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After the Carillion collapse, no one in government would put there reputation on the line protecting a private company. The exchange below occurred on Monday 3rd December.
Jon Trickett Shadow Minister (Cabinet Office), Shadow Lord President of the Council -
Asked the Minister for the Cabinet Office, whether the Crown Commercial Service has plans to issue guidance to public sector bodies on the financial risks associated with contracting with Interserve?
Oliver Dowden The Parliamentary Secretary, Cabinet Office response :
It is the responsibility of contracting authorities to carry out appropriate due diligence checks on potential suppliers and financial monitoring on existing suppliers when they are contracting out, to ensure that those suppliers are able to deliver the public services for which they are contracted..
And yet they still are giving Interserve work.......
Meta,
Better than expected profit this year [profits in line with expectations] - yes but in line with the raised expectations
Long term funding security until 2021 (something Carilion never had) [50m payment due in February] yes but as they are achieving the profit the maths show they have the £50m
Reasonable assets - 50 plus non core businesses that can be sold off if needed [why not sold yet?] Need to achieve the best deal - this takes time - two big international sales will be announced shortly
Most audited company in UK - all bad news out there [is it?] Yes - the FCA is all over them and the BOD would not put themselves at personal risk
Efw will be finally exited in Jan 19 [says who?] Follow the timescales of the process for commissioning - self evident
Insurance income not accounted for on balance sheets - note that you concede this
Strong position to renegotiate loans [lol - don't lower yourself - banks will not throw money away ...
It is very easy to be negative with the SP so low and forget there are positivesome
Better than expected profit this year
Long term funding security until 2021 (something Carilion never had)
Reasonable assets - 50 plus non core businesses that can be sold off if needed
Most audited company in UK - all bad news out there
Efw will be finally exited in Jan 19
Insurance income not accounted for on balance sheets
Strong position to renegotiate loans
Interserve will simply trade there way through the bad press
I will remind everyone of the 23p SP in 6 months time.....
Meta,
If it doubles, it will be at 50p - that's maths for you!
Rumours of their demise are greatly exaggerated...
I guess it's easier to be bearish when the market is falling as it has been.....
Market sentiment is currently against Interserve and the media generally have a downer on similar companies - Kier, Serco, Mitie & Capita. Hence any bad news they can scrape up, they are printing.
Apart from the fall in SP, which is significant & driven by the level of debt, there is very little new news out there.
The company still has long term funding secure and will trade their way through this.
Small investors are panicking and selling at a loss......when everyone else is selling cheaply, it can be a very good time to buy.....massive upside now & little downside!
Meta - I think they need you on the Kier share chat!
Bill,
Totally agree it is not all rosy at Interserve, but I am convinced that they have the time to trade their way out of this difficult situation and they will.
Bill,
Good to have a sensible poster with a balanced albeit understandably concerned view.
Not just a laughing boy who scoffs .... eh Metha. .
The banks are still by far the biggest debt holders, which is good.
Yes very interesting that we do have new investors who will have done their due dillegence.
The long term financing agreement was key, when the EfW debacle is finally exited, there will be a big opportunity to bring in more new investors and renegotiate the current borrowing.
"Oh so they will ask for free money and be given it"
No, just new investors buying the Treasury Stock or Preferred Shares.
Hold on whats that RNS?
Bill, Interesting previous post re. DfE
Debt holders lend their money to the company with the objective of having it earn a fixed return (the interest rate they charge). Their sole interest is in getting their money back with the expected return someday and if something goes wrong, they have a claim on the assets of the company to ensure that this happens. They are not interested in running the company. The shareholders, on the other hand are given voting rights.
Wiping out half the debt say £300m with a share dilution of 1:2 (to incentivise lenders) would be the equivalent of issuing 2 billion additional shares. Institutional Investors would never vote for this as it wipes out the vast majority of their investment.
The banks and Emerald have no incentive in seeing Interserve cease trading as will lose the majority of their investment and future interest earnings.
Interserve have time as their major asset - over two years left from the re-financing and can pay the current interest required of them.
Two things will happen - firstly a renegotiation of current repayments with exiting lenders to a more palatable level. Secondly the will attract new non-dillutive investment - how......
"Now that the business has been trimmed down, EFW has nearly been closed, unprofitable contracts have been terminated, this is now an attractive cash generating business"
Meta,
Yes, I was 6p off on 25th December last year and but it did hit the £1 mark on 1st Jan.....
Unfortunately a lot of bad news since then has knocked confidence levels significantly.
It is though, surprising we are still able to post on here; considering the fact that the company has been forecast as going into administration by so many people on here, over the past 18 months .....and yet it still survives.....
Also D4E and RI's have been forecast as absolute certainties over the past 18 months......and yet, we still await this....
One thing is certain is that posters will continue to underestimate Interserve......
Good Morning Meta,
Always watching at a distance, to bring some "balance" where it's needed........
Meta,
I don't actually need to know the level of any possible future dilution or if there will even be any dilution, to confidentally make the statement I have made.
It will be obvious to you that the current SP is priced for the risk of this company ceasing business. Any dilution (if they really actually need to do this) would obviously be better than the company ceasing.
This company will eventually trade it's way out of there current difficulties for a number of reasons, but mainly as they now have one commodity that is better than money.
Time.
I was wrong - they have just announced the legals are all signed on the re-financing Good news for the institutional investors.......
Good that shareholders backed the refinancing today. They will confirm the legals are all signed on Monday now. The 2017 results I understand will be better than expected. Whats the guess on the SP close on Monday, realistically how high could it move up?
Meta84 You really are a strange fellow. Had you taken the terrible advice offered and bought in early that day, Then you would have made 11.3p per share to date. It sounds like you actually bought too late that day on the 113p spike. OMG how terrible you are actually now 1.7p above the SP, unless you believed your own BS, lost your bottle and sold at a loss? How terrible to be 1.7 pence above the current SP. What a tragic loss. So so sad. Let's put the Samaritans on notice. I'm hoping the SP gets above 1.13 tomorrow, not just because I am making a shed load, but mainly because I want you to survive. GL
Or is the good news leaking out??
All the expected sells at around �1 appear to be gobbled up by a big buyer in the background The UT trade will be interesting today and the aftermarket buys! When this is safely through the �1 mark the next real test will be �1.20 imo
Nice to see and long overdue GLA
Nice 100,000 buy at 96.5 Going quickly towards the �1 mark now Be nice to see it break that barrier today GLA