Member Info for ToffAppleton1

BigBowler

You present a good argument for value in Rolls

But there’re plenty of obstacles to overcome before they’re out of the woods.

The firm will face what’s known as a "pinch point" towards the end of 2021, when GBP3.2 billion of debt will have to be repaid.

And that’s just one example.

I’m left with the feeling that this rights issue is like having to buy the company all over again. (And im not a shareholder)

As me and Poker discussed earlier, shareholders are having to stump up about 90 percent of the current value of their holdings to retain the same share in the company.

And even then there’re no guarantees it’ll be enough. The rights issue was the final card they had left to play before nationalization. If it works out - good - but if it doesn’t it’s another £2 billion lost.

There’re rights issues and rights issues; this one will go down in history as one of the worst - like having to buy the company all over again - an IPO

Let’s hope Rolls doesn’t go to hell in a handcart after this, because if it does the shareholders are going with it.

Toff

Poker

“I think were all thinking of 100p or such like.....I do think the BOD mislead”

I really believe that was the original plan, but when the shareprice started to plunge on the rumor, the advisers called the quantums in to devise an RI with lots of obfuscation and convolution in order to deceive. Jiggery poker involved for sure (no pun intended)

Toff

Deelaar

“Warren East reckons enough liquidity to cover a worst case scenario??? JPM reckon not????”

I remember when Freddie Goodwin announced RBS’ rights issue. At the time I think it was the biggest one in British corporate history at £12 billion.

He’s a renowned pathological liar now but at the time he led the world to believe the £12 billion would see RBS through any turbulence.

I think it was days later or no more than a few weeks when the government had to come to the rescue with a £40 billion bailout.

Statements of denial have to be taken with deep skepticism in this game.

There were some ‘smart brokers’ who doubted Goodwin’s word back then.

Toff

Poker

Thanks for taking the time to reply. You did well to exit the trade with negligible losses. Most on here would have held and hoped. What starts off as losing a toe often leads to having a leg amputated later on.

Toff

I’ll keep posting till I get a reply

Toff

Where are you Poker?

I’m surprised you got caught out. I’d have thought you’ve been around long enough to see the danger signals.

Only the other day you wrote...

“they are trying to move away from that and create their own fiction propaganda that if they repeat it enough times..folks will think it is now fact”

To which I replied...

“You took the words right out of my mouth.
That is exactly what you and other shareholders are trying to do by denying a rights issue.”

I’m interested to know what you’re going to do next?
I know it’s none of my business.
But how are you going to play this losing trade?

Toff

Roydon

My brains been working overtime today with all those new shares that have been issued so I’ve have to decline your offer of further calculations.

The last time I was involved in a rights issue was when RBS issued one in the financial crisis. I try to avoid them like the plague.

I sold my rights and never took it up. It turned out to be a good call because we all know what happened next.

I just hope Rolls doesn’t go the same way.

Toff

Roydon

“That tells me , someone is trying to get in before close.
right ?“

It could be short covering - shorters are buyers too don’t forget.

Tracker funds are also mandatory buyers.
And institutional investors may be seeing value in the current SP

Most likely a combination of all of those

Toff

John

“What on earth are you on about Toff? So if the same £2bn was being raised by an RI at twice the price, 64p, then Rolls Current Value would be much higher because your denominator was smaller?“

If the shareprice rights issue were 64p
Then it would be a 1.5 for 5
Not a 3 for 10

Toff

And I’m not talking about a rally car

Rolls has rallied off its low of 112.55 to the dizzy heights of 116.5

Now there’s a rarity

Encouraging nonetheless

Toff

Devil

“This was a long term investment, 10 years+,”

Whatever you decide, it sounds as tho you’re overweight in Rolls.

I don’t like giving advice because those who do are onto a hiding to nothing..

But if it were me I’d reduce Rolls exposure by 50 percent and buy deeply unfashionable oil stocks

65/35 split between Shell & BP in that order.
Oil stocks have been beaten into the ground - branded yesterday’s technology

Now is the time to buy in my humble opinion.
The wheels of the world still turn on oil
And demand will soar post-Covid-19
And so will the oil price

Toff

Poker

I’m surprised you got caught out. I’d have thought you’ve been around long enough to see the danger signals.

Only the other day you wrote...

“they are trying to move away from that and create their own fiction propaganda that if they repeat it enough times..folks will think it is now fact”

To which I replied...

“You took the words right out of my mouth.
That is exactly what you and other shareholders are trying to do by denying a rights issue.”

I’m interested to know what you’re going to do next?
I know it’s none of my business.
But how are you going to play this losing trade?

Toff

Casa

it is however they may run out of funds- we don't know how bad q3 losses are going to be - UK government unsupportive to RR- no vaccine any time soon - odds are stacked against them big time !!!

The government are supportive. That’s why Rolls are still solvent.

“Underpinning the entire package is the 1 billion pounds lifeline thrown by Johnson in the form of a government guarantee. Without that signal of ultimate state backing, plus the additional equity, Rolls’ bankers would have doubtless been reluctant to keep the taps open“

Pat

So your advise to existing long term holders of shares, what should they do”

I don’t give advice - it’s not my decision.

The damage is done
It’s a lose lose situation
You lose no matter what you decide.

Toff

We may argue over the numbers but as share trading goes this is almost as bad as it can get. It’s an investment tragedy of shakespearien proportions.

A cautionary tale. What amazes me most were the ones buying in in recent weeks when it was known a rights issue was in the offing.

Gutter press - public abusing of detractors etc - denial only makes tough situations/decisions worse.

I’ve been around trading floors long enough to know ‘statements of denial’ by companies boards should be looked upon as ‘statements of confirmation’

As anyone who remembers RBS’ Freddie Goodwin will know. And that was another investment tragedy with a shakespearien twist.

The writing wasn’t only on the wall - it was written in giant capitals.

As I said before...

Formula - ego - big swinging dick - wannabe hotshot trader - dumb luck - then you run into Rolls Royce - average down - all in - rights issue - all out - busted - broken ego

Toff

The rights issue is the tip of the iceberg

“Most importantly, the 5 billion refinancing unveiled by Chief Executive Warren East on Thursday puts paid to the question of failure due to the mass grounding of airline fleets by Covid-19. With 2 billion pounds of new equity and up to 3 billion pounds in additional loans and guarantees, East has more than enough in the tank to get through the worst-case coronavirus scenarios. Even if 1 billion pounds of operating cash is incinerated next year – possible, but unlikely – East would enter 2022 with a 7 billion pound-plus financing cushion. Vectoring in disposals, it could top 9 billion pounds.”

Toff

NO!.... If you are going to use the 8,3 billion shares then ADD in the £2 billion raised onto the MCAP
That is what the TERP is all about

I didn’t overlook the £2 billion capital raise.
But that won’t be reflected in the market cap
That will be allocated for cash burn to keep Rolls solvent

Toff

Poker

so..that looks like you have to put in 92% of your initial investment to get your average down by 55% ..given that example

that look right ?

Yes it is
I was being conservative in my estimates to soften the blow for shareholders

That’s a bitter pill to swallow - ughh

Toff

As of now is 36.38p per share

Based on SP of 115

Calculated by dividing market capital value by number of shares.

MC 2.5 billion
Shares 8,367,641,043

Obviously the 36.38p value will drop as the current SP plunges

And it looks like it could hit £1

Toff