Member Info for shylock

I can't get to today's GM so would be uber-grateful to anyone in attendance who can post summaries of any interesting Q&As. I don't think that many will be there so it could be done and dusted within 10 minutes. 50.1% vote needed to accept the offer and, FWIW, I'm forecasting 90%+.

"WOW - interesting maths there, the share price was at 6.75p when he took over" ===== I didn't mean the time when he joined the Board - the SP was less than 4p when Hawkwood wound him up and set him on the search and rescue mission. And the modest SP rise thereafter only came about because of optimism that he would be successful in growing value for shareholders. Other positive newsflow was pretty thin on the ground. The amount of cash, if any, included in the sale price will be revealed in due course no doubt. But after paying off debt with a large chunk of the meter money, I wouldn't expect there to be a lot in the pot. In any event, we are forecast to have £16.8m after the Utiligroup sale so that figure must include some £0.7m of carried forward cash. We will doubtless hear more about the oversight of pay-outs but my understanding is that the Takeover Panel has to approve them. No doubt there will be plenty of shareholders looking at past deals of this order of magnitude (£20m-ish including the BGM sale) to compare terms -- including the fee/bonus paid to KPMG and anyone else involved in brokering the two deals (not Hawkwood though, AIUI).

"…I find it hard to see how the BoD can spend £1.4m on de-listing costs, running costs during that period and severance packages without those severance packages being in excess of £1m…" ===== 30silver, assuming your warranty potential liability figure (£3.72m) is correct, the balance of £1.4m presumably also includes the fee to Hawkwood for a year of John Grant's services as well as a bonus to JG for pulling off this deal at a value which is 4-5 times higher than the market cap at the time he came on board? That's on top of contractual commitments re salaries and any bonus to the CEO (who has clearly been a key supportive figure throughout the process – and has presumably also put his legal skills at JG's disposal). Probably Peter Kennedy would resent any such payments but I imagine that most other shareholders would be appreciative of the services rendered over the past year. Doesn't the Takeover Panel vet and approve all fees and bonuses proposed under transactions of this kind? Anyway, if there are no warranty claims then I would be delighted to get back anything over £3.7m – but I won't be surprised if there isn't much change from the £1.4m.

EdwinSanchez1, I think you will be pleasantly surprised then -- even if you have had a bad experience in the past with different players. The fact that Peter Kennedy has endorsed the asset sale should give you a considerable amount of confidence. I imagine that he would have been a bigger devil's advocate than anyone here and would not have agreed lightly to this deal. If there was a hidden sting in the tail, I think he would have found it and made his discovery public.

bretty, at just below 11p, the SP *is* reflecting the short-term value, ie the imminent 11p payout. The balance of the payout, hopefully another 4p, is subject to certain risks so cannot possibly be fully factored in yet. The 11p is as near as it can get to being certain and will be confirmed following the 18 June GM. Pending the transfer of the Utiligroup business to the new owners, we will continue to manage it with maximum diligence. So there can be no question of getting rid of existing PLC staff and overheads yet. Nor can we even contemplate doing so until over 75% of shareholders vote to de-list -- which vote will be taken at the GM following shortly after the sale vote. And until we know what Peter Kennedy's intentions are with regard to his 23% of the voting rights, there can be no certainty that we will be able to de-list. So, your assertion that we are "now a dormant company" is nonsense. It's also nonsense that the current value is "15-16p". The £5.1m retained cash will be effectively held in escrow as security against potential warranty claims, contingencies, etc. We will get what's left - hopefully most of it, albeit I assume that some management payoffs/bonuses will come out of it, including the fee to Hawkwood for lending us John Grant. I agree that shareholders need to see a run-off schedule and I don't doubt that we will be presented with a detailed breakdown of potential costs and liabilities to be set against the £5.1m when we are sent the circular for the second general meeting. While you may have suffered some unfortunate experiences in the past, and quite rightly demand to see a run-off schedule, it is regrettable that you impugn the integrity of our BoD and their advisers who have shown no signs of profligacy nor nest-feathering at shareholders' expense. Hawkwood are a long-established and reputable outfit and all their income from this exercise will be fully transparent before the de-listing vote, I am certain. But yes, don't be surprised if there is a bonus in there for a couple of supportive directors who will be gaining nothing else from the sale, not even a job.

"Witness the share price - it's not lying." ===== Please explain what you think it is telling us.

bretty, have you bothered to read the RNS or the notice of the general meeting? The answers are clearly set out. 11p will be returned to shareholders immediately, ie within 6 weeks, and £5.1m will be held effectively in escrow to cover any warranty claims and contingency payments. Normally they would have to wait 12 months to cover a full year of potential warranty claims but I'm told they can cut a deal to shorten this to 6 months. At that point, the remaining balance of the £5.1m will be distributed to shareholders, potentially bringing the total value up to 14-15p per share. Your notion of an "11p bribe" is absurd. The PLC will not be kept alive for no reason. The cash will be parked with lawyers and the PLC will be shut down as soon as possible so as to save the overheads. There will have to be another general meeting to vote on the resolution to de-list however and it will need 75%+ to pass. Peter Kennedy, with 23% of the voting rights, will probably be able to muster 25.1% if he is minded to prevent the de-listing for some reason.

