Member Info for lightnotheat

Been a lot of rubbish talked about market makers holding price down. I worked with MMs for 20 years at various IBs. A combination of risk controls and capital requirements mean that the ability/willingness of market makers to hold the price down consistently is simply not there.

Other posts are correct. The price reflects the price of a potential bid x its probability. Given that I think - rightly or wrongly - that there is at least a 50% chance of a bid, this suggests to me that this will be below £1 a share. The problem is assessing what the real worth of Wood is X a bid. The refinancing requirement, including potential dilutive equity issue, possible going concern statement and other potential nasties in the final report are all downside risks. While I am with the bulls on the stock and own it, I keep asking myself why it is not trading higher....and it is certainly not the market makers holding it down!

For the record and as stated in posts well before the bid, I have always been long.!

I learnt a long time ago that if you are going to be positive you must first try and understand the negatives!

I think the key question is what happens to B's 17% shareholding. If dribbled onto the market we are going to be down here for a very long time; if sold to another partner than could have a big bounce and then of course there is the prospect of a bid. Long term, and assuming that C continues to add partners and others do not withdraw, then ex the share overhand the shares are very cheap but at the moment I do not see any immediate catalyst for a recovery and hence am cautious about buying even at these levels, C has been very volatile so can't be too clever on timing.

Am long but slightly worried that share price is not higher on bid news.

Historically bid premiums are not all that high vs the undisturbed price; so a 50% premium to this price which would be very high in most cases of a bid would only take us to around 40p which seems ridiculously cheap.

However, absent a competing bid I find it hard to believe that the offer price will exceed £1, which would do me fine.

Question is what is holding the price down at current levels. Probably no firm bid, the potential for a very dilutive equity issuance or worse a debt for equity swap if no bid emerges. I think if a refinancing ex equity issuance was assured the share price would be much higher than where we are now and, as I have mentioned before, no signed up refinancing by the time the Accounts are published will require a going concern statement. Difficult to price all this in now but if there was a 50% chance of a formal bid at £1, I would expect the current share price to be somewhere between 60p and 65p.

So what are we all missing - and please do not say the market has just got it wrong?

I agree that they do not have to have the funding completely tied down but the directors must be sufficiently confident to declare that they have sufficient funds for the next 12 months which covers the period when the debt is due to be repaid. I too hope they will get the money or I would not be long the stock, I am simply setting out the risks. As for the fund raising they would need to persuade underwriters to take on the risk. Ask yourself why the share price is at these levels? If the funding is secured the stock will rally strongly

One of us does not understand the rules. All companies are obliged to state that they have enough resources for the next 12 months, If they have not renewed their funding by the time the Annual Accounts are out they will not be able to give this statement.

Suggest you all take a look at the 2023 Accounts. As per usual there was a going concern statement by the directors in the back but it went beyond the usual year and said that the directors were confident that Wood had sufficient resources to see it through to 2026 having stressed the assumptions on what this was based. I have asked whether the directors still hold to this view and surprise surprise the response is that we cannot add anything to what we have already said. So this does not reflect well on management and detracts from the credibility of their statements about positive cash flow in 2026. The key date is the publication of the Annual report. This was April last year but the company won't confirm the date for this year. Basically the need to sort out their refinancing package by the time the AR is published or their will need to be a going concern statement. I have previously said that the lenders are also likely to want a fresh equity injection which is problematic at current levels. I continue to be long, hoping for sufficient bounce or a takeover in order to exit at a profit.

One issue is that we don't know what was estimated for future earnings from Bosch beyond 2025. The other point, already made is whether Bosch's departure is symptomatic of other potential partner withdrawals or might free up an opportunity with Doosan. Either way an overhand of 17% of the share capital is not going to help unless it was used as a platform for a bid for the company. The general background, as all know, is a retreat from environmental goals particularly in the US but also elsewhere. Clearly management did not see this coming - why I don't know - as they were buying shares at much higher levels. Further investment by them would definitely help the shares, but absent new positive news I see the upside as capped at below £1 until the overhang has been dealt with. I am long the stock at higher levels!

Indeed - thanks. Too quick a glance

Perhaps it is my eyesight but as I read it Schroders increased its shareholding from 4.9% to 5% ...???

I am afraid that some people on this message board do not understand going concern statements. Boards and auditors are obliged to make these statements if managements cannot see/demonstrate that they are able to generate sufficient cash from the business to meet all obligations arising in the next 12 months +. They do not have 2 years to restructure, they need to demonstrate that in the next few months - I would guess by the AGM. I am long the stock and just trying to add some light as to why it is trading at the current levels. That is it. No agenda other than this!

The fact is that Wood cannot meet its maturing debt obligations. The promise, not fact, of positive cash flow in 2026 may not be sufficient to persuade lenders to reschedule the debt. I agree that a going concern statement is not a certainty but it is certainly a reasonable possibility - which is why the shares have crashed since the update despite the company only delaying cash flow by one year and numbers ex those for cash flow not being sufficiently different from market expectations to justify a fall of the magnitude we have seen. As for the equity raising, if you listened to the conference call and analyst raised this possibility given management the opportunity to deny this. They didn't confirm or deny but their silence said everything. The thing is I cannot see how they can get an equity issuance away. If they manage to get the refinancing done without an equity issue, I would expect the stock to more or less double from current levels,

Not sure I agree. It looks that everytime it bounces people sell into strength particularly if stock has been picked up in the low 20s. My only hope is that Fidelity increasing its stake is a positive sign but a bid is the best hope for all of us!

The fact is that they need to refinance their debt maturing 2026 very soon or their auditors will have to issue a going concern warning that there are insufficient funds to meet Wood's obligations for at least the next 12 months. I strongly feel that the lenders are going to want to see fresh equity injected as part of any refinancing. Tell me how that is going to get underwritten! I say all of the above as someone who is long of the stock at somewhat higher prices

I am long WG but average price is above where we are. The bull case is a bid, but no one has mentioned the real bear case. This has two elements - the risk of a going concern statement when they can't get the refinancing of 2026 maturities done and either the inability to get an equity issue underwritten (conference call hinted at one as part of refinancing and may well be insisted upon by lenders) or a massively dilutive equity raise at single figure price. That is why I think the share price has tanked.