Member Info for QBArtist

Agree, could go higher or lower depending what the market movers decide to do, as there is lack of certainty for long-term investors to make a decision either way. My view, for what it's worth, is higher, based on cost of capital and opportunity cost of holding a short position on something that has fallen a lot, the wait for the Supreme Court hearing and decision, and the likelihood that risk-based market participants will have to factor into the share price the possibility of whiplash as there is at least a chance the Supreme Court ruling will be different to the Court of Appeal judgment.

Well, I've gone long and think that from a technical point of view for a shorter to tie up capital for months on borrowed shares to stay short on this one won't make them too much money.

From my internet searches, it will take many many months for the legal matter to make its way through the Supreme Courts. Presumably the Shorters will continue to pay fees for the stock loans in the meantime? With this in mind plus an unknown legal outcome makes the case for further shorting not so strong....?

https://www.google.com/url?sa=t&source=web&rct=j&url=https://m.youtube.com/watch%3Fv%3DaZHTm0N59Rc&ved=2ahUKEwizgr-ZnLnuAhXHPsAKHdQ6A-QQ28sGMA16BAgvEAc&usg=AOvVaw1fk4XgtAp950BQ9tX6krfB

Solid operational performance in all our businesses

· Business performance net profit (1)(2) down 2% to US$353 million

· Reported net profit (2) of US$64 million post impairments and exceptional items

· New order intake (3) of US$5.0 billion; backlog (4) of US$9.6 billion at 31 December 2018

· Net debt eliminated; net cash of US$90 million

· Full year dividend of 38.0 cents per share

Increased their short position just over a week ago. There will not be any bid from Sport Direct in the short term. Our only saviour is going to be a turn or at least stabilization in retail sales, and a hope that dollar keeps strengthening (lower costs for Debs). Think that about �100m of debt is maturing this year and this has to be refinanced. Dividends cost about �40m a year, so without the dividend, they need to find �60m. If there is some positive cash flow maybe they need to find less, but if there is positive cash flow and earnings come out in line, then wouldn't expect refinancing the debt to be an issue. If earnings miss, then we are in trouble.

Just been looking at the accounts coz I have a sizable stake here. Can't understand why the SP has dropped much more than other retails. Debs is cash flow positive. Div cost �40m last year but they can halve this to save 20mn. There is a secular decline in retail, and no end in sight. To deal with this, the company will have to close stores when it can and sublet space in other stores, take lodgers in, be it coffee shops, barbers, beauticians, office workers etc. As for MA, he is a smart guy. With the secular decline he will take his time, and is probably looking to buy this sub 30p and so is playing a waiting game. Remember the offer price must be, as a minimum, the highest price paid by the buy in the last 12 months. But on the plus side, the company should be cash flow positive for the year, and earnings should positively surprise due to the 10% gain by sterling vs dollar - a high proportion of costs are dollar denominated, and the share valuation is very cheap. So if MA waits too long he may miss the boat to get this cheaper than otherwise.

11 institutions own 50% of the company. Not sure what the float is of those who would be excluded from the placement. Whatever it is, the question is, is it worth screwing smaller shareholder PIs for a quick transfer of value, because an excessively low issue price is likely to be counter productive. However, company's latest release talks of ebitda, no cash flow forecast.... The guys over at iii are becoming increasingly negative about the placement being successful....

So it seems the choice is either administration and 0p in the pound back, or IIs rescue at deep discount and minorities get 10p in the pound. Not much of a choice. All because the company put an RNS out on Monday 13th at 1.06pm.

What the company is worth is a factor of margins, costs, earnings etc. If new shares are sold to a select few large investors at a deep discount then minority shareholders lose out as a consequence. . It doesn't really matter what the issue price if all shareholders participate. Either the business idea is no good and that's it. Or it is viable and shareholders put up the money to get a return in the future. Something doesn't add up with the press speculation

From 2017 accounts: Cash and cash equivalent 40.0 Bank overdrafts (20.3) Net cash and cash equivalents 19.7 Debt due within one year (94.5) Debt due after one year (197.9) Finance lease obligations due within one year (1.6) Finance lease obligations due after one year (1.6)

Where this share price has gone. The dividend yield is a red hearing because it is partially financed from debt rather than cash flow. Expect dividend to half. Debt is about �285m, but it has been on a decline albeit only about �15m pa. The bigger point the market seems to have missed is sterling strength vs 2016/7. Up about 10% against dollar is good news for fall in the price of cost of sales. This I expect to be the positive that will send the SP up sharply.

Just my thoughts. I suspect PWC will advise on some goodwill write-off, and so the higher than expected capital increase would be to strengthen the balance sheet, appease the credits by paying them sooner and ultimately have a much healthier debt to equity ratio.

I think this has to be treated as an IPO . They will need to provide, info on cost reduction, margins and earnings outlook to pull it of and determine the offer price.

The only omission from the Telegraph article is that the world will be ending next week.

Institutional investors have been supporting the company all the way. In Sept 2015, there was a placement of appx 86m shares at 150p per share at a 3% discount raising �130m. In May 2016, there was a placement of 15.6m shares raising 32m. In both cases the discount to the open market price was within 3%. To me, a placement at the price suggested by Sky news would significantly affect minority interests and so my gut feeling is that it may not be lawful. I think a special resolution is needed for a placement of greater than 10% of the share capital. If �100mn is raised at 10p, as per the Sky news article, then 1bn new shares will need to be issued, and the float on the market would be less than 10%, making it a relatively illiquid share. I don�t think that that would be in anyone�s interest. According to my calculating if �100m fundraising is at 30p, then the theoretical ex-rights share price would go to 50p. If the earnings outlook is more of less the same as now - �47m pretax in 2019, and �53m pre tax in 2020, then the company is worth 380-430mn on an earnings multiple of 10x, or around the 75p mark, which the shares would recover to as creditability and confidence is returned. Just my thoughts and calculations. PE multiple expansion, exceeding expectations would bode for a higher valuation. It all depends on what the cost reduction and margin outlook is.

The only info i can find on placing vs rights issue is that a company can issue up to 10% of share capital by way of a placing and avoid the pre-emption rights of existing shareholders....anyone know anything more? The sky news article is quite scary, but the Times article looks more sober.

IMO, the second EBITDA RNS, which was on Tuesday, was intended to provide reassurance on earnings with a view to supporting a share price that had fallen some 70%, with the knowledge that they would have to make a Ri, not just because of the tax cash outflow, but the business has grown by acquisition too fast. If they provided clarity on margins and cost reduction, the RI will be a success and it is by no means certain the share price will suffer more. Just look at other companies who have got through these situations.

It is in everyone's financial interest to keep this company going, and there will be a solution and the company will live to fight another day. The alternative is that the creditors will get less and that they will have to wait longer, including suppliers. Will there be a haircut for existing shareholders ? YES Is the business model money making? I produced some analysis of the figures, and the answer is yes. Rather than thanking me for the analysis, some people have come back to tell me something I already know. Where will the share price go on re-open? Haven't a foggiest, could be up/down the same. Look at PFG rights issue, Tullow Oil rights issue, PMO in 2016. What we know is that if you can't take a bloody nose in the stock market stay at home. This is my last post here, as the number of people who actually post value added comments is limited. Best of luck to the holders.

Yes, and this is what that same analyst had to say on 9 March 2018 https://www.sharesmagazine.co.uk/news/shares/conviviality-crashes-again-on-accounting-error-and-margin-weakness