Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Why are you assuming that the open offer is the option that the board and Dunkerton will select? Is it not a safer assumption that IF shareholders vote in favour of everything listed in the rns then they will select the second option which is available exclusively to dunkerton and results in him owning 75% of the business? What’s then to say that he might not subsequently decide that further liquidity headroom is required once delisted that would be for any value of his choosing and for any volume of shares of his choosing and could be voted for exclusively by him and reduce anyone else’s value to even less than now?
Debt level was £30million at end of h1, approx £0 at time of January presentation. There is no £100million of debt unless your only source is news reports where the author can’t grasp the difference between available lending facilities and debt.
So having taken time to digest Thursday and thought upon it the following is clear (as we all know)-
No bid for the company in the expected sense but he still wants to take it private.
He wants to complete an equity raise that doesn’t appear to be necessary, this will be at a massive discount and will likely increase shares in issue by 50-100%.
This requires shareholder approval.
So why?
The takeover code way is lengthy, allows plenty of opportunities for other bids to drive up the price, requires board approval for any proposed bid and is likely extremely expensive to process. Whereas an effective buyout by delisting appears (from the little research I’ve done) to be easier, quicker, doesn’t allow for competitive bids and doesn’t require the same from the board.
Why the equity raise? Potentially doubling the shares in issue would make an offer to holders for delisting effectively value the company far heigher (buying 74million shares at x would only be 37% of the shares in issue thus placing the business value far higher), this could increase any ip values in the near term. It would also protect from outside bids as his offer could be 37% of any other offer and still be the same value for shareholders thus de-incentivising any competitive bid and obviously he would control a far greater proportion of the business (perhaps aligned with whatever deals have been struck).
Any proposal, and it is just that, requires shareholder approval and a delisting price will need to be communicated to holders in advance of any vote, should that offer be s*** then it stays public and he’s failed.
Everyone wanted an offer from dunkerton, this isn’t what anyone expected but this is the start of that… if any of this is even close to accurate then it’s Bond villain level devious but then I’m pretty sure I saw the name Rothschild on the end of his rns so no surprise.
All of this will become clear over the coming days as this will likely move quickly from here on.
Also we could be getting a massive shafting, which doesn’t appear unlikely at the stage.
Beo, that needs to be voted for by the majority of shareholders and without an acceptable exit price there ain’t no one who isn’t called Julian Dunkerton voting for it.
What the sp does on Tuesday depends upon whether there’s any rns in the morning or not. He intends to take this private through the dirty back door but still requires shareholder approval. At this point that’s what is known (oh and that he won’t be offering 79p per share).
This is frankly ridiculous and must be the last throw of the dice of a man about to hit the bottom of his losing streak.
There is no reason for an equity raise especially on the very day that further lending is announced.
There is no need to delist the company (unless of course shareholders are concerned about a hostile takeover, I’m pretty sure that holders would welcome that!)
There is no way that anyone who isn’t dunkerton would not vote against such a move.
Frankly that this has even been allowed to be put out by the board is appalling.
I’d like to think that anyone invested or anyone on this board who enjoys a little antagonism will spare 10 minutes to bombard investor relations to express their views, make it clear that they will not vote against their own interests and demand a vote of no confidence in the ceo.
If the balance sheet has been hit by the, no doubt, expensive advisors from pwc and teneo to ‘explore’ this farce then dunkerton should repay that money and shut the door on his way out.
Considering Next (or similar) as a possible interested party makes this very interesting indeed. Realistically they would likely only want the U.K. aspect of the business and so would raise huge sums of cash from selling the ip in North America, South America, Africa, the Middle East, Australia… these are all different size markets with different potentials. If the Korea/China region sold for £50million and India for £40 (with cash out back in for sdry’s stake in the jv), then potentially anyone interested in just U.K. (or europe) could make (insert best guess as to the value of those) within months of acquiring, not to mention what an established market like mainland Europe would be worth.
This alone could make things interesting if dunkerton doesn’t put up an offer or attempts to low ball.
In my experience further extensions to deadlines indicate commitment to completing a process, and are usually often common where any kind of financing deals are concerned as these deals carry with them certain conditions that need to be met in order to secure the financing. It’s only natural that any organisation potentially funding or part funding a takeover would want to ensure their investment is as secure as possible, this is likely where the cost savings mentioned in the extension rns come into play in terms of securing financial backing. From shares that I’ve been invested in where there is any investment required that isn’t a straightforward issue of shares in exchange for x amount of cash there has always been deadline extensions and the sp has always reacted as those looking for a fast profit either got board or spooked by a drifting sp.
But none of this is to say that an extension will or won’t happen or that an offer will or won’t be made, simply my experience of similar situations.
Hi Dean, I’ve just scanned your most recent contribution and would like to correct a couple of points-
1- the sp was in a low-mid 30’s with range following a trade update and was sent down to the 15p mark following the sky news report that pwc had been bought in to ‘advise’ and holders at the time feared administration. The results (half year) that followed showed a swing to profit (albeit off the back of the ip sale) and net debt of £30million, at the time of the web cast it was stated that net debt was zero but they expected to end the full financial year with debt broadly the same as the previous year (I believe roughly £20-£30million, although I haven’t checked this in advance of replying). The release of the half year results was not the trigger for the sp drop.
2- Dunkerton has previously looked into a take private bid a year ago when the sp was over £1 and it was reported that he didn’t pursue it because he felt that the debt burden that it would create was too great a risk.
