Member Info for Hounddog10

Manageable. Also likely to be tax deductible so for Lloyds that is 25% off the exposure.

https://www.proactiveinvestors.co.uk/companies/news/1038362/lloyds-banking-most-exposed-to-motor-finance-crackdown-analysts-suggest-1038362.html

Looks like the 6.7m on Friday has gone to Lombard through Liberum. See the two RNSs today. Seemingly Lombard wants the deal to go through or perhaps wants to be the kingmaker and drive a higher price. It is still only on a letter of intent. Impossible to know motives.

It seems that Lloyds has 35% of the market (see Telegraph article - I can’t get into it but the Google search summary mentions 35%). In the cases (which are class actions) it seems the lawyers are assuming around £600-700m or so total liability. I think with 8% pa interest that adds up to around £1bn in potential claim - which I have seen quoted elsewhere.

The 8% interest is a statutory legal interest rate applied to claims. Although it is calculated on a simple rather than a compound basis over a number of years it can really add to the value of a claim eg 10 years is 80% extra. I believe if the FCA orders compensation they follow the same method.

The BMW cases are it seems against the financial services subsidiaries of the motor manufacturers - so not against the manufactures in their role as a manufacturer but as a finance provider (as with Lloyds).

Worth noting that I think any compensation is tax deductible (as was PPI) - so with an effective tax rate of c25% impact is reduced.

https://www.telegraph.co.uk/money/banking/lloyds-faces-high-court-claim-car-finance-overcharging/

https://www.marketscreener.com/quote/stock/SANTANDER-UK-PLC-10439498/news/Santander-and-Lloyds-face-1bn-car-finance-claim-44533139/

I doubt there will be a need to (yet) make provision for the car loans. More like a 2025 or indeed 2026 item. However, from what I read it does not look good for Lloyds and there seems to be about £1bn exposure.

The more immediate threat is a ruling on HMRC’s case against Lloyds on the tax deductibility of loan losses in HBOS’s old Irish subsidiary. That is a £1bn hit of extra tax if they lose. The case was heard in May 2023 and a ruling must surely be imminent. I was wondering, if they lose, whether they will immediately make a provision. I suspect probably not as it will be appealed (it is such a big sum that the losing side will appeal I would imagine). The case is at first instance in the Lower Tax Tribunal and can be appealed to the Upper Tax Tribunal, the Court of Appeal and the Supreme Court if sufficient legal grounds are there for permission to appeal to be granted. So potentially plenty of time before a definitive position and plenty of opportunity for the learned friends to rake in fees.

You will need to wait for the Scheme document, which will be published within the next couple of weeks or so (quite possibly earlier). That will set out the timetable.

It has to be remembered that the Scheme needs to be approved by the Court as in the interests of shareholders as well as creditors. If there is a counterbid at a higher amount then it is obviously rather difficult for the Court to do so - although they will no doubt take factors other than the buyout price into account. 14.85p is probably the (estimated) limit which Saturn thinks the Court would go to without saying that clearly it is not in the interest of shareholders.

NFNICK. Thanks. Not sure where the 10% comes from. Needs to be in the Takeover Code. Do you have a reference? But others have pointed to a mechanism in the current Saturn bid proposal which seems to latch on to this (but only from Saturn’s perspective). Not seen it myself.

The fact is that contested bids have been very rare for at least a couple of decades - so not much practical experience from anyone.

Passing on equivalent information is Rule 20.1 in the Code ie everyone has to be on a level playing field and recent information will be determinative.

Lost “10” in business days in my previous post re time to disclose opening positions.

I think potential bidders are likely to wait for the scheme document (effectively the offer document) to be published. This has to be done within 28 days of announcement. I think that is business days. The disclosure of opening positions, if I have my day count is right, had to be published by last Friday (at 3.30pm), being ten business days since announcement. So Leslie Snr was late and the organisation (can’t remember the name) which announced early this week was also late. So we potentially have over 3 weeks (18 days) from Monday this week before the scheme document has to come out. Then from that it is 21 days to the Court hearing ie where the vote is effectively counted. There may be two days on 21 days because of taking into account posting (may have dropped away now in this electronic age). We will know the exact timetable when the scheme document comes out. However, we are looking towards early/mid February before the vote count (with voting fairly shortly before).

The matter which may lead to an earlier bid is the requirement for any internal information given to Saturn to also be turned over to any new bidder. Clearly the earlier the bid the more time to look at it and adjust the bid. However, at the giveaway price currently being offered there is probably not much downside for any alternative bidder of size putting in a bid of, say 14p, which would be enough to derail the Saturn bid as it currently stands.

