might require you to talk in very large sums indeed. That goes for most bonds not available from your execution only broker and on ORB or available from WiseAlpha.
I combine a mix of direct, charity, LSE ORB, WiseAlpha, IT's and funds in this part of my portfolio.
Hope that helps.

"devonplay,
Or if it all falls appart you could be offered 45pc or less for your bonds."
That's possbile, but by who? If it all falls apart then it won't be the company will it! and if there's a change of control they might have to buy them at par, but if's that's the case then it will be likely after the company has defaulted and the equity has 0 value. I'm sure it's more thanpossible that the debt migh take a hair cut, but lets be honest, at the moment the future of the company is dependant on 2 votes and the second can't take place until the creditors have agreed. The debt is already trading at a discount, so what would you prefer 45% loss or 100% loss of your equity if the deal falls over, that's why I'm of the opinion the management will want to get the placing away at what ever price and that becuase of that the offer will have to be at a steep discount.

I don't know if anyone follows the LSE listed debt of the Co-op. There was an RNS early this week (results);
93RDFXD RT RESET CALL SUB T2 NTS 25/04/29
https://www.londonstockexchange.com/news-article/11YR/2020-interim-financial-report/14634125
Also an interesating article from Savills ( I believe) office space in the regions in the last few days. It's superior returns over prime city based units.
What I've taken from both of them is that "local" is going to be a long term trend, shopping locally, less commuting as workers start using business parks rather than trekking 2 hours into a major city. I don't think the office is done for.
I've held these for a long time, and it's been painful, but I still see my original hypothesis as being good. People value local community services and that's what NNR provide well, so I haven't been tempted to sell. I believe they have they resource to remain intact, and as such locality and cash generation, you get plenty of that from pubs, will be a good long term prospect.
It's a typical position for me. Less than 2% of my portfilio, I'm the kind of investor that thinks in decades, so I'm content to give the management that I rate, a reason I invested in the first place, the chance to steer us through these difficult waters. I'm happy that pubs will open again one day, people will carry on liking local services and that it's not beyond the ken of a professionals to turn local retail estate into local offices estate. I'm happy to hold, not sure at this point I'd be buying or adding, as I think there's other better risk adjusted reward available elsewhere . I'd not bothered by risk as such, and that's why I'm considering adding more of Intu's debt with it's 25% YTM and have been buying property on a selective basis TRY & BCPT.
Alongside PE which can be had at similar hefty discounts. I'm not expecting things to change quickly, so I don't see an oion for trading in these beyond going short, but I look foward to being with then for the long term.

What did they say about it before 30th September?

"You have some fair points Devon"
I try to be fair. I'd like to see them get the deal away that's on offer now. I just expect the management to feel that same, BUT I don't think they've got many options. I suspect the RCF and bonds have "change of control" clauses in them that will put off acquires, hence they might have to price the placing, and given the timetable I think it's likely to be a non-premption placing, at a heavy discount. Hey, I'd love a bidder to step frward and have to buy me out at par..I'm just not expecting it anytime soon.

then a very low raise may help their short position, why still retaining their long high yielding debt position.

"OK so all that is needed is 75% support and do you not agree that the vote is about the price for issue of the equity? Once the price is agreed then we will have that 75% support and PMO back in business right?"
"do you not agree that the vote is about the price for issue of the equity" No it isn't. If it was about just the pricing of the equity why would bond holders care? They wouldn't care if it was raised at a 1p, dillution means nothing to bond holders, only equity holders. It may be about the amount being raised, but what it's raised at matters not a thing to them. Unless they are also holder's, if they are holding both assets, and short the debt, them a very profit mught actually benefit them, if they also get turn on the junk debt.

"Each to their own, but I for one have filtered Devonplay. Just a twat holding a few bonds that thinks he's Warren Buffett. Hasn't the risk profile for equities, so wtf are you doing here? Just a lonely ****** who likes seeing his muses in print."
Hahahahah

"But now they have tentatively secured the £325m this would mean creditors would provide the other £200m odd of the £500m odd (sorry don't recall exact amounts). You'd hope this sort of support would give reasurance to the remaining creditors require to get to the 75%."
See I still think that's specualtion, you have to accept that pushing the company into breaching it's covenents might be more valuable for a set of creditors than accepting the deal, hence why the companty hasn't reached a deal yet with 75% of them. They get to rescructure in a way that might allow them to take equity and keep debt in a private company. That's usually at the cost of pi investors.

"Before you post, do some research please!"
It's not part of book building process, until they've reached a creditor vote there's not book buidling process., so it's not commited money.
Do you understand corporate financing?

"Devon, can you explain why Schroder's upped their stake above 5% after reducing earlier?"
Easily. They may have a longer position in the debt. If the deal gets away the debt and equity should rise in value, if it doesn't then they are likely be getting more equity from the debt being converted into a shareholding at the expense of the exiting shareholders. They can play a more complex game based on being able to operate each side of the cap. table.