Member Info for lightnotheat

@Ice I will absolutely give you credit and confess that I was wrong and you were right, if it plays out as you have suggested both in terms of the vote but more importantly the future value for shareholders. I certainly will not try and make excuses for my views.

I think if everything was as secure as you suggest there would have been no need for a going concern statement. The wounds that were inflicted on the Balance Sheet may indeed have been historic but their impact is not. A few disposals do not solve the problem in my view.

We both want the same thing in the end - appropriate value for Wood which is above what we paid for our shares. I don't care how we get there and am happy to be shown to be wrong if this happens.

Let's see what tomorrow brings.

"hat" to him!

Several responses. I agree that Wood has a potentially valuable order book but has failed to deliver positive cash flow for years. If we assume that the order book has been correctly priced and that management have changed/learnt lessons, then there is a chance that this can change. Wood also has a valuable franchise and know how. So far so good.

HOWEVER - while several historic issues may be just that ie historic, they have left terrible scars on the financial position of the company. In particular the level of debt is almost certainly unsupportable by the remaining equity. Lending covenants have been breeched and although temporarirly waived the need for fresh equity is still there. Someone has to provide this and if Sidara don't then who will. I think it is a huge act of faith to believe that Wood can carry on without a recapitalisation or that a recapitalisation other than by Sidara or another bidder will do anything other than wipe shareholders out. There is not a going concern warning in the Accounts for nothing. I grant @ICE and others that share his views that if you believe either that Wood does not need to be recapitalised, that disposals are sufficient and that lenders will be satisfied with this based on a more positive view of Wood's future then I would concende that @ICE might be right. I just don't believe this to be the case.

You can spout what ever conspiracy theories you like about the current management but they cannot in my view make statements that without Sidara then shareholders would face a much worse outcome, if they truly believe that this would NOT in fact be the case. It is quite simpley illegal to mislead the market in that way. So either the management with all the information available to them are deliberately and illegally lying or @ICE with rather less information at his disposal is correct that shareholders would be fine if Sidara walked away and no other bidder emerged.

We will wait and see. I very much hope there will be a yes vote, or a higher bidder. On the possibility that a no vote would lead to a higher offer from Sidara, this is technically possible but somewhat unlikely. Institutional shareholders would have been consulted on Sidara's lower offer and if they strongly disagreed with it then I do not think the Board could have accepted it at the time. That and the likelihood that they will get wiped out on a no vote is why I sincerely hope they vote yes tomorrow.

To repeat @ICE can only be correct in my view if the company can manage without a recapitalisatio - through disposals etc and that lenders agree with this. If so he will be proved correct and I will metophorically doff my hot to him!

@ICE - " if it is a no vote this will go past 30p in time" I am fascinated how it gets there. A no vote and no counterbid = shareholders being wiped out. @ICE seems to envisage a scenario which I for one am not clever enought to work out should there be a no vote. Tell us all what this is please ?

Fidelity increased its holdings in Wood on the 12th Nov to about 12.4% from 11.01%. Of this 7.74% are held as long positions and the balance of 4.67% is held via Contracts for Difference. Either way it would appear that Fidelity are confident of this going through or at least expect a positive outcome as they have increased its shareholding.

Re voting down covenant waivers - Malcolm J - you might be correct but voting down the deal could have the same impact as the deal and funding by Sidara go together. Insitutions will not want to put more equity into Wood and indeed with 692m shares in issue a rights issue even at the current share price, let alone the huge discount that it would need to be, would not raise anything like enough money. Without more equity the lenders are unlikely to continue to support the group. What is then left is a massive debt for equity swap which again would wipe out all shareholders. So basically I would surprised and hugely disappointed if this deal got voted down without an alternative more attractive unconditional bid being tabled.

If the bid was nailed on to go through, the share price would be probably around 26/27p with the discount reflecting the delay until shareholders get their cash. I would be surprised/horrified if the deal got voted down. At every stage where a vote has been necessary e.g. approving covenant waivers/breaches it has gone through easily, so institutions which could have brought the deal crashing down have chosen not to do so. So why vote against now.? It makes no sense. Regrettably, if there had been a sniff of an alternative bid we would have seen a much higher share price. The last hope is that any possible counterbidder is waiting to see the result of next week's vote before making a move. There is still a chance but it is a low one.

So apart from a few people on this BB - take a bow @Ice - there is nothing to suggest that anyone else thinks that Wood in its current state is worth more than the offer price. Personally, I think that it is worth a bit more but not a lot more. Sidara will have factored in a margin for safety into their bid offer but also can probably extract some synergies from a bid given their current operations. Others might be less able to do so, hence the silence on a counterbid.

If Wood had such a rosy future then surely we would have seen (still could see) alternative bidders emerge given that @ICE and perhaps a few others think that Sidara is getting the company at a steal. I do think the company is worth more than Sidara is paying but obviously they will want to factor in a bit of a margin given what they are taking on - a group that has managed over £1bn cumulative of cash outflows and shown gross incompetence in managing its business.

