Obviously. My speculation on earnings is based on where revenue is generated Vs its peers. Also, the rhetoric from administrators and the previous board. If the company wasn't making good money then no-one would be fighting over it.
To say value will only be determined by recovery of the fraudulent debt is too simple of a way to look at it.
They probably have squirrelled away a lot of money but the fact Neopharma is still largely owned by Shetty suggests otherwise. Also, I'm sure the UAE authorities will be asking what the Bhuttis did with the sale proceeds from their shares. I don't think the legal system in UAE will be as forgiving as the UK.
I already know this. My claim is operating income is good and in the absence of the fraudulent debt earnings are strong. I've outlined why I think NMC earnings, in the absence of the fraudulent debt, are strong in previous posts.
For shareholders to get value everything rests with how much money they can claw back and how the debt restructure can be done. There's also the possibility that some can be written off because of fraud.
I'm not completely sure there is value here and by the sounds of things you're not sure that there's no value.
That's a fair point. When I say earnings I meant operating income. In the absence of the fraudulent debt, if earnings are poor then it makes no sense for debt equity swap. In the absence of the fraudulent debt then NMC is a strong investment.
If they can do debt restructure and claw back some of the money, combined with rights issue. I see there's potential for value.
I assume that you've spoken to administrtors and they've told you that shareholders are going to wiped out. You seem to be talkiing like you know for a fact?
That's not rubbing it i because it agrees with what I've been saying all this time. Value will be determined by earnings which I think is strong. Thanks for finally agreeing with this. I also, think if earnings are strong then current shareholders will not be wiped out. A debt for Equity will lead to a dilution but not a wipeout. If the debtholders can recoup money from the fraudsters then it will add more value for existing shaeholders.
You are the one that is saying debt for equity and then a sale. Why would that add more value than simply selling the business?
You seem to have evidence that would suggest strong earnings means a complete wipeout for shareholders. Please do share.
I've also been clear to say I'm not sure that there is value but waiting to see how things play out.
What an amateur!
How is it not right? Why would they just not sell the business as it is instead of doing a debt for equity. you're making no sense. You think they need to do a debt for equity before selling?
You're argument for doing a debt for equity doesn't match up with what's being said by the administrators which is why you're scrambling for a reason.
Do you have Google?
Debt for Equity is completely pointless unless earnings are strong. I think you've pointed out in the past that you think earnings have been overstated as claimed by Muddy Waters, so earnings are poor. Which do you think it is?
Value is determined by the market. A company can't simply determine that the shares have no value and de-list. The reason why NMC was delisted was because of factual inacuracies in the finacial statemenst. The reason why new board is looking to delsit is clear and I quote - "FT - The newly overhauled board of NMC is considering delisting the company, according to a person familiar with the situation, which would remove costs and complexity." Can't see anywhere in that statement that they think NMC has no value.
I personally am still not sure whether there's still value here but am being pragmatic.
The ADR's as we know are extremely volatile and it would appear they move at any news. probably best not use them in an argument. I do think they're a good indicator of news sentiment.
Ah, so you only think a stock can't be re-listed because you don't know of any that have done so in the past.
I don't know off the top of my head but I do know that once the listing requirements are met again, it's possible for a company to be relisted on the exchange.
Correct. So delisitng doesn't change much from the current situation.
The devils in the detail. When words like "continue" and "retain" are used it doesn't suggest an overhaul of exisiting ownership.
Regarding FT article - Delisting is a suggestion by the new board to save money and make things simpler but this is what it ultimately means:
""Delisting" is generally used in a negative way, for when companies no longer meet the requirements to be listed on an exchange, and are removed either voluntarily or involuntarily. However, delisting technically just means the removal of a listed stock from its exchange, and there are a few reasons that can happen.
If a company is delisted, technically there is no change in the shares. They still represent the same ownership stake in the company, and nothing officially changes in terms of the company's ability to conduct business.
However, the market generally sees a delisting as a major negative sign that can damage investor confidence in the company. In addition, moving off one of the major exchanges can result in less interest from institutional investors, which can in turn result in lower volume and reduced liquidity for shares."
The Times article was an opinion piece but contradicts what the administrators were saying: This includes actual quotes from the administrators:
"On Monday, The Times newspaper in London reported that administrators could return to markets to raise capital if a restructuring of NMC Health is deemed to be achievable.
It cited court documents accompanying Alvarez & Marsal's appointment which stated it "may be desirable to continue to make use of the company as a listed entity to allow the group access to equity funding”.
In a statement to the newspaper, Mr Fleming said retaining the company's listing could “provide an exit route for investors if and to the extent that any of the existing financial indebtedness should be converted to equity under a restructuring that has the support of the creditors of the company and the group”."
Rastuss, It would be very unlikely that a bank can forced to do a debt for equity unless they explicitly express an interest to take part. Can you please provide evidence to the contrary? Any creditor that doesn't take it up would move up the scale for seniority of debt.
There's a point some people keep missing here. There are around 80 seperate creditors invloved and they would all have to agree to a debt for equity for it to be viable a option. Otherwise, the creditors who don't take part would be the first to get paid in a disposal of assets. Also for a debt for equity swap to have value, it would require the company to be listed and traded because price discovery can only happen with a traded stock. Furthermore, I find a debt for equity for the purposes of a sale rather pointless. Right now the creditors pretty much own the company, meaning if they're looking to sell they can do so without any debt for equity swap and without a listing. If they could find a buyer willing to pay circa 4Billion and take on the 2.1Billion debt into the Newco then it would work. Or some other variation depending on how much money they can recover. This would, in any case, wipeout shareholders. The funny thing is, That's not what the administrators are alluding to. When they talk about looking to equity markets that means working with exisiting shareholders. I'm sure we'll know more come the 20 Apr after the meeting between all creditors.
Just goes to show how incompetent the old board was. The administrators have only been in place for about 5 days and they've already identified those responsible and are going after them. It's no wonder why ADCB lost faith in the old board and brought in administrators. I suspect the old board was sitting on this information for weeks and not acting on it.