3- a counter theory to the cva narrative would be that pwc may have been bought in to advise on preparing a buyout and that the cost saving/cva article may have been leaked to avoid speculation on such a bid. The rns stating dunkerton’s interest stated that he had previously approached the board so this approach occurred at some point previous to the rns, and long ago enough for the board to form a panel, organise and release the required information, etc. This is my working theory, although it’s entirely speculative.
Congratulations all on today’s contributions, it’s good to see the quality of the exchanges improving and being a much more productive exchange of views and ideas.
Joules were close to the max of their available borrowing for a while (lending facility of £25million and borrowing of over £20million). Half year results here from January record debt of £30million with a lending facility with bantry of upto £80million and hilco of £25million (presently). This begs the question of why tap up hilco for an additional £10million on the lending facility and a loan of £10million (which according to the rns would be until feb next year)? All I can come up with is that bantry might not be supportive of a bid. Also why might hilco consider a loan of £10million that would be due for repayment in eleven months unless they’re confident it’ll be settled?
There’s lots going on here and none of it is easy to unpack.
Different platforms showing differences on this from Friday…. Advfn shows three buys over 1million and one for over 1.5million, whilst London stock exchange shows two transactions at over 1million and one for over 1.5million, whereas this site showed one sell at over 1million, one sell of over 1.5million and two unknown that effectively cancelled each other out. The blackrock rns rationalises one transaction but whatever the others are should also require rns as they each account for over 1% of total shares.
Would also expect that if they are all sells the sp would have collapsed on Fridays volumes and that they were at highs from Friday (and the preceding days) is extremely bizarre.
Any takeover will take months to complete and any potential capital injection can’t be incorporated into the business until completion, stock will still need ordering and paying for over that time for autumn/winter (it usually starts appearing in store around September and would likely start dispatching for wholesale earlier so likely needs paying for in the coming months).
Regarding the turnaround aspect of the rns given that they’ve been working with advisors there’s likely costs attributable to realising further savings such as exiting leases of excessively unprofitable stores. Could be something more significant like closing the U.S. stores ready for the I.P./ J.V. That was rumoured months back. Could be to take steps to enable them to meet conditions in place for whoever is providing funding, could be that the wholesale books have recovered somewhat requiring higher volumes of stock, could be they haven’t got a pot to p*** in, could be anything.
There’s nothing here that provides any insight into whether the takeover will happen or not.
The 2.1 indicates that this is now entering into an offer period-
‘When an offer period begins, the offeree company must announce, as soon as possible and in any case by 7.15 am on the next business day, details of all classes of relevant securities issued by the company, together with the numbers of such securities in issue.‘
There is literally no reason to issue the 2.1 unless there is an offer on its way.
Interesting to see our partners sp has risen by 77% recently exclusively from their interest in bres…
https://www.thearmchairtrader.com/jangada-mines-rides-graphite-wave-shares-blencowe-funding/
Does anyone have a link to the most recent interview please? I can’t find it through google
Jimini I feel that the ‘stores have been rammed’ observations are anecdotal… there’s nothing tangible that supports anything one way or another, it’s the build up to Christmas they should be busy. But these observations are simply that, there is no data to metric footfall against last year, there is an increase in reviews but I genuinely don’t believe that a 50% increase in those translates into a 50% increase in sales… especially when retail sales last year were incredibly strong.
On the discount side of things, for me I’d imagine that there is a price sensitivity for consumers and the need to cater to that is simply a thing that exists in practical terms so what the ceo wanted to achieve previously is fine but the practical approach is likely necessary. Additionally it’s worth noting that while they offered a 20% off Black Friday offer other (more premium brands went further) Tommy did 30% off everything, vf brands timberland and napapijri effectively launched sale early with ‘up to 50% off’ and then offered mailing list customers an additional 20% off those prices, this suggests that many big brands have had a tough season (how could they not when people were at the beach through October instead of buying winter clothing?) and that Superdry was more restrained can only be viewed as a positive.
Still for me cost control is everything, a return to profit and evidence to support the turnaround plan working are needed (an update on wholesale is also well overdue).
Jimini the 20% off everything Black Friday event was the same as last year, and I note that many other brands ran more aggressive discount rates over that period. I also seem to recall a series of promotional discounts in the run up to Christmas last year so would expect similar over the coming weeks.
Anyone hoping for a swift turnaround in fortunes here should probably prepare for disappointment, retail has been challenging this financial year, and wholesale sales will not miraculously return. What we do need is evidence of increased stability through cost control, a demonstration that the turnaround plan is beginning to show that the foundations are in place to provide a profitable (or at least none loss making) business in it’s current form and something to support that a return to greater wholesale revenue will come… in short a greater degree of confidence.
I also understand the logic, however I doubt very much that November top line sales have exceeded last year’s. Let’s remember that both retail and ecom had company record breaking Black Friday sales last year and that they recorded their best ever jacket sales also.
I do note however that prices of products seem to be around/above 10% higher than last year so given such a margin increase sales can be weaker than last year but more profit rich. I think that the season (and year) will be more greatly impacted by how they have/are controlling their cost base. I’m more than happy with declining sales in this economy if they have actually stopped spending more than they are generating, if there isn’t a return to modest profitability this year and a massive improvement in cash control then the board should be stepping in… it’s ridiculous that a company can sell its ip for a handful of countries for a cash price equivalent to the overall value of the company.
There was no rns for completion of the previous ip sale so wouldn’t expect one for the jv completion, it was scheduled to complete last week so I would assume all went smoothly. A quick email to investor relations should confirm.
Hi all, I’ve been considering taking a position here for a while… it’s increasingly looking like there’s strong upside potential. One question I have is if there’s any indication of of when the definitive feasibility study is likely to be completed? I can’t seem to find this info, but may have missed it.