Member Info for devonplay

@SafeYields you asked about how to buy the debt.

It's in tranches of £100,000 and there after increments of £1000

WiseAlpha sometimes have fractions available, you hold their notes, not the debt notes, in lots of £100

https://www.wisealpha.com/loan/detail/56/debln

If you can pick any up on WA, yield is 12%, yield to maturiry 50%

If it all works out you can double your money and get 12% a year income.

Not without risk.

"also without equity .. would there be debt?"

Yes, there was debt market before the invention on the limited liability company.

In fact the debt market is bigger.

2. This sets an awfully example of lack of shareholder protection and should be used as a test case to illustrate to investors both here and abroad that buying shares in UK companies comes with certain rights and protections and should not be viewed as cannon fodder for bondholders to sacrifice at the first opportunity.

But, the equity to debt ratio in this was tiny, £200m just wan't enough. Borrowing money come with responsibilties. Unless you are also suggetsing that equity is no longer the "risk" money? Do you also think equity holders should also been given less upside if it all works out? I bet not.

"making a share trade - at least over x value."

I cant see how that would ever be practical. What value could it be? how quick would the advisor respond?

I suspect we'd also see spreads increase on transactions below that "x value".

Lets face it, financial eduction is the best hope.

There will always be people who get spat out in this game, but for the sensible conservative invetsor willing to accept 7% per anum return (plus some side bets) why should we kill the asset class off for them by applying a ton of extra regulation?

I often have to fill in those "sophisticated investor" things out, maybe for there should always be a reminder when you login to you brokers "are you diversified enough".... :)

"As a general principle, it's far safer to buy the distressed debt of a struggling retailer, rather than its equity."

That's what i did here and I'm looking over Saga this morning. Long on debt, short on equity looked a perfect place to be on Debenhams.

"The point is that as soon as MA made his potential offer, it invoked the Takeover Code."

It doesn't. The Board has a responsibility to creditors. It's a primary duty. If a company is headtowards insolvency, then the key respnsibility is to the creditors.

If it didn't work like that you'd end up with a Board operating an insolvent company on the bases of a "potential" offer.

What would you say to creditors demanding their money? We might "potentially pay you"....it's logical really.

In there isn't absolute confidence, administration is the only choice.

Otherwise a Director is running an insolvent company.

"shareholders in the sold entity if I understand this correctly"

No.

I dont know the detailed structure of the business, so let me take a guess.

You hold shares in Debenhams Groups PLC.

Debenhams Groups PLC has a subsidary that it's a 100% sharholder of: Debenhams Group Holdings Limited

All the debts and assets are put into Debenhams Group Holdings Limited and that's sold.

That leaves Debenhams Groups PLC with no assets. Eventually it gets dissolved and alongside it your shareholding.

"will have to apportion part of that listing to our shares"

No because you are a shareholder in Debenhams Groups PLC whilst it exists. When it's eventually struck off and dissoved your shareholding wont exits.

You aren't a shareholder of Celine UK Newco 1 Limited .

I own some of the debt, the 5.25%, but I'm still not a shareholder in Celine UK Newco 1 Limited, becuase I didn't participate in the 2md round of funding. It;s a vehicle owned soley by SOME of the lenders. Who, at the moment, say they are going to still pay the 5.25% debt holders.

It's like selling your house. You aren't the owner of house you've previously sold.

Sorry, don't know anything about Mothercare.

Here's the fill commentary:

"Immediately following our appointment, we sold the Company’s shares in Debenhams Group Holdings Limited, the top holding company for the Group’s principal operating companies, as well as certain dormant entities, together constituting the Company’s entire interest in the Debenhams group companies (“the Group”) to Celine UK Newco 1 Limited (“Newco”), an entity owned by certain of the Company’s secured lenders (the “Transaction”)."

They don't sell "your" shares, they usually create a new company with the assets and debts in it and sell that.