Gosh @Ice I actually agree with you that if the deal was a slam dunk the price would probably around 27p or so, with the discount to the offer reflecting the time until you get the cash. That said, there are two possible classes of seller at these levels - those who think the deal will fall through and those who are not certain but believe they can redeploy the cash released from a sale at these levels and get a return which might not be as much as the 30% they get from waiting but at least they are taking some insurance now. I would have thought that the vast majority of institutional shareholders, perhaps 95%+ are in at higher prices so the temptation to take some cash off the table just in case is high. I am not selling and would buy more if the stock fell to around 21p.

@Ice - so we are clear on my position. I am very long at an average of 26p. You are right that I think there are two choices, Sidara or an alternative bidder which must surely emerge on your playbook that Wood is evidently very cheap. The lenders have accepted covenant breeches and extended waivers precisely because of Sidara's bid and promise to inject liquidity not because they love the new management and will happily support it without fresh equity being injected if Sidara walks away or rather its deal fails to get the votes. Tell us all; are you long or, less likely, short and at what price. People might infer from your irrepressible optimism that it is north of 30p.

Frankly I would be happy to get 60p a share and confess that you were right all along than get 30p but absent a new bidder that aint going to happen. Management have reaffirmed that the Sidara offer is the best on for shareholders, if that statement was blatantly untrue - as you seem to think - then they could be done for making misleading statements and contributing to a false market in the shares.

@Ice - how can you possibly think that the existing debt burden can be supported by the alomost absence of equity. It does you know favours in terms of credibility. Either explain how this will work or leave us all in peace!

@Ice - as I have often said , I really really would like you to be right but absent a new bidder emerging before the vote next week, it is 30p or nothing. The solo option does not exist, no sane lender is going to refinance the business without fresh equity and no one is going to provide this or if they do then we shareholders will get nothing as the most likely route would be a debt for equity swap.

You can dis what the market price is saying but to me it is clear; there is a perceived 20% chance that it will not go through - I think it will - and then there is a discount for the time value of money to completion. If this company is such a steal then surely a rival bidder will emerge. I think there is a 10%-20% chance of this (gut feeling not science) but if the market thought there was any chance then share price would be way higher. What confuses me a bit is who is selling at current levels - my guess would be institutions hedging against the possibility that the deal will not proceed but also taking the view that the return on the money they raise by selling will be more than waiting to be paid out the 30p. All theories welcome!

@Ice while I think we might agree that there is possibly sufficient value for a counterbid; on the remote chance one arrives it will be nowhere near the figures you have been suggesting over the months. I think that your view on a got it alone option are totally totally wrong. No Sidara then you have two choices: a massive debt for equity swap or a massive rights issue. I do not think that the latter could be underwritten or would raise enough. I do not think a few business sales will solve the problem. The size of the debt relative to current net worth means that no other solution favourable to shareholders exists other than a bid from Sidara or someone else. I just don get why you cannot accept this

For once I agree with you @Ice re comment on those who think 30p offer can be reduced :)

Agree entirely with @notanotherone apart from one thing, which is I fear that given the delay to the payout the shares might not rise up to 28p in the event of a positive vote next week. Still hoping for a counterbid however unlikely. Timing wise it would take several days post the publication of the Accounts to put an alternative bid together, so there is still hope however small that a counterbidder will emerge.

If none emerges and the Sidara bid fails then shareholders will be completely wiped out,

No deal and no alternative bidder means we would all be wiped out. I am astonished that @ICE isn't truly embarassed by his assertion that all would be ok, that somehow lenders would lend money to a new management which is presiding over a company that is technically bust!

I think Sidara has spent enough time and money on this deal and must know pretty much all the now revealed horrors - which is why it reduced its offer price - so I think it will stay the course. I do not see institutions voting this down as they would be just increasing their losses. Having said all this I would expect that the share price would be higher than it is. If it were to fall to its pre suspension price then that would be a very worrying signal.

Shares not closer to 30p as you need to allow a discount of about 5% or about 1.5p for the time value of money as you will not get your cash until the middle of next year. In addition I would take a further 10 off the bid price or 3-p to allow for the chance that it will not go through ie 90% probability that it will. So 4.5p or so discount in total so a maximum current price, absent a counter bid of about 25.5p

The market price looks about right to me on the information we currently have. If no bidder emerges - see below - then ahead of the vote I would expect the shares to trade around 24-25p. If the vote goes through, then I expect that they will rise to around 28p given the long delay until completion.

The most likely time for an alternative bidder to emerge is in the next week ahead of the vote. It will take a few days of slog to go through the Accounts and get a decision to bid sanctioned. If the shares fell to below 22p in the meantime then I would add to my already large holding.

A rights issue!! You clearly are not thinking. Who is going to underwrite a rights issue? at what price? You will not raise what you need to deal with the debt mountain. This is complete nonesense

The 60p+ crowd must be smoking some powerful stuff. Wood is a good franchise with a strong order book but it is also saddled by huge debt and a history of failing to generate any positive cash flow from its business. In other words it is and has been structurally unprofitable. You can of course blame management for some/a lot of this but at this point of time Sidara are not going to massively increase its offer having reduced it. So we are left with the possibility of counter bids. There is some chance and I would have thought that now the Accounts are out we will know before the vote on the deal. Even if there were to be a bid I would be astonished if it were anything like 60p, let alone the higher figures. No bid and no Sidara means shareholders get zilch