Agree, a major downside seemingly off the table.
Also saw this and I think they are an activist investor who purchased their earlier holdings at a much higher price. In order to do something they probably need to get support from a number of other institutions. Over recent years there has been a lot of PE interest in the sector and whilst Renewi do not have the potential landfill liabilities of others, they do have a legacy defined benefit pension scheme and the seemingly unquantifiable ATM issue. Both of these are potential red flags to a PE House.
As one of those old (10years plus) Shanks shareholders I am pretty sick. Since turning down the Carlyle 120p per share on the basis that it undervalued the business, it has been on a continual downward trend. As I have posted before, I believe that the executive Board lack the sector experience to turn it around. Salaries have substantially increased and performance got worse. Until ATM is fully resolved then I can not see a bidder emerging meanwhile the major U.K. PFI contracts get closer to the end. I think it could recover but needs an activist investor to give it a good shake. In my view listing is in wrong country now and the money and time spent on branding as Renewi was a total waste. Everybody I speak to in the sector saw nothing wrong with the Shanks brand.
Agree with you. Why they have not moved the listing to Amsterdam has been beyond me for years and the change of name was expensive and confusing, particularly as the Dutch business trades under a range of names and had never adopted the Shanks name.
I think there is significant upside potential but only when the full extent of the ATM situation is clear and that probably includes being certain there is no major contamination clear up cost in the site and the adjacent canal. Also as I have said before, in my opinion it needs an executive on the Board who has long term experience (15 years +) in the sector. I would love someone in the company to explain why they thought that the £1.20 per share offer from Carlyle group under valued the business given what the Board has delivered since.
I agree it will get funded at some point but the potential funders will have little regard for the current shareholders. I suspect they will want it done via a pre-pack administration or by diluting the existing holders massively. In having access to funds in the knowledge that the business will eventually run out of money, they hold almost all of the cards.
Depends on your definition of failure. I think it will be built and deliver jobs, taxes etc but this may well be at the cost of the initial investors. Many believe that the Channel Tunnel has been a success but the initial investors lost substantially.
Russia who still mines asbestos and does not recognise the health risks.
Just hope none of your funds were managed by Woodford!
Not in aim. Still has a full listing just not in FTSE250
Whatever you think of him, he called Thomas Cook correctly all along although probably with far too many posts. Had people listened to him, rather than rubbishing his analysis, new investors would not have lost anything and long term investors would have got out with something.
Market Cap too low because of what someone paid.
Exactly what people were saying about Ashley on Debenhams or some Turkish investor on Thomas Cook. Market Cap is absolutely nothing to do what someone paid for a share and everything to do with the future outlook, generally immediate future outlook, on cash flows, and we all know Sirius has serious issues.
The bank manager would ask, “what is your track record of delivering what you said you would do, at the time you said you would do it and at the cost you said you would do it? If your record is one of failing to deliver, why will you be right this time?” This conversation happens all the time on investment funding from banks and other investors.
Also have a small holding in this one and still under-water. It is also taking longer to come to cash generation and I fully expect them to have to raise further cash before we see any kind of return and there is more location risk. Like Sirius, it is a gamble that could come good but may see initial investor wipe-out.
Aubery,
Whilst there are differences, there are also similarities, ie the urgent need for cash and inevitable failure if it does not arise. Why did I invest? Because I recognise there is a valuable asset and had hoped that the management had a business plan that provided for enough cash to bring the site to production without having to do what in essence is an emergency raise. I have another 9 business in a 10 share high risk portfolio, 3 are doing well, the others may come good but the chance reduces as time passes. A common theme of those doing badly, is over optimistic management who built nowhere near enough contingency into their cash flow planning.
Yuri,
I am merely pointing out what was being posted and those posters continually dismissed those making the points you are raising. I totally disagreed which is why I predicted that both Debenhams and TCG would fail and was shouted down by many. I am just predicting here that there will be a massive dilution of existing equity holder, time will tell if I am right, and as I said I hope I am not.
“It’s not like those companies” just what posters were saying about Debenhams and it’s valuable Belgian business, and TCG and its strong brand and busting billion turnover. Likewise cases were being made why Carillion, Flybe, Interserve and Afren had their own unique value. . The fundamentals are the same, in that it is a business trading cash negatively, which will eventually run out if new funding is not found. I am not disputing that a backer will be found, just that this funder is not likely to look favourably on equity holders, they do not have to, and never do.
Aubrey, just wait and see. I called both Thomas Cook and Debenhams correctly despite the boards being full of individuals claiming that Ashley, on Debenhams, Fosun on TCG plus any number of potential white knights on both, would come to the rescue. I just base my assessment on 15 years as a CFO and having completed over 25 deals, some of which were distressed businesses with good long term potential but no cash to see them through. Hope I am wrong as as do have a small shareholding as part of a number of high risk young businesses of which I would expect to lose on 70% just do not know which 70% but now suspect this is in the very high risk category.
Dilutions are normally much greater than this when you have a business that is consuming cash. The new funder will be able to dictate terms and would be surprised if existing equity holders end up with more than 5% and could be less. Suspect this is what is largely priced in.
Do not think the project will fail but the most likely beneficiaries are the next round of investors who have the cash to bring the project to a cash positive position and therefore will be able to dictate the terms of their investment.