Your "shares" are then eventually in a dissolved company.

You'd need to look at the Company's Article to see the full structure of the business , but for practical purposes they've rolled the assets and debts of the operating company into a new vehicle and sold that.

Your "shares" may still exist in a delisting compay that's in the process of being dissolved.

Eventually they wont exist because the company wont exist either.

That make it clearer?

"herefore, can someone explain to me how they are able to forcibly sell my shares [or yours] without our permission, to this new company?"

Yes, through the Insolvency Act (of 1986). Boards are required to act to protect creditors. That is what they have done.

It's their fudiciary duty and professional reposibility. Not protecting creditiors is where they take on personal risk.

In Debenhams case the creditors were the largest stakeholders by a country mile.

You Mmght might consider looking at the responsibilites of a Director enshrined in the Companies Act of 2013.

Hi Daniel. I recognise that, so yes, it's a market place the bond price would rise. it was to illustrate my arguement.

I agree, if I was advsing I'd have been part using the bonds to pursue his agenda. I suspect he doesn't care for more than the game. I get the impression it isn't the money. It's the game he likes!

It's my first time doing that trade Daniel. It's only recently that private investors have been able to get access to debt without buying trances of £100,000, so it's only just come into my universe.

It is a nice place. Often feels like London if you got to Salcombe on a summer afternoon. Reminds me of EC1 at times.

I look for further opportunities now I've tested out the concept.

At the end of the day, the barriers between private and other invetors is slowly being eroded. Not sure what the outcome will be, but it looks like i might be getting back equity that I sold previously when I didn't own it. If that makes sense.

I agree Pearls. It has the feeling of a bull in a china shop.
I have very small position in the debt. It's been more of an experiment for me. Going long in the debt and short in the equity.
It was always obvious the real owners of the business was the debt holders. At any time they could have pulled the rug from under the business. You can see it in the cap table. £500 million of debt, £40 million of equity. That's a terrible position to be. Try a rights issue on that basis......
I haven't work through the nubers, but you could have bought the debt, £200m of 5.25% for just over £100m yesterday and 51% of the equity for £10m or there abouts. That would give you total control. £110 million.

His biggest mistake was not buying the debt. Especially as it was trading at 50% discount to it's issue price.

So he could have bought the majority of the 5.25% debt for 50p on the £1

That was the mistake, buying that would have avoided all the need for rights issues, M&A and publicity.

Article mentions some yeild for shareholders. Wonder how much?

What ever's left after the repayment of the £760 million of debt.

Ive been short the stock and long the debt, so overall it's been an interesting ride.

Just £84 million to be sucked down.

Looks like i'm going to get back the stock I sold when I didn't own it. Unless Sports Direct offers no hair cut and underwritten rights issue. Either way ordinary sharholders face wipe out or diluttion.

It's a business with a capitalisation of 10's of mill, debt of 100's of mill and liabilities of decades. It's only ever going to be solvent with the goodwill of it's lenders. That's why the Board is indicating a pre-pack.
Lenders hate pre-packs because usually the transfer is to a Directors or a major shareholder.
But, and it's the critical but, in this case the pre-pack is with the lenders.
Because they are, at then end of the day, the biggest players in the capital table of Debehams.

I tell you now from someone who has been in a pre pack ... IF ma is offering cash and minimum job loss and payments to debts . They will chose him
Over stores closures and not paying back any debtors !

No, their job is to protect creditors. That's the point of insolvency. Not managing the ongoing buisness, but to protect the creditors.

"liquidation will not be effective legally without the convening of a meeting of creditors who have the opportunity to appoint a liquidator of their own choice"

That's why that clause is part of the Insolvency Act. It stops Boards and Shareholders from choosing something biased towards their interests. Creditors very much have the last word.

It's not desinged to protect shareholders.

Out of date OM, it was updated 8 minutes ago LOL

I've read them OM and nothing has changed.

So tell me, what has changed OM?