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Certainly very short of positive news at the moment.
Spiton, in the unfortunate event of an administration, the administrators act on behalf of creditors. They will try and sell the business in as intact a form as possible, although if they have little income, their time line is limited as they will have on-going (although not pre-administration) costs to meet. The administrators will check the validity of any security and identify any preferential creditors. Secured creditors only get paid in full if the asset over which they hold security realises its full value, if it falls short then they rank alongside ordinary creditors for the balance, if it fetches more, the surplus goes to pay other creditors. Preferential creditors must be paid in full before any ordinary creditors ( typically those who provide goods and services) get anything. There is normally a bun fight over retention of title (the point at which title to an asset passes from the supplier to the purchasers) as to whether it is on delivery or payment and this will depend on the contractual terms. After all of the claims, and of course the administrator and their advisers (lawyers, valuers etc) who always get paid first it is fairly unusual for shareholders to get anything. It can be a long and costly process and a fee fest for the accountants.
More recent than Poly Peck, although still a while ago was Marconi which was huge and cash rich at one stage. Remember well as lost a lot of money catching a falling knife that “could never fail”. Much more recently was Provident which crashed out of the FTSE 100 only a couple of years ago and whose share price is still only about 20% of its peak. It can happen, and very quickly, just hopefully not in this case.
Tuckup, I have posted on others. What you cannot eradicate from your mind is experience both as a Director of large businesses and an investor. Believe me, I have made mistakes in both but some of the comments I see on here and indeed on both Thomas Cook and Debenhams suggest individuals either have or are about to make mistakes I made 30 years ago.
Skid, I am the last person you would want to advise you. My initial entry was at around 90p many years ago and with hindsight I should have sold when Carlyle Group bid an initial £1.30. Like the Board, I also thought they would up the offer, but they reduced it on DD and it has been largely downhill since. I have averaged down with my recent stake at 25p but still have an average price of 70p. Have held now for 15 years so will hang in in the hope of a major shake up of the Board that rejuvenates what I still feel is a good business.
I bought 3 businesses out of administration and am fully aware of the process and rankings. I am also aware that it is the role of the administrator to check the validity of all security and claims and deal with appropriately. Equally I am aware that in the administration of a significant PLC a few years ago, one of the major banks believed it had £30m of its debt fully secured but the security turned out to be invalid. Nothing can be taken for granted. You practical experience is?
We have also got it that you have a different view and post incessantly on it. Time will tell who is right but I clearly have the ability to be more objective than you having much less emotional attachment to an equity investment which always carries risk,
In the event of an administration all the negotiations will be with the administrator. All contracts with the previous business effectively terminate and it is down to the administrator to see what can be salvaged and does not have to pay any of the previous liabilities. The rights to proceeds from the administration are laid down in law depending on whether they are secured preferential or ordinary. If the administrator does not have funding to keep the business going then they will liquidate it which frankly would be a disaster for everyone.
During negotiations I have regularly heard sellers claim our offer undervalued their business because of the number of years of their life they had invested and how much they had spent on investments. If a business does not have enough cash to continue then that is all totally irrelevant and it is worth what someone is prepared to pay. In this instance, so far the only offer is AAL. I am surprised that others have not come to the table but they know the industry better than me, and will have reasons, equally, I did think AAL might increase the offer slightly but as time goes by then that looks less likely. One thing that is almost certain is that in an administration, shareholders will get nothing.
Taverham, that must be a possibility although I am not sure there is much value in any of the U.K. contracts, particularly given the announcement on ELWA. It would make some sense given that they would really struggle to win much in the U.K. now whilst they are still operationally strong in both Belgium and the Netherlands with a good reputation.
I think we can all agree with that!
phimx, you are certainly giving them away for nothing if the consequence is an administration.
Mrd, you are making the assumption that there in nothing in the results that is going to cause concern. Based on the recent track record of news that is a big assumption and no doubt one of the reasons the market is so nervous. It is hardly a business that has displayed either good control or governance.
Only things I can think of are a late reaction to the increased stake by Sterling Strategic Value Fund last month who now have 5% and I understand quite an active manager or alternatively a realisation that based on what value Viridor is being talked about then Renewi is under valued. Whatever the reason a welcome move although I am still sitting on a massive loss.
Honest, Not sure I agree. I think it will go into administration and there will be a buyer, probably AAL, but they will get it for almost nothing.
FFC, you are right to worry about Odey. He works in the interest of one person alone and that is himself. He is a leading shorter of stocks in the U.K. and as such has worked on forcing stock prices down in a number of businesses to the detriment of private holders. He has had some huge gains and some huge losses but one many of the losses, he has still made money due to the way his hedge fund charging structure works, the losers are his investors.
Herman, if so valuable why so few interested parties? It is only worth what someone is prepared to pay.
Mrd actually now can get back in in the 810s. Why do people post such rubbish on pricing when they have no clue which way it will go?
Mrd, you can now get in in the 820s, why on earth did you think it was the last chance in the 840s?
Time will tell and I really hope that another bidder emerges or AAL increase their offer but I think it is wishful thinking and it is highly unlikely that any government will look kindly on the fate of shareholders that have sabotaged a bid for the business just because they didn’t like it. Given the very large players in the market and no sign of interest from them then it does look as if AAL have priced their bid correctly given the amount of cash they are likely to have to spend to bring it to production and the risks that remain.