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Unravelling just like McColls
cashcall to preserve the business as a going concern to attract bidders through the sale process
then company entered a CVA and shareholders got wiped out
Just skimmed through the HY24 results a couple of other comments:
- pre-tax profit appears to be in line with projections
- underlying £75M capex spend with further spend intended supported by cost savings
Would be say banks would view this favourably? as in the business is fundamentally massively profitable other than boohoos intent on buying DCs etc?
Near term for me BofA called it right in commenting the current share price implies the business is not a going concern, and, that when this becomes clear the share price will re-rate. In my view 60p easy on favourable news, and complete collapse on a failed return to profit. At this stage I think Boohoo will return to profit. And I think we will find out the answer to this question fairly soon. barlcays profit projections indicate FY24 driving the most profit growth.
Desperation is a reliable thing, if you take someone's £100k, destroy most of it, then ask for another £10k on the basis it might help restoring value, many will sign up to that deal.
Form an orderly queue please.
McColls
IMO:
what I will say at this point is that I find the price action a bit revealing.
Sky news has had its finger very very close to the pulse on finance matters to the effect that it very well understands what is going on in recents UK restructures.
the names mentioned, the market cap, and the price action in my view a sale is on the cards.
but the basis of the sale would be that new money has a higher creditor ranking versus standard equity.
my guess is that the company will enter a form of CVA and exit with new ownership, total lower ranking shareholder wipeout with enhanced value for the new creditors who supplied sufficient liquity to enable a sale.
if this werent the case the share price would have rocketed much much more of the new money arrangements.
I still think these are valuable brands to a much larger group with economies of scale.
£10M cash call
market cap 'little over £1M'
'If the restructuring plan fails to gain sufficient approval from creditors, the only viable alternatives for the company would be a sale that would ascribe little value to its equity, or administration'
Excellent news,
Aged like fine wine.
Aged like fine wine.
Revenue isnt the problem
many high volume sales hospitality locations are being closed up and down the country.
Why? No profit.
I foresee a decade of failure for smaller / medium sized companies in the hospitality sector with only the very biggest with economies of scale surviving, and even they are in really trouble, they are running out of options to save costs.
many businesses are now have to restructure reletively senior retail management roles into minimum wage positions. its desperate stuff, and the hospotaslity sector is running out of ways to cut costs.
Macroaxis: 42% chance of bankruptcy.
Worth a punt with total loss of investment 4.2 times out of ten?
Loads of contract wins.
But if they don't pay enough in time creditors taking the company the the company. Aka fair share price valuation of 0 pence or less. what clear comments from the company have their been on this. None.
Great company, terrible stock to hold. Don't get the 2 mixed up.
Is it worth a punt at 15p?
For me there a 55% chance of fair value at 0p and a 45% chance of value at 100p so I would have to say no.
If there was adequate operating cash for 3-5 years and the pipeline of contracts were growing and profitable the share price would be up to 5 times present.
presently the business is priced to go bust as the market views it is more likely than not that it will or that there is substantially dimished net value in the company.
if it were more likely to preserve its going concern status under the current capital structure the share price would be higher.
the market does not share the view the business will survive in its present form.
this seems to be a fair and accurate view.
talk of robust pipelines ignoring operating cashflows is fanciful.
A business can either meet the terms or it can't
The problem is refinancing and it can be solved by the creditors taking the company and it future earnings as a means to repay debt. shareholders may well be wiped out in this situation.
See Cineworld. lots of future earnings, precarious finance, company taken. shareholders wiped out.
The business will go on to do very well though.
I hate to say it but this is looking like it will be sold out of administraion, and starting to look like a McColls situation where the business raised case to enhance the business so it was more like to be purchased out of administration. in McColls case share holders money was used to rebrand into a higher revenue shop format and pay debt. the business got purchased of admin after the business used shareholder money to help make it happen. here debt has been used to buy Peach as a carrot to a failing estate which at this stage looks like it will fail and got scooped up for peanuts of of admin. if the Directors play their cards right them may even get to keep their jobs, but retail investors would very likely get wiped out in such a situation. hence the share price. time is ticking this the new minimum wage hits the P&L.
The shorts didnt close at 15p they increased ...
https://www.youtube.com/watch?v=9aJ9muso9VM