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It needed my intervention to get the two parties talking which is odd.
Why buy? https://quoteddata.com/research/chrysalis-investments-turned-corner-qd/
Today's RNS doesn't mean the Verne Global deal is off so at least £349m will be returned to shareholders plus whatever they can get for the other assets. Even if the Norwegian's try to stop the deal there's an appeals process or another buyer.
@broomtree, I'm in a worse position and can't even average down as ii won't let me buy any more because Chrysalis haven't filled in a form. I've emailed Chrysalis and have received a response but nothing has changed yet.
@CaneToad, I've had a look at what you suggested and you clearly know your stuff, thanks.
As far as I can tell all other covenants are LTV not more than 60% except Santander which moves from 60% to 50% July this year. The latest Santander LTV from June 2023 is given as 47.5% so maybe a problem come July but the loan value is £62.5m and as of 9th November 2023 RGL had £32.6m cash so I'm guessing they could just pay some of the loan off to reduce the LTV.
I general the rent roll of £67.8m far exceeds the interest payments of £15.7m including the bond. So as far as I can tell the main issue is refinancing the £50m and of course the future of office space in general.
I'm relatively new to investing, please excuse my ignorance. I'm guessing canetoad and 0715 are referring to bank covenants , I found this definition:
Bank covenants, as described in bank credit agreements, may often be even more limiting than bond covenants. In many cases, a bank may require a debtor to maintain leverage ratios such as debt/equity, debt/EBITDA, or debt/EBIT under a certain threshold. These types of covenants are called maintenance covenants.
In case a covenant is breached, the bank will probably block further credit to the debtor involved and will require the covenant to be cured, generally under the threat of triggering a default.
Consequences of a Breach of Covenant
The breach of a covenant can trigger a technical default. However, the specific consequences of a breach of covenant should be analyzed on a case-by-case basis and depend on whether the creditor decides to waive the violations.
The consequences of a breach of covenant generally include:
A penalty or fee charged to the debtor by the creditor;
An increase in the interest rate of the bond or loan;
An increase in the collateral;
Termination of the debt agreement; and
Waiving the violation without important consequences." here: corporatefinanceinstitute.com.
There's two things that spring to mind. Firstly, the consequences are scaled and clearly open to negotiation, not quite the guaranteed Armageddon suggested. Secondly, there doesn't appear to be a standard level of LTV for a covenant breach. I would guess that this information is confidential between the bank and a the loanee, please could both of you let me know where you got your specific covenant breach information from.
Much as I appreciate today's news, there's two very important pieces of information missing. How much are Microsoft paying and what is the cost of debt. I understand that I should DYOR but this RNS simply doesn't give enough information. I suspect that analysts can ask these questions and be much better informed which wouldn't be fair and against the one of the reasons why the RNS was set up.
It's probably good news.
I think it goes something like this: The fed keeps interest rates high, HGEN is a growth stock so the curent value is based on future earnings which the calculation depends on the discount rate which depends on the interest rate. So while interest rates are high growth stocks will be rated low. In my opinion it's more to do with short term targets than anything fundamentally wrong with the share. As soon as it looks like the fed might cut interest rates growth shares start to increase, today's interest rate news was a little negative so growth shares go down.
And do they should. How Hipgnosis Song Management managed to get that call option, it's disgraceful. Clearly the board want to terminate the advisory agreement but need at least one other bidder to set a fair price before doing so otherwise Hipgnosis Song Management may be able to buy at market cap which would be a disaster. Paying out £20m to cover bidding costs seems ludicrous but it's not because of this hideous call option. I will certainly be voting in favour of the proposal.
I've owned this share for a while now and it's always tracked about 40% below the NAV. I remember watching a video where the investment manager said this would happen and he didn't know why. At the end of the day the share has performed nicely for me so a narrowing of the discount would be a bonus.
Unhooked, register for the call on 4th Jan, you may get your answer. It'll be entertaining. At the end of the day there's value in the assets, I'm just surprised they haven't sacked investment advisor yet given the failed continuation vote.
Basically the banks have shown faith in the project and the hold up is due to a poorly organised 2nd world country government. This is what risky investments look like. I wish I had taken profits at 11p but I was too greedy. It's a bottom draw, fingers crossed share which will either die or skyrocket depend on the permit. There's nothing the CEO can do other grease a few palms.
I have to take issue with this statement: "Nor is there much evidence of optimism among the board of directors of this disaster. Despite one of them serving since 2015 and their annual fees ranging between £31,000 and £48,000, only two out of five have more invested in INOV"
Here are their quoted holdings on ii:
Dr. Scott Selby Durrand Brown: 78,269
Mr. Stephen Cohen: 309,737
Ms. Jane Tufnell: 500,000
Mr. Tim Edwards: 210,230
I don't think any of these directors bought at today's prices, which is the price Ian is using. They more than likely bought at a much higher price which paints a completely different picture. Like us they are probably sitting on big loses. I don't know why he presented it this way given he's a holder.
Having got lucky with Bacanora and unlucky with EML, CWR and FDBK, I realise that fishing in the AIM pond is a dangerous game best left to the experts. In this case Richard Staveley. I'm very happy to pay a fee for Richard to search the pond, engage with the boards of AIM companies with the expectation that he will be much better placed to identify the winners. So far he's done a great job. Their half sister IT OIT has worked out sell for me, one of my few shares in the black, just. DYOR but won't be wasted time.
Similar to others, I am always learning. I read this today in the interim report:
"Pursuant to the terms of the Portfolio Management Agreement, the Portfolio Manager is entitled, with effect from Initial Admission, to receive an annual management fee equal to the lower of: (i) 1.0% of the net asset value (calculated before deduction of any accrued but unpaid management fee and any performance fee) per annum; or (ii) 1.0% per annum of the Company's market capitalisation. The annual management fee is calculated and accrues daily and is payable quarterly in arrears."
I don't know of any other ITs where the management fee is based on the share price when there's a discount. Add that to the fact that both managers own a lot of shares, they are strongly aligned to the success of the IT.
It could be that the potential upside is medium to long-term. The actual sale won't happen until mid 2024, if it does and the potential additional £100m won't be seen until 2027. So I'm guessing the dividend won't be reinstated until post sale once the balance sheet has been sorted out. I'm reluctant to take a loss but not confident enough to average down. The could be big capital gains to be made over a 3 year period if VG hit their EBITA targets but I'm guessing we won't be able to see the progress.