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Incorrect. No shares. Davies has got to make some decisions and sharpish. If homes and commercial won’t sell as going concerns then start to break them up. The property market is still there for some sectors but others have been hit hard. Retail and leisure for example. I expect the axe will come down shortly. I heard the same march daffodil; moving back to their old offices. They say never go back!
Kier are doomed. The level of cash tied up in the homes and property businesses is significant. Easily over £200m. The debt will be that again much of which is held off balance sheet. Davies announced homes was for sale months ago and hasn’t yet made an announcement stating a buyer. The MD was let go also. Who knows what is going on in terms of day to day running of the business. Property offers were in a fortnight ago and rumour has it there was no offers. Davies needs to sell to get the equity back into the business. In the mean time you’ve got over 500 employees getting paid but not doing much as the doors are closed to new business. Not that anyone would run with them anyway on a sale as you wouldn’t believe they would perform. The margins are so low in the core businesses, mainly set by frameworks, government spending won’t make any difference. Kier will only want to take so much on and if others aren’t winning they buy the work in to cover over head only. Drop the profit. There was a lady running property who left last week also. Direct report into the board. No role for her if there is no appetite for the business. The cost of running these businesses and having turned off the tap for new business will cripple the results. Action is required and required sharpish.
Does the debt include off balance sheet in the property development business? I expect not as it is secured against assets. The problem is these assets are valued by the directors for accounting purposes. The housing land bank has never been written down since the credit crunch. I can’t believe it is valued at market value. As for commercial property some sectors are holding up (logistics and industrial) but offices and retail have been hit hard. Kier have very little exposure to the former and are weighted towards the latter. I can see Kier broken up and property sold off or wound down, highways sold off back to a specialist and perhaps services. This would leave a decent contracting business but we all know this is very low margin work. However, if it is run correctly it can be a good business. Bring back Busby and Scarth and team. A good source told me middle management there are weak and have been elevated quickly to fill gaps of more senior management positions who were axed. Does anyone know if they are close to a new CEO?
The new CEO must be from a construction or engineering background. At present there is no one at board level who has any experience in house building, commercial property, services or construction. Hayden removed both Nigel’s who understood property and construction. Regrettably they believed Hayden (former FD) and Bev (Hayden’s choice for new FD/ his own replacement) had the finances under control. The property business is loaded with off balance sheet debt on predominantly speculative product. I’m not sure this appears in the net debt. It is secured against land and buildings but many remain vacant and wouldn’t be easily sold. Hayden always reports the nature of this business is unspecatuve but this is nonsense. It would be interesting to know what margin the construction business makes if you strip out the negotiated work via sister companies. mo1960 - isn’t the idea of a main contractor to put everything possible onto the sub contractors? I
i dont know how or if it is possible to track this but i was told the out going chief exec, paul idzick, sold his shareholding on the Friday before the press annoucement was made on the Monday that the shares carried little or no value. very good timing and i should have followed!!! this of course may not be correct.
Sain - what is your source for the rest of Europe (exc UK and Ire?) not being sold?
RBS must be running the show here. The French have had their opportunity, both with and without BNP backing, which they haven't taken. I can only assume they don't have the funds or RBS have lost belief in them. However, key to any takeover are CY Leung (8%) and SGP (55%). CY for strategic reasons moving forward as he is the power and brand. Obviously SGP to take control. My theory is that a statement was made to reflect the offers received as they were poor. This sent the share price diving. UGL have yet to make a formal offer but they originally circled when SGP and BNP were pairing up. I believe this put them off. So the million dollar question is will the French sell their 55% holding that has cost in excess of £140M and CY who is key to the business moving forward and once worth £80M in value sell for pennies? I don't think so. My question is can they be cut into a wider deal in isolation or would all shareholders be given the same treatment?
sain@vision - what do you mean by 'offered something for the future' - can they do this? rbs must be calling the shots. the french are in for 80m altogether. why sell for a couple of mil?
chief exec is looking very smug on the egi (real estate web page) saying done deal BUT subject to price. it does however have the support of SGP and CY Leung. SGP are in for approaching £80m - why would they sell at a fraction of this. They would be better taking the entire company private themselves. i guess they can't fund it or the banks - or RBS are calling the shots. debt could be halved with the cash they hold. i don't get it. Question - can SGP and Leung be cut in to a deal? or is this preferential treatment?
hold 10,000 shares. know a little about the company and watched the french (55%) slowly assemble their holding. can't see then accepting a bid at such a low level nor the 8% owned by CY Leung. RBS are the bigger debtor - what can they do if the company isnt sold? does this mean the french would have to load in further?
maybe i should shift the last shares i have? the debt is serviceable but they need equity to grow and expand. cash and equivalents half the debt (half year). is there a chance they could sink lower? may work with the french but the asian owner cy leung isn't going to sell cheap..... i can't see how all of the various influential shareholders aspirations can be met? 55% , 8% , standard life went for a chunk at the capital raise. can somebody explain to me what must happen for the shares to be suspended? also can some shareholders be given preferential treatment i.e. cut into a back to back deal? answers on a post card pls
who will the pull the plug? RBS? what level will the french family accept for their 55%, are they purposely driving the price down so they can take private and break-up? i cant see their exit from the mess they have helped create. also, what about cy leung he's not going to sell out at these levels is he? if there any experts out there i would welcome your thoughts on whether this is saleable at all despite market conditions? i have c 10,000 shares and am close to bailing....
i have followed this share closely and have bought and sold at varying stages in the last 6 months. how do we know oriel took a short position? i believe there are a number of reasons for the dramatic fall. they all come back to poor management decisions. rockwood - disaster and huge right-off. donaldsons - didn't fit, dreadful timing and took the risk on all of the inevitable staff restructuring. costs - some very expensive people who don't justify their costs. wouldn't happen anywhere in any other industry. i could name names! what now. an acquisition at the current market cap is a steel. king sturge sold to JLL for c. £150m. dtz asian operation is larger than king sturge and arguably has far better growth opportunities. does this mean you will get the uk for free then which is still a top 3 offering? mainland europe must carry too much over head and according to the web has had numerous managers. contacts tell me steven watts, pete leyburn didn't cut it in the uk in the good times so goodness knows how they are going to make an impact on struggling europe (ex uk). as for the states - less knowledgeable but patch work seems appropriate. sell back to management? does anybody know the timescales oriel are/ have to work too?