Member Info for lightnotheat

Agree re the odds - it is just my way of expressing the most and least likely reason for the current share price . If one thought that there was a high probability of the deal not proceeding then you would obviously sell. It is not a precise scientific exercise - and it can't be - it is just a directional view

The question is why is the share price languishing at this level given a potential cash bid at 35p.

Many on this BB - take a bow @Ice - said that we should ignore the share price and that a three figure bid was bound to happen. That was wrong then so what is the share price telling us now: Possibilities and odds are as follows:

1. That there will not be a bid at the end of the day - 10% chance

2. That institutions are not going to average down on already loss making positions - 20% chance

3. That no one other than perhaps individual punters are prepared to get locked in for an indeterminate period but possibly 1-2 months when the shares get suspended at the end of the month. Indeed I suspect that many institutions are not allowed to invest with this hanging over the shares or are willing to risk looking foolish if it all goes pear shape -75% probability

4. That lenders will refuse to continue waivers and pull the plug 5% - probability

5. That Sidara will not request an extension to the offer period when the current extension expires on 17th April -1% probability or less

Obviously all 5 of these factors and perhaps others are in play. I suspect that the shares will have a small rally post 17th April if an extension of the offer occurs but I would expect the price to remain well below 30p into the suspension. So you pay you money and wait for the outcome which is what I have done this morning by adding to my holding.

I think that selling at this level is loss mitigation by individuals and traders who bought at much higher levels.

I believe that the transaction will go through and have backed this by buying more shares a few moments ago. The reasons I think it will go through are:

1. Sidara has invested a huge amount of time and money in trying to get Wood several times now, it has conducted a significant amount of due diligence and is very unlikely to walk away at this stage. I believe its offer price is a bargain for it despite Wood's problems

2. I think the current lenders will go a long with this as I think the alternative could be very messy, would take a lot of time an money to try and get repaid. While the additional debt from Sidara means that there is technically more to repay out of available assets, the new lending is not senior to existing lending, is not on better financial terms and crucially will be SUBORDINATED to the existing debt once the deal goes through,. So I think that there is every reason for the lenders to support this deal.

3. I believe that Wood will be able to publish its Accounts well within the 6 months allowed to do so after the end of April

The risks are - S is put off by further market turmoil - unlikely in my view or that it finds further significant nasties and either withdraws or lowers its bid. This is a genuine risk but hopefully a low one.

There is remote chance that another bidder will come in now that S has declared what it is prepared to pay. I think that this is unfortunately unlikely although not impossible. Any new bidder would have a lot of work to do before submitting a bid although the level of uncertainty is significantly reduced by the amount of due diligence already done. It might also want to wait until the publication of Wood's Accounts as to succeed it would need to make an unconditional offer. However a new bidder has a lot of ground to make up on S and so I would attach a low probability to a further bid but it is in the current price for free.

The whole value of the BB is to get a range of views- not necessarily to follow any particular one of them. Its purpose in my opinion is to make you think. You always need to be aware of the contrary views and contrary views perform a valuable role but you need to form your own opinion at the end of the day

He was wrong but does not need to apologise.. no one should have followed his advice and if they did then they have only themselves to blame. It is true that he ignored many other commentators on this Board but it was his prerogative to do so. His views have been exposed as wrong and so have many others all be it not to the same extent and that is the end of it.

If they pull the deal then the shares will fall to zero and the company will likely fold UNLESS they can get the finances sorted pronto

I note what you are saying but the size of the debt financing costs vs the income generated from the order book still seems too high, hence a desire for a better capital mix with more equity and less debt. They do not have until next October as covenants have been breached and this probably allows lender to immediately call in their loans. So forget that there is a load of time to sort this out. The fact of covenant breaches and the waivers expiring at the end of the month also makes an additional bid unlikely, unfortunately

It would need to be something like a 4 for 1 at half the current share price to raise about £360m. Even with the deep discount it would probably need to be underwritten and the big shareholders have probably already told management that they would not support a rights issue which rightly or wrongly they may well regard as throwing good money after bad.