Top of the share risers today if you ignore the 100-to-1 consolidation: http://www.lse.co.uk/share-risers.asp

Thanks for your kind words, Kamel and I'm glad if I was able to help. I guess the alternative to the sale would have required a lot of faith and much dilution - which many will be pleased to avoid as the upside isn't guaranteed. A bird in the hand and all that… I hope you (and I) get significantly more than 11p - and that we spend it wisely.

Btw, I asked the company whether there are fees to pay to Hawkwood. I gather that the only charge will be for JG's services as chairman - plus, I assume, a bonus/incentive payment for pulling off the deal. I'm told that Hawkwood played no other part in the strategic review and sale negotiations.

http://www.manchestereveningnews.co.uk/business/deals/utiligroup-sold-mbo-7201609 https://bdaily.co.uk/finance/02-06-2014/northedge-capital-commit-to-investment-in-lancashires-utiligroup/ http://www.proactiveinvestors.co.uk/companies/news/69056/bglobal-banks-161mln-after-sale-of-utiligroup-69056.html http://www.insidermedia.com/insider/yorkshire/115834-16m-mbo-bglobals-utiligroup

With an unknown chunk of the retained £5.1m still to be added to the 11p per share payout, I'm in no rush to sell. We could get another 3-4p if there are no warranty claims - which would tally with the 14p that Hawkwood's shares stand them in at. Given the known credentials of the buyer (this is effectively a VC-backed MBO of course - albeit I think the current chairman and CEO aren't involved), there must only be a tiny risk that the deal won't go through - arguably counter-balanced by the small chance that another buyer emerges from the woodwork with an increased offer. We may also receive an offer for the resulting cash shell (an instant listing for some other company), albeit the stated intention is to de-list. John Grant's comms track record has been pretty solid imho. He tends to under-promise and over-deliver (my kind of guy) so I won't be surprised if we get 14-15p per share by the time the dust settles. Subject to the votes, the first 11p could be in our hands within 6 weeks. And any balance should follow within 6 months, imho. Peter Kennedy's view will be interesting. If, as seems likely, he needs cash to inject into his new venture, he will surely vote in favour. But if he wants to vote against, he will need more support than I think he can get in order to stop the sale going through since that vote will be won on a 50.1% majority. My quick ring-round to a few major shareholders tells me he won't get the support he might need. However, if he should be inclined to, he could probably scupper the other resolution - the de-listing of the PLC - as that will require 75.1% to pass. That said, I can't think why he would want to maintain the listing of a shell company - unless he wants to reverse his new venture into it and bear all the costs of maintaining the listing. In that event, PIs might want to stick around for a piece of that action, having already pocketed 11p+. Given that KPMG have been through the business with a fine tooth comb, it must be unlikely that there are any skeletons in the cupboard to vary this deal. I think there should be plenty of share buyers at the current level given the prospect of a 30-40% increase over the coming months. In fact, I will be one of them if the Offer would kindly dip below 10p. My thanks go to John Grant for an exemplary job. I hear from my industry moles that there were plenty of offers for Utilgroup (obviously keeping the BoD extremely busy over the past few months) and that the recommended offer wasn't the highest - but it was the best in terms of deliverability and timeline. Congrats to all here who will make a profit; and commiserations to those who will be out of pocket, even at up to 15p. But I think this was as much as we could have hoped for if the business was sold.

Kamel, I always look for the unspoken dark side of any RNS but I didn't see anything sinister in your CEO quote. Had there been any material change since his December RNS statement then I feel sure he would have had to make it clear in the April RNS. I thought that his April comment was consistent with his December comments, including: "Utiligroup has had its strongest ever start to a year and continues to flourish…Utiligroup's performance was ahead of our expectations in the period and the business continues to see strong demand for its software and services." But each to their own. Being ramp-averse, I much prefer to be invested in a company which under-promises and over-delivers. As for contract announcements, much depends on the new regime's comms policy. I'm more than happy for new contracts to be announced as long as contract losses are announced too. There may also be delicate negotiations ongoing with the former chairman about the purchase of his shares.

