Member Info for Hounddog10

The situation seems to me quite reminiscent of when Jim Ratcliffe and his Ineos buddies came to acquire the Grangemouth facility in Scotland. He had not wanted it (I think it was mainly an oil refinery) but was trying to buy BP’s chemical business and BP had said that if you want our chemicals business you have to take Grangemouth as well. It had been loss making for years and I don’t think BP wanted any extra money for it.

The deal went through and they soon found out why BP was so eager to get rid of Grangemouth. When Ratcliffe & Co pitched up at Grangemouth one of the first things they did was to visit the union’s office. Decked out in Che Guevara posters they were told you don’t run Grangemouth, we do.

Ratcliffe put up a restructuring plan to turn losses into profits which was fiercely resisted by the union. One of the union’s arguments was that another part of Ratcliffe’s empire should finance the Grangemouth losses (heard that before?). Ratcliffe then said to the unions back the restructuring plan or we will close Grangemouth. The workforce led by the union more or less entirely voted against it. Ratcliffe then called a town hall meeting and told the workforce that Grangemouth would close. At this point the penny dropped and the workforce turned on the union leaders.

Grangemouth was restructured and became profitable. Quite a number of job losses but for those that remained and were put on lower basic wages but with a performance element, they were earning more a couple of years later. A happyish ending for most. Not so sure for RM.

More on the court case plus note the comment on India re differences in regulation. It is not an easy place to do business.

https://bioplasticsnews.com/2023/03/28/michael-stephen-euro-arrogance-plastic-policy-in-india-and-canada/

Anger. Yes, but I am trying to see it from Kretinsky’s point of view (and the fact that I don’t think RM is bust yet - whilst the directors have stiff not trading as insolvent obligations (and probably others under the terms of the privatisation) it would be difficult to put a put a solvent company into administration). If it goes as expected and Labour is in end 2024 then he runs the real risk of GLS disappearing from his grasp. He has a narrowing window to do something - which may well be why he is buying. A spin out of GLS will take at least six months. Also I am not sure if IDS stock exchange quote would be suspended if such a large part of its business is put into administration. Can’t think of an equivalent situation.

It will be off to the Pension Lifeboat Scheme. The main legacy scheme running post privatisation seems to be in surplus so probably OK there. The interim scheme which has been running pre getting the mixed DB/DC Dutch type scheme is in deficit. On that pensions in payment are paid out at 100%. Deferred pensioners are cut by 10%. Broadly.

The government took on the pension liabilities that existed at privatisation so those are for HMG to pay.

The Darren Jones GLS comment is, I think, a real threat to Kretinsky. There are plenty in the Labour Party that think like him and with Starmer bouncing around all over the place on policy it is very difficult to know what he would do. I suspect he would not particularly want to renationalise (rather like the water companies let the private sector cop the flak for issues very difficult to resolve) but Starmer might find a way to hold GLS in the group to cross subsidise RM. GLS won’t be able to do that for too long and it would be gross interference in the private sector but it would be a short term fix that will please the Left.

I would be surprised if RM is bust yet (but have always felt there is a possibility of insolvency). There is the much touted £1.7bn liquidity. However, that includes £900m of undrawn facility and I am not sure they will be able to comply with the covenants on that. Still about £800m left - but that go could go quickly if there is a resurgence of strikes. The numbers are big - it only takes revenue and/or costs to change adversely a bit to make a big difference to losses/operating cash flow.

It would be interesting to see if the auditors put a going concern rider on the upcoming annual accounts. They have to say the company is good to survive for a year from signing their opinion - so into around June 2024 - but technically not taking into account the £400m Eurobond payment. I think, however, realistically they will need to take that into account in some way.

Another article (apologies if already posted)

https://www.bbc.co.uk/news/business-65099143

I agree that the court case is really a long term issue. I think SYM mainly went for it because the EU’s position was damaging d2w’s position elsewhere in the world. Near term what matters is reestablishing d2w’s position in the Middle East and how successful Indorama will be in India. If India can be got to work that would be a major step forward. Also we are overdue to hear about new d2p sales and contracts.

I have noticed that recently SYM’s Rivulis Protect product has moved up on Rivulis’s website to be the first product displayed. So one would hope for more sales from that direction.

https://www.rivulis.com/category_product/products/drip-tapes-drip-lines/

https://bioplasticsnews.com/2023/03/22/michael-stephen-eu-ban-on-plastics-unlawful/

In an idle moment had a quick look at it. Total voting rights (shares) on 28 February 2003 was 67,386,199,641. Subsequent buybacks reduce this to 67,023,218,739. This agrees to the number on Lloyds’s website which is 67,054,039,205 (see link and click on right side “show more”). The difference is the 30,820,466 shares bought yesterday. Guess they only adjust a day in arrears.

The figure on this website is certainly wrong. I think it often has been. Hardup has slightly different number - starting with an earlier total voting rights RNS.

https://www.lloydsbankinggroup.com/investors/shareholder-information/share-price.html

Lloyds itself seems to have a different number. (Click on show more on right hand side in link). Odd.

https://www.lloydsbankinggroup.com/investors/shareholder-information/share-price.html

There will be no distressed sale of GLS. It is big enough that it can simply be spun off and floated and will find its stock market level as an independent company. No forced sale for shareholders. At the same time it might be that a trade sale is also proposed - so called “dual track” - to see if someone will pay more than a float would get. But there will always be the fallback of a float.

