Member Info for FED1

Yes, the jazz hands announcement last March was a damp squib.

These full year results need to deliver a credible business review. I really hope Dan delivers but the hurdle is rising every week because the share price is falling every week. The reason being: poor communication.

This is ‘managing expectations 101’: communicate to the investor community. I feel Dan has staked a lot on a deal that may not deliver.

No one could accuse the mgmt team of ramping the share price.

I would hope Dan is standing in front of his bedroom mirror this weekend rehearsing his Full Year Results Analyst Presentation.

We may as well find some enjoyment out of stock investing, even if our portfolios are looking a mess. Discussing stocks at least provides that.

Also, occasionally helpful to be able to vent frustration at mgmt team in an unfiltered environment.

I wonder what summer event the mgmt team are attending this weekend? And is it on company expenses?

Neil,

I certainly have no inside information, and I appreciate some of my posts are speculative. However, I do feel that Boo has options. That's why I like to shoot-the-breeze on discussing those possibilities. Wouldnt want to be accused of ramping!

I do feel something is happening though (i didnt start this post thread)

If I was offered Frasers scrip at a nice premium to the current Boo share price, I probably sell the Frasers shares soo after. Nothing against Frasers, but I will not be dabbling in AIM nor retail for a very long time. Unfortunately, my behavioural finance bias of "loss aversion" which many of my fellow posters share, means I have a cost price I would like before I bail.

Blind hope than Dan, Kamani and BoD can do something to release value.

Neil,

Unfortunately a scrip offer of Debs shares in lieu of cash for RevB shares would increase free float by a further £6-7m in Debs shares (Debs would cancel its RevB shares). Then Debs would probably strike a convertible debt deal with a private equity player like TPG. However, it seems shorters have no issue borrowing shares.

* is the share price of RevB worth more or less (not market cap).

If you replace all the debt with equity on an one for one basis, and now removed the interest payments from P&L, is RevB worth more or less on a market cap basis?

People normally assume that a rights issue is a bad thing for existing shareholders. Share prices can rally after a rights issue if it brings reassurance. Maybe RevB's problem is simple: it has too much debt.

If you pay down debt to a sustainable level, then in theory the equity value may rise at a rate of more than 1-to-1. However, what is the true value of RevB? If you add up all the equity, and the debt less cash, is it worth that amount today assuming it was to continue? Is the issue the unsustainable level of interest payments, or inability to pay off debt now that it matures, or is RevB fundamentally a company that has declining revenues and would even struggle to generate positive cash flow even if it had no debt? I do not have an opinion.

Maybe RevB should simply do a 1-to-1 equity rights issue at 3p (£9m) to pay down debt and debt holders convert a third of its RCF into shares at 3p.

If RevB is a viable cash flow business with 18mths liquidity, then it may be able to survive?

There is a deal to be had here somewhere. Even if that includes splitting Debs/KM/Labels from Youth Brands. Maybe RevB would fit well with first group (reverse takeover).

It has been painful for Boo shareholders to write down prior investments in DC, sell office, and have a rights issue. The balance sheet is in spitting distance of being in a good position where we are not negotiating with "left-field creditors".

We should not give that up easily. If there is a deal with RevB, then RevB debtholders need to take some pain as well.

SCB - I wasnt aware that RevB had such a healthy liquidity position (excluding RCF refinancing).

I do wonder whether Boo's aggressive paying down of debt in FY25 has left them short on liquidity - particularly as it now needs to build inventory for Autumn/Winter. It should have no problem however in rolling over RCF and probably best that it gets it sorted now. I'm concerned that the TPG deal for £175m means we are going to be paying off RevB debt at 100p in the £!

The concern is Neil that Boo has a poor track record on capital allocation. It may be tempted to return to its old ways and acquire a heavily debt laden business. This could put us in the same situation as the RevB shareholders who are now at the mercy of lenders.

If we are to participate in some way to keep RevB out of administration (versus taking the full right down on the equity stake in RevB), then we need RevB debtholders to take a discount on its debt. We simply cannot absorb RevB debt.

The only glimmer of hope for RevB shareholders is that True had its offer rejected. I assume True required the debtholders to take haircut and probably offered a paltry some for equity.

The debtholders decided that it would rather take control of business or for it go into administration than to accept True's offer. It may also suggest that they have decided to go for Option B. Maybe accept a rights issue, take haircut on debt, and convert some debt into equity. A convincing restructuring could keep this out of administration.

Debt holders need to take a big haircut to make this sustainable and to keep it out of administration. There is no white knight.

Put simply, it is not our place to bail out RevB debtholders and its retail shareholders. Everyone has to take the pain.

I feel sorry for the RevB retail shareholders. Unfortunately, Boo needs to remain disciplined.

I am sure RevB is a decent enough business, just has a big balance sheet problem. Boo's balance sheet is not strong enough to absorb it. I think it be dangerous for assume that debt.

I suspect the private equity bid required the debt holders to take a haircut. If Boo does absorb RevB (gives RevB shareholders some Boo stock) then it still needs a haircut from RevB's debt holders.

Squandering the recent efforts to get debt down should not be wasted on prior poor capital allocation.

Lets assume there was a 2-for-1 equity rights issue at around 3p, that could probably get £15-20m which would pay down debt. However, this would have to be underwritten by Debs or a third party. Debs would then probably have effective control (probably enough to make mandatory offer).

Other options include debt holders converting some of the debt into equity. Say £10m at 3p per share giving it effective control.

Alternatively, shareholders are given Debs Scrip and RevB is consumed into Debenhams group.

Either way, I struggle to see how RevB is worth the current enterprise value (Market Cap plus Net Debt).

It could go into administration and then debt holders be forced to take 50p in the pound. Equity gets wiped out.

I am hopeful of something meaningful coming out of business review. The Chairman’s profile says one of his roles is to oversea the business review led by Dan.

Last year, Kamani said now was the time for a corporate restructuring. I hope the initial ambition for business review hasn’t been watered down.