Good morning, Kamel. Still here and waiting for further news. Major structural change takes time to assimilate so I'm not concerned about the lack of news at this stage. I remain optimistic and confident that JG/Hawkwood know what they are doing and see value in it for them. And what is good for a major shareholder should also be good for PIs. It's worth revisiting the interims RNS if you need some comfort. JG said: "One conclusion I have drawn so far from work on the strategic review is that our business remains undervalued by the market. Utiligroup alone produced EBITDA in the period of £0.46 million." The CEO said: "…turnover in the period increased to £6.17 million, a 6% increase on the same period last year. Whilst the Metering business has continued to face difficult trading conditions, Utiligroup has had its strongest ever start to a year and continues to flourish." And he also said: "Utiligroup's performance was ahead of our expectations in the period and the business continues to see strong demand for its software and services. Utiliserve has had a particularly successful six months and was over 25% ahead of budget and has delivered a profit in the 6 months to 30 September 2013. Turnover increased by 63% to £2.97 million in the six months ended 30 September 2013 (2012: £1.82 million). Recurring revenue in the period was £2.38 million (2012: £1.61 million)." This all looks good to me - and I am further encouraged by JG's statement that "gross margin has increased to 62.5% (2012: 54.1%) as the Group further concentrates on the software and services business." With no words of warning or doubt since then, I assume we remain on track and can look forward to a profitable future.

"I think the point that OnTheUp was making is that it doesn't need the Kennedy vote to get to 75% if all the other shareholders vote in favour." ===== EdwinSanchez1, I get that - but 100% of the remaining votes isn't a realistic scenario. To demonstrate how unrealistic it is, I, with my modest holding, would hold the balance of power in that scenario. Everyone else could vote in favour but if I joined Kennedy in voting against, the resolution would fail. So, while it may be a theoretical possibility, I think it has a 0% chance in practice of succeeding. However, it could be a different scenario if Kennedy were to support the BoD in selling off the plc (or its main/sole asset, leaving a shell plc behind to distribute the proceeds to shareholders or seek approval to invest the cash in some other venture). You highlight what seems to be a new venture for the Kennedys and the possibility that he would be pragmatic and let his need for seed capital overrule his antagonism towards the BoD and so vote with them to sell off the asset. Again, I can't see why this should happen. Hawkwood Capital want their money back as a minimum, and preferably a good return on it. From memory, their shares stand them in at 14p apiece. They are in the middle of their plan to realise that value and all seems to be proceeding well. So I can't see why they would abandon that plan at this stage and take a paltry 6p for their shares. More likely imho is that Hawkwood, and/or other IIs, would simply buy Kennedy's shares from him if he needs to sell. For around £1.5m, that would give Hawkwood a 30%+ stake which might be more than they want - or it might suit them. In any event, if they don't want more than 29.9% it should be easy enough to find another buyer for the 'excess'. However, this scenario would lower Hawkwood's average and could allow them to accept a lower offer for the plc/sole asset of around 10p per share -- unless they know they can get more. Anyway, it's interesting -- as I don't think we have yet seen the full extent of the masterplan.

"Kennedy owns 23% so 75% should be no problem" ===== ontheupupup, you've lost me there. Are you suggesting that Kennedy would vote FOR a MBO which would clearly not be his management team as neither he nor his son has a seat on the Board? I think that's highly unlikely/impossible. The chances of him supporting the new BoD (including the directors who voted against him and fired his son) must be lunar-remote. So how can a vote for an MBO get through? Utilsoft may have more growth potential than you realise - especially with the greater focus it will now have. But the key fact is that it is profitable, and increasingly profitable. But it's not impossible that a de-listing may be desirable - it would probably save a business of BGBL's size around £250k pa - it would have to be in the major shareholders' interest, as well as ours, as it would still have to be approved by a vote. Anyway, thank you for your good wishes, which I reciprocate.

"Just sold my entire holding which was significant" ===== ontheupupup, sorry to lose you - you appear to be an infrequent poster but a knowledgeable one. And I seem to have hoovered up your shares. Sadly, we can't both be right. You do realise that an MBO (or any proposed sale of the PLC or its primary asset) requires 75% of shareholders to approve? Imho it is therefore inconceivable that the current management could even contemplate such a course of action since it would surely be voted down by the major shareholders let alone the PIs. And imho, that would still be the case if the price offered represented a premium on the prevailing SP, as would usually be the case. Ironically, the previous BoD may have been planning to take the company private. If that was true, then they may or may not still be interested in such a course of action (notwithstanding the fact that they failed to acquire the metering business - if indeed they tried to buy it). But if they are still interested in acquiring the restructured company then they would now have to put in a t/o offer to the current BoD - the success of which would again require a 75% shareholder majority vote. Even if the present management, backed by Hawkwood Capital, were inclined to take the company private, they would still need to secure the votes of the former chairman (and many others) -- which must be considered extremely unlikely.

Kamel, according to my moles this morning, everything is on track so I can only assume this is more fun and games by the MM. FWIW, I bought everything I could get hold of at 5.25p and 5.5p (via ISDX) - albeit only 100k+.

In case of need, this is my man: http://www.keystonelaw.co.uk/lawyers/oliver-smith/ Not that I have actually paid him any fees as the loser picks up the tab.

This troublemaker seems to be determined to prove my point by harassing me on every board I post on. Reported.