Member Info for Okehurst1

I like that LD - think many of us do

Selling Nutrition clears the debt, we did the maths on Beauty standalone using ULTA numbers and it was £2.5B
It might not hit that level day 1 but it either performs or gets taken out

Bit of a long shot but I would have thought Ingenuity could reverse into a SPAC, loads still on the market in USA looking for a home for their cash
Ingenuity doesn’t have the longevity of audited accounts standalone for a full USA listing

Licker , agree
The interest rate on the Mezz would be high and primary may not have agreed , they may have had to take the Banks out as part of the deal

Would have been £2B of debt with working cap and assuming buying out 60% at £1.70

Even if it was a 12% coupon it would be £250M a year interest was never going to happen unless it was equity driven - but they said it was debt fuelled

Either Mouldy pivots / cuts Capex and hopes for massive growth in Ingenuity - personally I can’t see Ingenuity making a material
contribution for years, how long will it take to hit £600M Rev ?
look at growth this year ?

The share price might get to £1.40 next year if the cut capex ( maybe ) but will that save him from being exposed when GS expires

Or

Qatar stump up the cash to buy out the non insiders

Sell the family silver

The clocks ticking

They said on the conf call it was debt THG the company couldn’t carry it, their lawyers advised against

Never going go happen Canary

Agree with funded / credible btw but not viable from BoD /fiduciary and nowt in it for Mouldy

Steve

Re JV agree but do that inside Ingenuity, Mouldy won’t want to dilute at Parent Co, no chance of him grabbing big $ like he nicked off SoftBank

A/Steel
The £1.70 was never going to happen, the THG balance sheet won’t take the debt

I have no idea what price the II Whales wanted but THG the company couldn’t fund - put aside the lead banks wouldn’t allow it
the new debt would have to be secondary to secured ,the interest payment would be 15% easy

It was a non bid by a fellow director and two pals of Mouldy
- Ian Mc and Candyman - never going to happen (with debt)

Hi Steve

Thanks for response - we are on the same numbers, it’s the capex crushing the cash flow

Yes, so sell Nutrition, repay debt, few quid to Beauty and Ingenuity and spin both out and a special dividend to boot to get II Whales on board

Mouldy then has a sum of $$ to invest in Ingenuity and can raise funds as/when as an independent company, he either makes it work or not but could probably squeeze 5 years from a cash runway with a mixture of both above

A/steel

Shares off near 80% YTD , 95% from highs

I just can’t see the big II’s being happy with the share price or Allen’s performance - Ingenuity a drag on earnings

The II whale holders have to be asking why are we spending £1/4B capex next 24 months, doesn’t make sense and v frustrating

Golden, my thoughts

If Nutrition does 15% EBITA - on 47% gross
Let’s say £95M EBITA with Whey at €850/ €900, it’s doable

Assume £150M EBITA group level 2023 but we don’t know the true losses of Ingenuity
Strip that out and if we look at ‘ peers’ ULTA/ELF Beauty should be doing 10% EBITA

THG Beauty is 42% gross, this division should be viable on its own

If THG spent £30M on Capex 2023 and mothballed spare capacity of Ingenuity until they secured larger contracts we would have £100M FCF, to me that’s the only other standalone solution I would prefer - am guessing he will trim capex to £100M from £130M to achieve FCF breakeven

If Mouldy doesn’t want the above he has to sell Nutrition to fund his plans
or get Qatar to fund his ambitions via funding an equity buy out / not debt

Point being, the options are running out for him ( GS in background )
FCF neutral 2023 & £150M EBITA may push the share price £1.20 to £1.50 but is that enough to stop a Bid / activist to push for EGM and remove him?

Even if Ingenuity did £400M in 2 years - 100% growth - its £20M contribution , that’s it.

Mouldy has boxed himself in due to the poor performance of Ingenuity he needs to decouple from the rest of the business

THg need to sell the family silver - Nutrition

Then split out the 2 other divisions and Ingenuity stands on its own feet so to speak

It’s the only logical solution other than MBO

Close to 80% down YTD

Still no red dot profit warning, they would have been under pressure to update the market on that one more than a non story, every day goes by we get closer to the £100M plus EBITA

On a 6X EBITA value …. Nuts how cheap this is

Ste,
Suggest their view is we have told the market we have working cap of £600M just 7 weeks ago, head down and ignore a non story

Do agree it’s frustrating but that’s created an opportunity to get in at this level

I wasn’t expecting any response, these guys didn’t even have an analyst call after the recent trading update

They have gamed this out ….

Fully agree with Lickers/ Pearls comments below, legitimate questions from the Guardian - stuff we all raise

Mute point but they didn’t comment on the fact Allen dropped £2M on buying shares in the open market over the last 6 months or so

I am not supporting Allen for his performance as a Chairman to date but he does get some credence for putting a wedge on the table

Something is afoot at THG, sit tight and watch for the red dot is my take

Thanks for sharing Steve

Hi Brewman
Once I get a chance will crunch a few numbers

Been stuck on the day job today :-)

We are where we are ….

Off 95% from highs , 80% down this year

As Licker says ‘ blood on the streets ‘ - it’s the time to buy

Appreciate it’s about the entry point but from here we will make good $, as many have said on the BB it’s about having patience at the moment

It’s a nothing deal though - share price wise

Mouldy needs to protect his £20M a year personal rent roll and retain control

The Banks wouldn’t let THG take on pari passu debt to their agreement

THG are in a straight jacket, he needs cash to grow Ingenuity - pay the rent same time - disposing of Nutrition is a logical solution

Side note, am sure if Qatar pay a massive premium the big II’s will do a deal to sell out but without that on the table he needs a plan B

Steve,

THG don’t have the balance sheet to do serious M&A

FCF in 2023 is neutral - at best
2024 £20M to £30M that’s it
They are planning to pump £1/4B more into Capex the next 24 months, they have a bombed out share price down 95% and whilst they have a facility of £600M there will be covenants blocking material M&A activity

Not saying they can’t bolt on a small deal here and there but it won’t budge the dial - for the share price

Selling Nutrition - if he can find a solution via a contract for Ingenuity - gets Mouldy where he needs to be

Disposing of the nutrition manufacturing plants would be part of the consideration, that’s not an issue.

As frustrating as this share can be it’s not one to Short at this level and not one to sell.

Ste

Mouldy takes risks / finds solutions, it’s how he is wired, he needs to do a deal or he’s got problems when the Golden Share expires

He could sell Nutrition and separately lock in a 5 year distribution deal for Ingenuity.

He doesn’t have the balance sheet/ or the City on his side to support an M@A strategy and he has the clock ticking on his Golden Share

Actually how difficult would it be to sell Nutrition and sign a 5 year logistics deal for Ingenuity? I wouldn’t bet against him pulling that off, it’s doable if it’s in your interest

He pays off debt, spins out Ingenuity/ funds it same time,
Beauty gets separate listing, 5 year ( as a number ) contract for Ingenuity and he throws out a special dividend same time to get Whale II’s on board

As part of the restructuring he re lists both separately in the USA, he’s never going to unlock the value with a quote on the LSE

I wouldn’t bet against him, this guy pulls rabbits out of the hat, it’s why am Long THG at these levels, something is going to happen before the GS expires, it’s just when