The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
No one besides insiders knows the information you are seeking, so it's pointless searching or asking in forums.
Let's just say it's a high risk high reward investment. You should not invest what you are not prepared to lose in high risk investments
A CVA is good for the company. For the shareholders it depends how much it will dilute them. We will see.
Flybe is a bankrupt company that already passed an finalized an offer to shareholders of 1p.
Debenhams is a profitable company going through a rough time.
The market regards these two companies as equals, so whoever can take the risk, there is opportunity. I will buy more at or below 2p, not more.
He's been smoking the 2.2 bn revenues of Debenhams and comparing them to their current 40m market cap. Theoretically they could buy back the whole company using one week's revenues.
The SP has proven it can go to any number. For me the "unbelievable" area was at about 6p. Below that it can go anywhere. Why not 1.5? Why not 1?
Like Upside down posted a chart showing how investors behave during a down tend, it's the same kind of behaviour when a company's stock approaches 0 like Debenhams does. Investors in forums all say it's already bankrupt, the world is finished and and positive comments and contrarian investing is "hopeless".
Many of the companies survive that and provide 5x investment results to holders. It's perfectly ok not to want that kind of risk / reward, but reward and risk go together. Debenhams is one of the stocks that can give 10x returns in 1-3 years. That's rare, and it attracts some investors who like high risk / high reward
Anyone knows when we are getting the Q1 results? (October to December)
thanks
It depends a lot on the agreement with the landlords, it can be without any dilution or with full dilution.
In case of debenhams I would not expect a lot of dilution, if any, in case of a CVA. However there can be other effects, the agreement can mention anything (for example for a landlord to take a percent of the profits).
There will be definitely be dilution if they have to renegotiate with their lenders (bondholders) in case that they insolvent and can't pay their bonds, even after MDN sale, as well as if they raise money from shareholders.
The share price will go up if there is a tangible update of the financial restructuring plan. Shareholders are afraid of dilutions via placements or dept to equity swaps and potential buyers are afraid of the leases and increasing costs of the future.
At the same time the SP is decided by small investors who sell very easily when losing, they never hold. It can go down to any level.
Flybe isn't worth more than Debenhams. Their market cap is just 8m.
Yesterday one of them reported that Debenhams is working in a 3 stage plan, one of the stages involving a dept to equity swap. Without revealing their sources that is just blatant market manipulation. This is very serious inside information, but who cares right?
When doing a viability assesment you are supposed to run extremely bad realistic scenarios.
The scenario of a no deal Brexit resulting in a UK GDP ressesion of 7% is one that even the bank of England has accepted as a worse but possibile scdnario. 7% GDP decline would bring 20% sales drop in Debenhams, not 2-5%.
If their viability assesment doesnt account for a scenario like that then it's not worth much, but I am sure it does
From an outsider and without wanting to offend anyone, I wouldn't blame anyone than my parliament if I was from UK. The way they are handling Brexit is both laughable and discaseful (and my country is a global leader in discaseful, ridiculous politics, I should know.)
I am running a big financial company myself and I can assure you, we will know at least 2 years in advance if we are going bust or the probability of us going bust. it's not that complex either if one has access to all inside information of a company.
I am not saying there is zero chance of them going bust next quarter. I would give it a 20% chance. But if they do go bust anytime in 2019, then the BOD was ferudulant to release that viability assesment.
This is published in their annual report, at December 4th page
41 (viability statement)
The directors have assessed the viability
of Debenhams over the three year period
to 28 August 2021. This period has been
selected because it reflects the pace of
change in retail; uncertainty surrounding
the UK’s decision to exit the European Union;
aligns with the Group’s plans under its
Debenhams Redesigned strategy and its three
year planning process; and presents the board
and the readers of the annual report with a
reasonable degree of confidence whilst still
providing an appropriate longer-term outlook.
The board is in agreement that Debenhams
is a viable business and the viability statement
can be found in the directors’ report on
page 78.
In making this statement the directors have
considered the resilience of Debenhams,
taking account of its current position and
historical financial performance, the principal
risks facing the business in severe but
theoretical scenarios, and the effectiveness
of any mitigating actions. This assessment has
considered the potential impacts of these risks
on the business model, future performance,
solvency and liquidity over the period. In
assessing these impacts, the directors also
considered specific supplier risks in relation to
credit insurance and the potential impact that
working capital may be impacted by such risks.
As noted in note 22 of the financial statements
on page 121, the Group’s revolving credit
facility is due to expire in June 2020 and its
issued senior notes expire in July 2021. While
recognizing the challenging retail environment
will increase the risks and costs around the
future refinance of these facilities, based on
current market conditions the directors believe
Debenhams has the appropriate plans and
mitigations in place to maximize the prospects
of a successful refinance of these facilities in
advance of the 2020 and 2021 expiries.
The financial position of the Group, including
information on cash flow, can be found in the
financial review section on pages 35 to 40.
The bod predicted at their September 2018 results that they see no solvency issues untill 2021 even taking into account the declining sales and difficult period for retail.
If you think they will go bust this quarter then you must also think the bod is fraudulent, since (1) it's against the law to run a listed insolvent company without informing investors, as well as (2) impossible for you, an outsider to better be able to access the solvency of the company than the bod and (3) the bod cannot be that incompetent, so as to be unintentionaly wrong.
But at page 21 of that presentation, the rcf on January isn't zero. It looks to be around 100m which brings the 280m dept that was reported on January 2019 inline with their forecast. I appreciate the reply and the rest of the info but your post of missed forecasts is totally missleading.
Can you please disclose where you saw the management forcasting the rcf to be at zero at January 2019? I read their end of year presentation document and saw no such forcasting.
Which forecast forcasted 180m of dept? Their dept was 320m in September and 280 last update in January.
Debenhams is a company generating 2.2bn of sales. This should not be underestimated. Not paying dividends ensures they are cashflow positive after paying their interest payments even with the current margins and lower sales.
They didn't issue a profit warning so that means they are inline with estimations of 1-30m of profits for 2019.
That's very far away from Flybe a company that was loss making for years.
Btw if every listed company had to pay their depts immediately tomorrow without any refinancing , half of the worlds listed companies would go bankrupt immediately, come on. It doesn't work like that.
Flybe completely run out of cash. Debenhams generates enough cash to keep going.