It is only a refinancing if lenders are prepared to refinance! It has been clear every since the conference call when management did not explicitly rule out an equity issue that some equity capital injection was required. Refinancing don't just happen!!!

@Ice Cool they will have spoken to the biggest shareholders before putting out this statement. The only hope is an alternative bid; shareholders are not going to vote this down as if they do there is still a chance they will get nothing. We have mostly disagreed throughout this bid and in particular you could not rationalise the difference between the market price and what you thought the company was worth other than by saying that things had not changed that much and therefore the market was wrong. Market can be wrong but very very rarely to the degree that you were consistently implying. You had your view and I had mine; you are fully entitled to your views and I certainly did not rely on them and nor should anyone else have in making their decisions on this stock.

I think we all got this wrong, me included as I was consistently saying a bid of 50-70p. I am long at 42p. I just feel strongly that totally ignoring the market price implying that everyone else is wrong and that a bid of three figures or more was a near certainty reflects a very poor understanding of market dynamics,. That said, everyone on this BB should make their own decision and not blame others if they made the wrong one.

The one major concern I had throughout was not that S would not bid but that a significant equity injection was required. I mentioned this many times. There were always three options here, a very very dilutive rights issue, a massive debt for equity swap or cash injection by an acquirer. Personally given the price offered and without know the full details on the restatements etc, I would have gone for a rights issue on the basis that over time we would have got our money back. Clearly the insiders will have considered these three options and that is why they are saying an injection by Sidara would be the best one.

The lenders are unlikely to pull the plug if Sidara proceeds and perhaps even if they don't. While this suggests "free money" to be made at this price, the market is clearly attaching something like a 30% probability to the deal not going through and no probability to another bid. For me personally to average down to 35p would cost me too much and so I am going to sit on my hands and hope beyond hope for a higher bid. The likelihood of a bid is greater now than at any time since Sidara indicated a possible bid as others now know what price they have to beat. That said they are outside the tent and any offer would be conditional. For this to work it would need to be at least a 25% premium to the offer on the table and perhaps more to prevent investors taking the "bird in the hand" rather than "one in the bush"

Unfortunately the market is much more right than wrong. I am long at 42p. It is regrettable that several posters on this BB believed a lot of rubbish about why the market price was where it was and how the market was totally wrong. They did a great disservice to others on this BB. The market is of course sometimes wrong but some of the views on possible bid prices were ridiculous.

The current share price is expressing doubts about whether a bid will go through at all. I think that it will as Sidara has done most of its work, is desperate to acquire Wood, the lenders will not want a total collapse and nor will the regulators. So unless something further nasty is found then I think it will go through. Institutional shareholders are not going to punt on this. There is an outside chance of a bid now the price on the table is known. Any offer would need to be quite a bit higher than the current one once it is finalised as a new offer would be conditional. For me, the cost of averaging down to the 35p is too high in relation to the still residual risk. So I will sit, hope the deal goes through and take my losses.

The key reason why the share offer is so low is the requirement of additional equity. Without this we would be looking at about 80p

Totally agree with @IceCool that baring any new nasties, a refinancing and accounts signed off would see the share price meaningfully higher though this depends on any equity issuance which I believe is highly likely in order to satisfy the lenders and bring covenants back into reasonable shape (how incidentally were they breached - was it on income or written down balance sheet or both - that is what we really need to know). If by some miracle there was no additional equity then a very strong bounce is on the cards. In any event I will probably add to my holding if there is an extension on 17th April and the shares are anywhere near current levels

If there is an offer for Wood in excess of £1 then @Ice Cool, longfell and others suggesting a three figure bid price would be my total heros. If you all really believed this then unless you think Sidara will walk away you should all be mortgaging your houses to buy the shares at this level. If institutional and very large PE investors believed that such a price was even 50% possible the share price could not be down here. Those believing in a bid at over £1 must also think that the stand alone value of the company is worth more than the current share price and the same is true of institutions. So unless you think that institutions are concerned about getting egg on their faces on the remote chance that there is no bid, you cannot explain the share price down here and please please spare me the bots and conspiracy theory crap. If despite all this there is a bid at £1 or above which several of you seem confident of, it would be unprecedent vs the undisturbed price and you collectively will be my heroes for life!

