RNS11 Mar 2024 23:17
I think the clues are clearly in the wording.
Superdry has confirmed its in discussions with Hilco but only in discussions, nothing guaranteed at all. They have previously consulted Hilco about loan facilities in the past.
It states that the discussions are over an increase in the lending facilities being two fold, so firstly for approximately £10 million so as to provide the company with additional liquidity headroom, which is interesting, because liquidity in financial market terms usually means as to how rapdily an investment can be sold without negatively impacting its price ie the more liquid an investment is, the more quickly it is likely to be sold and thus easier to sell at current market value. Liquid assets trade at a premium. So I would say there is definitely a reason behind this relating to the sale, as someone wants there to be more cash on the books. Is this to facilitate JD with Kempner and this is a Kempner term? Don't forget JD is still on the Board!
The company also states it is " to help facilitate the implementation of its ongoing turnaround plan and cost reduction programme" - but it's questionable whether the loan will be taken up if they don't sell, as I don't think from recollection they ever took up the previous Hilco loan, which assumedly has now expired or might be about to expire. Without looking it up I can't recall off the top of my head.
They then state that they also require an additional £10 mill to deal with what appears to be the 'seasonal' fluctuations presumably in sales, and to extend the duration of such loans to 7 February 2025 if offered and taken up.
So as I see it, it's simply an exercise if it happens, to strengthen cash reserves on the books for the purposes of JD being able to fund the buy out. Of course, if JD does buy out, then he has to take on the company debt, but assumedly by then, he will have borrowed enough funds to secure the repayment of those loans, and in turn, he will no doubt have secured himself more favourable repayment terms or perhaps a wedge of shares to Kempner in to the bargain as part of the deal, as will be his right if he wishes to do so, if he has taken the company private, but who knows.
The company then add the usual rider of course that it might not happen.
All in all, it sounds as though they were caught on the hop with the news leaking out about them making enquiries but there is nothing definite, but they've issued the rns to temper the speculation and to act in accordance with the TakeOver Code.
That's my take on it, and my view of it is that the JD buy out scenario is still very much alive.
DYOR of course, as this is just my views.
Nite.
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