Member Info for Okehurst1

Hi KNK

EV is nearly £900M at the moment

Depending on your view of where capex sits ,FCF is £77M to £43M for Remain before debt repayment, I think it’s the latter and suggest the market worked that out; so it’s fully valued at 20X FCF in my opinion as we have to add debt/EV plus of course the MM factor

Remain needs to improve its net margin by 2% if it’s £43M, to double FCF ,with Sweet Whey up a wedge this year I just can’t see that being achieved

MM top slicing 25% of revenue for his private concern doesn’t help, it’s a hefty £400M of cash from Remain and could it get better terms in an open tender ?

The market has voted with its wallet

Looks like MM won the battles to retain control

He can now filter 25% of the revenue out of Remain Co and do as he wishes within a Private Co, when the timing is right buy out the smaller shareholders or dilute via a placing, no wonder he celebrated in Dubia

Whatever you may think of him he is a smart boy

Make your call on FCF in Remain, is it £77M if you think capex is included or £43M if not, if it’s the latter then the share price is on the money if the former the market has it wrong

Remain co would need to improve margins by 2% to near double its FCF if it’s the latter, that would take a serious improvement in Nutrition

Good post Elmsley, any view on below

In your opinion what’s stopping MM in 6 months offering to buy out the minority shareholder via a scheme of arrangement ? Assume the Neds are toothless in this scenario

This could be a blessing in disguise, speculating.

The big investors are now focused on Remain doling out a £4B contract to ingenuity if it was 10 years ?

Ingenuity only has £170M of external revenue a year, do they burden Remain with this contract ?

Or remove MM from day to day control, place a new chairman within the group with a new BoD and review their options.

MM has to go one way or another, he has destroyed shareholder value

If it’s going to happen it’s now

LD, makes sense

Roxi how would they restructure the debt?

Ingenuity nicking the placing money and needs the £400M a year supply contract or it’s gone, so without that contract how would they pay off existing bond holders and secure a new one just for Ingenuity? The £400M a year contract is survival for Ingenuity but can they secure standalone new debt ?

Throw in Nutrition which is going backwards and Sweet Whey up 20% plus this year, who would take the risk on the pro rata debt there ?

Then we are down to allocated debt in Beauty, do they take the rump ?

Can only imagine the negotiations on going within the large shareholders / MM / Bond holders / landlords/ banks etc

Some lawyers must be involved with all these groups

Then we have the employee scheme, it’s a mute point ,as whilst small in percentage it’s large enough to be heard, do they think MM has done a good job and worth backing or they become more commercial minded as he is driving this into the ground ?

MM looks more and more exposed all round

Steve is correct

He loses the BoD and he’s out, the whales who cornerstone’d the placing could join with the ones who didn’t and push him to resign? Doubt he would go without a fight then it’s down to a vote on the day at an EGM as Steve says

That could be a good outcome for shareholders, the market would like it I guess, it’s only going one way with MM

It’s focused both parties minds on the small print that’s the point and the delay

MM will want control of the BoD of Ingenuity, he may have thought he could get it ?

Can’t see the big boys letting him retain control, they know his MO

They could just kick him off the BoD when they are ready if they have the seats

He will then want representation on Remain so they battle with him there as well

The big investors know he’s a liability in both business’s now is the time to take him out

# Ingenuity is pro rata £170M external Rev not £150M

Good point Know..

Ovs we are all speculating but logic says MM was forced into action with the demerger but he miss read he would lose control of Ingenuity within the share holder agreement so he’s been battling on that front.

Then he has the same Whales who are also looking at Remain and trying to work out what a 10 year £4B on a straight line to today contract with Ingenuity does to their investment there ?

Don’t forget Ingenuity only generates £150M external revenue

Let’s put it this way, the Whales/ the market wanted a demerger for SOTP, they are like the Dog that caught the Car, they have realised this is a mess.

MM has sold the Ingenuity dream to the Whales that have backed him with their recent Cornerstone placing contribution and they got intoxicated on how much they could all make in this private company at a Nil £premium cost

The hangover came when when they realised MM wants to load a £400M a year pro rata contract onto the head of Remain and the world leading Ingenuity only generates net revenue of £150M a year and there lays the problem, post demerger Remain needs to carry Ingenuity’s water for them, how does the BoD of Remain sign up to that deal without a proper test in the market for value for money? It could be £4B over the muted next 10 years

The only way out of this is for MM to resign and let the adults take over, he’a lost all credibility

MM could well have thought in his head it was all agreed however I doubt this was months of planning with all the big shareholders, the market would have been aware of a near £100M raise.

MM presented his case, the Whales backed it, he raised the cash very quickly ,he thought he could railroad them moving forward , he offered an expected completion date to the market, but they are squeezing him on the small print

IF MM can’t have total control of Ingenuity where does he stand ? How secure is his £55M annual rent if he wasn’t on the BoD and the business was restructured? This stuff happens.

