Member Info for Okehurst1

Hi Hosia

Yeah Minto sold up in U.K. and relocated to Turkey, think we can say he’s in deep water from what Rev B tell us, the writing is on the wall for this guy to be facing serious litigation.

He may well put more $ into REV B but it’s a big risk holding 32% stake and no BoD representation

REV B defo not relisting until 2023 audit complete, we know the auditors have ‘ material ‘ concerns, they won’t be able to relist without a fund raise as their cash is actually net debt, they survive today because the Bank supports them on a month by month basis - they have no formal secure banking according to their accounts/ auditor report

Ball park reckon they need £25M raise minimum, ideally £40M

Repay debt and have headroom

Back to back debt facility with 12 month minimum formal banking facility, covenant light.

It’s big hurdles to satisfy the AIM team as we can see from the things to do list

Do agree Minto / Tom chip in and BOO that’s 60% of the £25M - as a figure in the bag - they have a chance

Minto / Tom have to find £9M cash ( on £25M)or get heavily diluted or BOO buys their stake for 20p to 25p and they bag £20M plus and walk, know what I would do in their shoes

IF Boo make the move … say they did

Debenhams / REV B combo, £300M to £350M Global revenue

On line / in store

USA Walmart

We nick REV B and we get a rerate I reckon

Yeah, agree complex game

Am thinking BOO have squeezed suppliers 35%

they have £170M of distribution costs £40M Admin

they surprised the market with recent FCF and are they going to do same to fund REV B stake out / pay cash to acquire the 32% and then tender for the balance ?

BOO have this one chance to land REV B and the Minto / Tom could make it happen ?

Think Minto residing in Turkey is telling, he’s defo a flight risk

on his assets and he risks them being frozen

This has been a top bit of entrepreneurship by BOO for £15M

REV B say stuff to do to get the AIM steam to lift suspension

Below is the big one

‘The FY23 half year results have been completed. There is a detailed plan in place for the FY23 full year results, including a plan with the designers and printers to prepare a glossy set of plc accounts with full disclosures included. The plan has been discussed with the auditors who are working on their own internal planning to ensure audit completion by the end of August 2023’

No way the AIM team will let REV B re list without this years accounts being signed off by the auditors, they wouldn’t risk REV B being readmitted then suspended 12 weeks from now - again

Would make the AIM team look dumb

Nb forget to add

Their actions as directors have cost REV B the company serious ££ in legal /accountancy payments/repetitional damage put aside the potential overcharging for the manufacturing plant

How much will they have to pay up to settle ?

If they fight litigation they need $$ to fund

I understand Minto now resides in Turkey ?

You could see a U.K. court freezing their shares ?

Some thoughts

Are REV B going through the motions with capital day?

They need £cash to satisfy the Banking covenants ,the auditors have ‘ material ‘ concerns and AIM team will insist on a £raise, arguably £25M to cover existing debt ?

Will BOO / ex management support or the latter sell to BOO and do a runner with their proceeds ? Just can’t see those 2 guys pumping money into REV B from where they are sitting today, ditto do they want to get diluted if they don’t take up their rights and they then still have a sizeable stake that may be illiquid ? Would they just rather take the £P’s and be done ?

Too easy for their shares to be frozen by a court once legal action gets underway and it may even be REV B the company litigating against them ?

So the 2 ex directors 32% stake currently gives them some leverage today , they hold the key but they won’t after a fund raise if they don’t participate

Game of chess at the moment

We have £300M of cost cutting / tail winds / COGS to go at

as we revert to Pre Covid cost of sales

£170M distribution

£40M Admin

And we know BOO recently squeezed suppliers 35% being £100M cost benefits

Not saying we get the lot but 50% annualised is £75M H1 2023

It’s low hanging fruit for the BoD

I think they will please the market as they did with the annual results around FCF / nil debt

Peel Hunt understand this business their analysis is fair in my opinion

Message crossed T4G

Think your correct

PP, the numbers below are there / there about to what we know /they tell us

Agree not without risk but they deliver and we rerate, we all take our chances on a risk / reward basis at these levels today

Hi Moody

I think it’s through their p&l account - bought in open market - will find out and report back

