Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
There's easily enough firepower among major shareholders to save the company. I think the main fear is Whittaker and maybe a couple of other major shareholders decide to take over the company at the expense of other shareholders.
Yuri you getting very confused between assets and equity and also between £'s and pence.
Does anyone know whether preference shares is generally considered as equity in this case?
Hammersons one remaining retail park has had around a -20% revaluation for the year. Their retail park assets had around a -11% revaluation at H1, which was very slightly more than the average of Intus UK properties. So I'd expect Intus remaining UK properties to be down slightly under 20% for the year, another 9-10% (around 700m) write down for H2. Management did say it would slow in H2 but barely if this is correct.
Does anyone know why the yeilds in Intu's June valuations are so much lower than Hammersons June valuations?
This seems key as if Intu were to sell properties at the same yield as Hammerson recently did then their net value is pretty much wiped out. However, as mentioned, if they sell properties at a 22% discount to Junes valuations like Hammerson then they still have a large positive value.
Sain I think your points I have factored in. The cash from operations takes into account falls in rental income even from the latest results. The assumed values take into account further declines from the latest results as well and the 50% ltv I assume on asset-specific debt is less than the 60% you mention.
2022 isn't too far away, agreed, but is 2 years to sell more assets.
This is why I started this topic, I don't have them as needing over 500k until 2022. to break it down, from the interims they have 190m non-restricted cash. Then going until the end of 2021:
250m of cash from operations
300m of cash from the sale of Spanish and sundry assets (though this could be higher)
then minus 210m capital expenditures in 2019, 2020 and 2021 listed in the interims
There is just over 500m of asset-specific debt to refinance and I am estimating over 350m can be refinanced after the value writedowns at 50% ltv leaving 150 more required
460m from the revolving credit facility.
That leaves around 460+150+210-300-250-190 needed, resulting in less than 100m required?
Like I said I don't know how that would play out legally, as he obviously as a conflict of if he is diluting shareholders and he is one. It would probably have to be approved by other shareholders but they would all be bent over a barrel.
ownthingowntime, Pokerchips eludes to what I was thinking. If he sees this as an opportunity, I can imagine JW using this as a chance to gain a much bigger chunk of the business and make a big return, not just take interest from a loan. Something like a convertible loan I imagine is possible but at what terms. The dilution could still be huge when it is converted. JW hasn't made his billions by passing by opportunities when they come along.
ownthingowntime the thing I am paranoid Is that JW will somehow be the one that massively dilutes shareholders. Though I don't know what the legality of that would be.
Thanks for the response gewillia.
I agree with everything, especially regarding how far they are from bringing down ltv's to reasonable levels, but I was thinking just about the cash needs over the next couple of years. When I said "refinance some of the asset-specific debt . . back to lower LTV ratios of around 50%." I meant just the small amount of asset-specific debt maturing in 2020/2021. Even though the values have decreased on these properties they will still be able to refinance a portion of the debt.
The effect of covenants breaking is a big unknown and depends on how much the value's decline (probably already around 10% since the interim results). I can see how this can be what kills them if values continue to decline at this pace, but much of the doom and gloom must be already priced into valuations, so I'd say that's a big if.
I am curious does anyone else have them as not needing huge amounts of funds through 2021?
Please correct me if I am wrong, but it would be good to break down this point.
Regarding the need for funds in 2021, I calculate that after refinancing some of the asset-specific debt (although back to lower ltv ratios of around 50%) and using their funds from sales, small profit and cash in bank, their requirements aren't huge (I estimate less than 200m). This could be covered by selling their last Spanish asset and a small amount of UK assets. Doesn't this then at least kick the can down the road until 2022, as the 50% total ltv can be seen more as a long term target? As even management has declared the need for shareholder funding this year I feel I might have missed something?