Publican. Look at, say, Blackrock’s form 8.3 on 2 Jan 2024. You will see that Blackrock’s 1.33% position is described in table 2(a) as a cash settled derivative and more explicitly in table 3(b) as a CfD. Derivatives do not carry voting rights for the holder. The underlying shares on which the CfD is predicated are still held somewhere and are not removed from the ability to vote by whoever holds them. How, the CfD provider is hedging its position (or perhaps it is not - but one would expect it to do so in such an illiquid share) cannot be determined. Perhaps it has offsetting sold short positions or perhaps it is holding the underlying. If more than 1% long or short it is subject to the same disclosure requirements as others. However, it would have to be above 1% and BlackRock may be using more than one CfD provider.

BlackRock can affect the share price by its CfD activities but not the vote.

Blackrock is through CfD so no voting rights.

Up to something. Steady accumulation.

I agree entirely. Difficult to see how the Panel could have given a waiver. However, all UK regulators are very weak. Having said that the Panel is somewhat more effective than the AIM regulation team (utterly useless) and the FCA (merely useless).

No, it refers to all the valuation statements made by Zurrin - 5 year plan, webinar presentations, verbal statements in the webinar. It is a standard disclaimer but made very difficult by how specific Zurrin has been in his shareholder communications.

It does seem clear to me that this is a flip. It is difficult to establish the ability of ETC to fund Shanta (and particularly WK) as there is no public accounting information but my sense is that it would stretch them greatly (or more likely be beyond their reach) and the short term nature of the bid financing is indicative that there must be an undisclosed longer term plan. But a flip to who? I don’t think Barrick would be involved in mugging Western shareholders in this way but I have been wondering if one of the Chinese companies that approached Shanta last year could be hovering in the wings.

I agree Patel is likely to have an emotional connection to Shanta but I would be a bit more cynical and think that he and his associates (or quite likely family members) are as much out to make money for themselves as help the East African people. I was always fearful something like this would happen, which is why I was hoping the gold price would move up incrementally rather than rocket. I had thought the money grab against foreign capital would come more directly from the government than a member of the Board who has fiduciary responsibilities. However, Western notions of governance do not mean much to most outside the West. It is about family and friends and what you can get away with.

Actually, having checked the Blue Book rules, because this is a Scheme Patel & co are not allowed to increase their stake during the bid period (I had thought they could - but that is only for a contractual takeover offer). So they will not end up with an increased stake if their bid fails. I think also they will have a problem with MAD in that they are clearly in possession of insider information which also would prohibit any dealings in shares - I would have thought that applies to both a contractual takeover and a Scheme as MAD ultimately is an overarching EU directive (still in UK law) on share dealings in all circumstances whereas the Blue Book is specifically aimed at takeovers.

Have read that capex on a locker station is about $30,000. Page 37. But this is simply a random article I found on the internet but seems well thought through.

https://www.econstor.eu/bitstream/10419/253743/1/WIK-WP-No2.pdf

As posted before I think lockers will form a significant part of delivery - although timing of switchover and exactly how much they will be used is uncertain. I am not sure, however, that RM sees it this way. I think it is quite wedded to home delivery. I think it is a case of where you start from. RM starts from the fact that they have the most extensive nationwide home delivery (legacy) infrastructure. The other carriers, starting with more of a clean slate, come rather more from the position of what the customer wants (and customers seem to be quite happy with lockers). I was really addressing the likely mentality of RM rather than what they should do.

Mike. Yes, it might be quicker than years but I think RM are behind on this and their competitors are much further ahead. I suspect there is a good deal of competition for decent sites. Ideally, yow want to be somewhere very convenient ie train station or supermarket or somewhere central in town. The best sites may already have been taken, subject to exclusivity arrangements or simply lacking any extra space to take another locker station. The DOs and MCs tend not to be so central and I think increasingly will be closed and amalgamated to cover ever wider areas. However, certainly some would get a locker station.

I suspect also that RM may go quite tentatively. It’s USP (and greatest weakness) is covering all UK premises with delivery to the home and I think it is going to have to work out how lockers fit into that. They may be eroding that USP. Delivery to the home is certainly in the DNA of Royal Mail.

Delivering into simply lockers is reckoned to be about 10+ times more efficient. The overall position will clearly vary if you still have to deliver some residual parcels to households but it should speed everything up. I suspect RM is significantly behind the curve on this and it will take quite some time (years) to roll out a meaningful locker presence. Perhaps they will have to JV it.

How dominant lockers or PUDO shops will be for RM can only be a prediction, but my guess is it is increasingly significant. From a RM perspective I suspect it will first help QoS but ultimately will significantly bite into jobs (but that will take some time).

It is certainly the third option extension. May even be the fourth. Absolute joke that the Nomad can determine it is fair and reasonable. Nothing in it for the shareholders.