The full year figures will be bad and largely known about. What those figures and the next six months will inform is whether RM can contain its losses to the low hundreds of millions or is on its way to closer to a billion of losses. Complex mix of impact of pay rises, VR, revisions, effect of Superhubs, IA, letter volumes reducing and direction of parcel volumes. They have enough capital for the next year or so. The next big capital event is the repayment of c£400m Eurobond in July 2024.

I think a little care is needed on the US plastic bottle announcement. It went out as a Reach announcement ie an announcement that is not deemed material enough for an RNS but is of interest. I know Laurier bigged it up in the interview but we have heard all this stuff before from him and it has come to very little or often nothing.

It is anyone’s guess what the current results are like. On the plus side they have just said that the Middle East facility is functioning as expected - and that area is critical to d2w sales and where last year I think most of the drop off in d2w sales occurred. On the negative side we have heard nothing about new d2p sales even though in autumn last year they promised that by the end of the year. For example, presumably Rivulis has not yet reordered? Also nothing on nitrile gloves.

Also Bristow STILL cannot get his figures right. Third year in a row sales have been adjusted downwards when audited because of cut off issues. Hopeless.

Nkey. The RNS is about the issuance of listed debt securities (here subordinated debt) under LBG’s £25bn Euro Medium Term Note Programme. In other words a Eurobond. If a company lists a Eurobond (in this case I assume on the London market) they have to issue a prospectus. This has a lot of accounting and legal gumpf which takes time to produce although hardly looked at by anyone, but is deemed necessary by regulation. For frequent issuers of debt securities this can be onerous. So a shelf programme structure has been devised. In essence you file one prospectus with the regulators which lasts for a year. You can then issue any amount of securities under it up to the limit (here £25bn) you have picked in the shelf prospectus. When you decide to issue a Eurobond you only have to put out a pricing supplement which contains key details - price, value of securities being issued, key features. Normally only about a couple of pages or so in a pro forma form. It means you can do the regulatory documentation quickly and not be wrong footed by changing market conditions.

“Final Terms” is just then really an announcement of a Eurobond issue.

As an aside, Barclays recently got into trouble with a similar style shelf programme in the US when through complete incompetence they issued more securities under the programme than the limit. Thereby, rendering the additional securities technically unlisted/unregistered. They had to pay a good deal of compensation.

Sorry autocorrect - Charac limited. Bought in 2022.

AS. Yes, they bought 33% in a small company called Character Limited. As, you say all around online pharmacy. Certainly think it is an opportunity but you have to get it right and there has to be someone in the NHS/pharmacy/customer chain prepared to bear the delivery charges.

https://charac.co.uk/local-to-local-royal-mail/

AS. I think that was also a key failure of the SC. From the start it was clear that there would be only softball questions to the CWU but really if the Committee was to have any credibility they should have asked Ward what was his plan and not taken vague assertions. As far as I can work out their idea of additional work for posties is to pick up granny when she has fallen, cut the front lawn, sweep the patio and walk the dog (actually cut the last one as posties are not too fond of their customers’ dogs). And then on to No.21 to do the same again. I am only being slightly flippant as I think that is what it more or less amounts to (gardening tasks was an idea that I think the Swedish postal union once had). The CWU certainly have suggested looking in on the elderly for a fee. But posties would need to be trained and probably regulated, horrendous legal and other consequences if a mistake is made and how do they complete their round if there is a problem with an elderly person they have to deal with?

Another suggestion seems to be delivering prescriptions. But if you are delivering meds then they have to be there, not like most letters or parcels, and so the core network of delivery has to be very robust - and what when there are strikes? And the pharmacies are saying they are losing money on drugs so where would the cost of delivery come from?

JBT. You can also see it in the annual return. The pension fund note is on pages 22-25. Much of the investment is in multi asset funds, which they previously termed hedge funds so will have all sorts of stuff in them. They have also been in multi strategy funds which almost certainly will be using shorts. Have found it rather strange that a union would use such red in tooth and claw capitalist investment instruments.

Also of interest are the “secured”. Loans to A Furey and D Bowman on page 20. Amounts have been much higher in the past along with a loan to a Mr/s Kerr. I wonder what terms those are on. Third party?

Oligarch - I was referring to the CWU pension fund - about £20m in deficit in last annual return.

https://www.gov.uk/government/publications/communication-workers-union-annual-returns

Well, the CWU’s defined benefit pension scheme (which is heavily in deficit) invests significantly in hedge funds. Perhaps those funds are shorting RM. Conspiracy theory for the day……

Redceo. I think your post nails it. This isn’t about reasonable negotiation. The CWU has a pretty unpleasant approach with ad hominem attacks against Thompson. They did the same to Black and will do the same to the next CEO and beyond.

What I find difficult to understand is where the CWU thinks this all ends. The strike is not really about pay. It is about changing working patterns and T&Cs. How do they think that a business which is on track to lose probably £400-500m this year and with declining letter revenue is going to survive much longer? They may (just) get nationalisation under Starmer but even in government hands it won’t be allowed to lose that much money.

Dynamofc. I was being slightly tongue in cheek. But Thompson’s downfall in the first committee was being evasive whereas Ricky was not. For example, on PDAs Thompson should have said yes, among other things, they are used for tracking (and used by competitors) and asked Jones why he thought that in the 21st century that was a bad thing?

Thompson no doubt will go soon enough. Another scalp for the CWU. However, you have to wonder who would want to be his replacement, particularly given the political landscape. The CWU would doubtless hope for re nationalisation under Starmer and he might just do it. I don’t think he wants to own the problem. Similar to the water companies - very difficult operational/financial issues so best left for the private sector to cop the flak as gradual progress is made. However, Lavery, Jones et al may push him there.