For H1 2023

If BOO deliver just 50% of the potential cost cutting below then H1 could see an extra £75M to £85M of profit/ pure cash on top of the 4.5% EBITA on £850M - working on 50% of the potential savings and pro rata for 6 months

They could arguably report £115M cash generated before finance costs £4M ? Rent and before capex of £40M

FCF positive same time

Do appreciate it’s Rampy - fully agree it is - but the numbers are there and BOO has directed the market it’s getting back to Pre Covid cost of sales

REV B could change the above mind, that needs to be funded as well one way or another

Think so Reardon

A TU this month would be handy

Ditto REV B update

Been trying to evaluate H1 2023 numbers

If we know COGS, Distribution, Marketing make up the majority of the gross cost ? Marketing they won’t budge on

Percentage spend wise they say

So they have £172M to go at for distribution now costs are normalised, COGS have been hit with a 35% overall net rebate

So if marketing makes up 13% cost of sales on £1.7B BOO have 37% of total sales to chip at? Assume Distribution can be dropped to 18% ( half way ) for this example I reckon they are going to try and nick £85M distribution and 35% off. COGS

that’s £323M @ 35% is another £100M

You could chip at the 35% saving on COGS and say it’s 25% as a guess but just in the gross cost section of costs we have £285M

Admin is another 3% being £45M cost savings on top

Let’s see how this post ages but I think BOO are going to surprise the market to the upside for H1 - the above numbers are in their accounts and discussed on the conf call, not saying they get the full hit but it could be material

Any views ?

Yorek

Not sure if Kelso have the gravitas to pull off a deal of that size or THG would need them tbh

Guessing but it’s an investment banker job

Seems the most logical route if MM doesn’t want a full

PE deal - uses PE just for Ingenuity deal maybe?

Agree A/S good post

Some thoughts

Worth mentioning 72% of nutritions sales are from wholly produced products and THG margin was 7% Q1 and that was after paying Ingenuity for its services - 60% gross

IF … Nutrition hits 8% EBITA as it enjoys the full discount in Whey prices then it’s generating £56M of cash on £700M

Beauty at 6% is closing in on £80M on £1.3B plus again that’s after paying Ingenuity - all numbers THG have told us

Thinking about that Bloomberg article and SOTP, if THG split away Nutrition it’s arguable it’s £m/cap is close to double our current £cap, maybe that’s what the BoD have as their plan B?

They then come up with a structure to repay the £180M group debt and fund independently Ingenuity growth ?

If MM can’t accept a an overall PE deal as he loses control then a spin off of Nutrition / Capital event has to be a strong possibility?

Everything is in place.

Retain Beauty as quoted plc

Raise PE debt just for Ingenuity as a standalone

Makes sense now we know - think we know - that MM wont cede control of the THG bod

Sky news story about a spin off / restructuring and this is £1 in a blink of an eye, it’s why I hold and wait

Certainly motivates the staff to deliver ?

Spidey

They must know something egh ?

Looks like it Moody

‘boohoo (AIM: BOO), announces that the Trustee of the Group's Employee Benefit Trust ("EBT") has purchased 12,606,970 ordinary shares of 1 pence each ("Shares") at an average net price of 42.12 pence per share’

Hard to know where to start with ASOS vs BOO

it’s like comparing apples with oranges

ASOS paid £30M finance costs last year

just raised £75M to cover finance costs

42.9% margin

Free cash outflow H1 was a whopping £261M !

I could go on regarding the differentials but of course this is the BOO BB

I am only really interested in BOO/ REV B as we own a stake in the latter

Just thinking that and we don’t even have the shorts carrying the water for us makes it more interesting

‘Wall Street is slowly revving back up its junk debt machine.

Banks have agreed to lend billions of dollars to finance leveraged buyouts by Apollo Global, Elliott Management, Blackstone and Veritas Capital in recent months, as Wall Street re-enters a market that left it nursing painful losses over the past year.

It is welcome news for the private equity behemoths who are sitting on hundreds of billions of dollars of dry powder and searching for attractive financing options, as higher interest rates eat into their returns.

Bankers say that, despite the turmoil that hit the banking sector this spring, underwriting is becoming a more attractive option once again’

https://on.ft.com/3OToqv0