Ingenuity needs another £65M capex in 2026 and maybe same again in 2027 based on recent accounts and what the market has been told previously, MM won’t be able to tap the market for cash so he can get his £55M rent

Think about it this way

Ingenuity is currently 100% owned by a quoted public company and it will post demerger become a standalone private company, as such it requires an agreed shareholder agreement

MM is a control freak and likes to to be Defacto controller with as little as 25% total equity , he won’t be in Ingenuity new structure, him and the whales will be slugging it out over preemptive rights, BoD seats, you name it.

If the Whales want him out they could just vote him off the BoD of the Private Co if they have the seats, he will be realising he’s exposed

MM will want a bigger piece of the pie off investors who stay with Remain in lieu of Ingenuity, the whales wont want that either, plus in the future he won’t just be able to issue new shares to who he feels like

The Neds will have to have their own legal advice to protect themselves, the contract with Remain and Ingenuity could be £4B, it’s massive numbers

Throw into the mix MM is the major landlord for all

Parties, is it £55M a year of rent or something ,plus he’s taking Ingenuity Private for a nil premium and putting a contract of maybe £4B on the head of Remain Co, no idea how the lawyers unravel this one and offer advice.

He’s dropped the ball as usual and not thought this out when he mentioned the time scale for the circular

If all parties couldn’t agree would the company have to repay the £money from the placing ? Surely at that point MM would have to resign / ditto Lord Lucan

The Whales are squeezing him, he’s under pressure.

OSG

Suggest II’s who were not technically insiders sold what they could the last few weeks and THG dropped 25% as a result

Agree the market waiting to see the Circular.

As Ingenuity will be a Private Co it will be interesting to see if the lawyers advise THG BoD to publish the associated Shareholder Agreement? That will be an interesting read to

see if MM has won control over his backers / Whales ? He usually does but some smart players in that group, will they roll over ? Longer it takes the more it looks they are digging in?

Then it’s the terms for Remain with Ingenuity, have the Ned’s looked after the minority shareholders interests or has MM railroaded them ?

Could be a decent jump in the share price if MM is weakened on the BoD of both entities, let’s see .

Ned’s should be looking after shareholder interests not taking punts in trading shares in the public company they sit on to make a fast $buck

Remain Co shareholders have to have confidence that the Ned’s are up to the task in hand, a possible 10 year contract to MM worth £4B to him today is big money

What if Remain Co could go to the market and obtain competitive bids but they are stuck in there till 2035?

How can MM be a director of Remain and Ingenuity and sign off both contracts ?

Ned’s trading the shares without the circular going out first looks very spivvy

A group of THG Directors who could have supported the company by buying new shares, made the call to trade in the open market because the price was below the placing price so looked cheap.

They must have thought the circular was plain sailing and didn’t think about the shareholder agreement or the complexities and their responsibilities in signing off contracts that MM stuck under their nose

Goes back to the Good Lord, he shouldn’t have allowed Directors to trade when the market hasn’t seen the circular, it’s not a good look?

We can only imagine the level of negotiations going on all round

On paper MM and the whales will secure the rump of Ingenuity for £zero premium but we know that this business needs maybe £60M a year min capex in 2026

Whoever bags the most shares now by swopping THG for more Remain will want pre- emptive rights on the future of any raise

MM will trying his best to secure 50.1% on his side to stay in control at all times be that his family / employee trusts etc

The Whales know his play book now, he won’t be allowed to just issue shares up to 10% of the company every year as an example, those days are gone as a Private Co

The longer this goes on the weaker MM’s hand as he has to cut a deal

Then we have the other side of the coin, who in Remain Co BoD is making sure they are getting a fair deal on the £400M a year contract with Ingenuity? Is MM and the Good Lord signing that off as well ?

The Ned’s are on the hook here, they will be requiring serious legal advice to protect themselves, Directors really shouldn’t have been trading in the shares until the circular was public.

Not surprised by the delay

Hi Cong

It will be an alphabet soup of issues, is it pro rata to existing equity percentage of the pot of Ingenuity shares for grabs?

They won’t want MM mopping up all these shares, don’t forget MM won’t have to worry about the 30% rule this will be a private company

Throw in ‘ good leaver and bad leaver ‘ stuff, the list goes on

MM might have been quite happy to see THG shares fall at this stage, he grabs what he can from Ingenuity via the proposed structure, his stake in THG drops by default but he can then go into the market to top up Remain shares post transaction, he’s a smart boy, it must have crossed his mind

MM is up against some big hitters, he obviously didn’t take into account the depth of negotiations and went with early November

He’s going to have to pivot as they hold all the cards, he falls out with these boys and he’s in trouble

The Whales the big hitters who corner stoned the fund raise

Don’t forget they have to agree to the mechanism to swop THG shares for Ingenuity

They won’t be letting MM drive that process, he may have thought he could bag what he wanted