@ Ice. I have told you that I am long. Frankly don't care whether you believe me or not.

All figures will be revised including for the balance sheet. We will see if the order book is still $6bn although whether it is or isn't is not that fundamental to the case.

As I have said previously, I think a bid in the 50-70p range is likely; you go for something much higher. As I have also said in the past, I would prefer you to be right rather than me!

The number of boards that I post on is irrelevant. I bought the shares initially around 60p but have averaged down to 41p. re Luca comment, you might be right but I have a different view. I am still invested for the simple reason that I believe that Sidara will bid and that it will bid above my average in price. The key date for me is 17th April; if an extension is asked for and granted that will be very positive; if there is no extension then we are obviously all in trouble. I am prett confident that an extension will happen although recent turmoil caused by Trump tariffs adds some uncertainty as tariffs at some level are here to stay and the position vis a vis China is pretty horrible but I suspect will be solved in due course. All this might impact on the price paid but hopefully there will still be a bid. I am being fully transparent in my views and other posters can take them or leave them. I was head of sector research at several leading investment banks for over 20 years; I would be interested to learn what experience others bring to this BB!

I am long Wood but I don't really agree with this analysis. As I have said several times before, the ability to generate cash flow in the future is not impacted but the AMOUNT of cash/revenue that they might have expected to receive will have diminished as contracts which previously had a future revenue stream attached to them no longer do. I think you can kiss goodbye to the assumption that the order book is £6bn. Let's see what it is when the figures are restated.

Please Please read the RNS's which say nothing about whether the AMOUNT of future revenue is impacted by the writedowns. As I say, I am long. With a bid we should be ok. Without, we are facing a long road to recovery preceded by a a large a dilutive rights issue or debt for equity conversion which is an inevitable part of the refinancing given the breach of covenants.

Disagree that extension by Sidara is bad news; quite the opposite in my view. Saying that Sidara knows Wood inside out because of its bid last year and so any extension suggests that the parties are far apart is not necessarily true. The situation is completely different from last year, contracts have been overstated, loan covenants have been breached and no audited accounts are available. Given how long it has/is taking Wood to get through the review process, sort out a refinancing and get its Accounts approved and out, it is hardly surprising that Sidara is taking a long time. I view an extension on the 17th as positive as it shows that Sidara is very interested DESPITE all that it has learnt so far of Wood's problems and despite the massive turmoil caused by the tariff war. Unfortunately tariffs at some level are here to stay and reduce the value of most businesses Wood included not least because they will have a negative impact on global activity and investment. The cost of this will be reflected in any offer price which I continue to believe will be in the 50-70p range and hopefully not lower!

I have been through this point may times before, so one last go. The company has talked about ABILITY to generate cash in the future not being impaired. it has not commented on whether the AMOUNT of cash that it has previously expected will be the same. Contracts will be written down substantially as already confirmed - although not the amount. We do not know whether any cash from these contracts had been assumed in historic figures but possibly not. However this might well be down to accounting policies for the recognition of revenue for contracts which means that they are not recorded in the books until the contracts reach a certain maturity. Nevertheless the fact remains that there were contracts on the books that were substantially overstated and that these contracts over time would have generated revenues which now will not happen. As the value of the company is calculated as the present value of future cash flows and that these cash flows will have gone down so will the valuation. How much is unclear at this stage but the market price is suggesting quite a lot.

Covenants have been breached and temporary waivers granted