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Wrong KNIGELK. Not only was I posting last year telling troubles from their full year results with fundamental analysis support, I told you early this year that DEB would go bankrupt with a high chance in the first quarter, and if not then, definitely in 2019. You and others scoffed.
Just keeping you honest.
I see IG are now paying the shorts in full, email extract from last night:
“At 3pm on Friday 28 June, we will be changing the valuation on Debenhams plc to zero. This is to reflect an action taken by our broker, based on independent advice.”
Went to a DEBs store in the weekend - lots of people walking around and the tills were ringing. Great to see DEBs thriving.
One of my earlier posts. If you choose to read one thing, follow the link at the bottom. My good friend is a genius but makes it look so simple:
---------------------------------------------------------------------------------------------------------------------------------------------
DEBRE: Debenhams passes Stress Test6 Dec '18
Stress tests are easy to pass if they make assumptions that ensure they pass. Sounds obvious but I've seen these "stress tests" in action and always weary when management make comments like this. I guess what else are they going to say? We failed the stress test and need to recapitalise?!
For them to "pass" a 3 year stress test, that will take them past refinancing of their bonds in July 2021. So one can make the view that DEB have made the "assumption" they will have no issues refinancing their publicly traded bonds (currently trading on a yield to maturity of 20% and at 65p in the pound).
For DEB to make the assumption they can refinance the bonds, they will probably have assumed they will restore profitability margins, reduce rents and not be subject to any break costs they hadn't thought of. They probably would have assumed they could stretch the creditor days aswell. Cutting the dividend helped restore some cashflow, but if the business continues to erode, this is only a short term measure. Transformations rarely fulfill their promised cost cuts and often go over budget due to unforeseen complexities - luckily DEB is a simple business so may be ok on this one?
It's a sad story and bloody big hole to get out of.
As I mentioned on one of my earlier posts, I'm a kiwi a member on other sites in NZ / AUS. I remember one great post on one of the sites regarding buying into a downtrend by an esteemed contributor. Have a look at the attached link and maybe consider this as a lesson before buying more shares in DEB - it's a high risk proposition.
https://www.sharetrader.co.nz/showthread.php?8469-Buying-in-a-Downtrend
I almost find it insulting how ignorant these comments are.
How did this happen? Read my posts from start to finish and I explained everything over 4 months ago. Everything. Exactly how this would play out. And guess what, it happened. Stop blaming other people. My very first post against DEB's was swiftly attacked by AppleGarth accusing me of a being a manipulator on behalf of a large shareholder. Disgusting.
Do you think the share price decreased 95% because it was a good company and it was "going to recover"? I said a while back that 90% of people on this forum were not qualified to invest and I think that was probably a tad light.
Also don't forget how Moody's gave a reassuring headline in January. Here's my post on that. Blaady hell.
"DEBRE: From Moody's analysis today:17 Jan '19
I must say I’m surprised with Moody’s assessment. They primarily concentrate on liquidity which comes from the RCF. They didn’t addresss the RCF not being cleared at Dec-18 which clearly indicates issues with their free cash flow generation that they tout about. I understand cash flow may have been impacted by suppliers demanding cash up front due to lack of credit insurance in the quarter but they only mention this as a go forward challenge.
In summary, a positive rating change would indicate survival and negative rating change indicates they won’t refinance and will tip into admin as they’d fail to renew lending.
Overall, it’s a good news story for DEBs having Moody’s release that but I don’t buy it. The market probably will though."
To me, the trading updates were definitely over positive but that's what management like to release to the market. You'll hardly ever see a bad toned update, especially when there is significant debt involved!
The trading updates needed to be read in conjunction with other financial / non-financial information. To me, it was quite clear where DEBs were going after each trading update and I dissected them with a skeptical view. It's difficult when people believe what management say....but maybe that's the way it's meant to be!!
Here's my first post on 4th December 2018. Sometimes it's nice looking back...but I know it's not the right time to say....
"Gidday,
Interesting comments by MA yesterday, for sure. He implied he's doing his DD but has admitted reaffirmed he's written off his investment - to me, that implies one thing : he's waiting for DEB to fall over before picking up the pieces he wants. There is no way MA would expose himself buying DEB as a going concern with £4.5b in (escalating) lease commitments, 27,000 staff & c. £300m in net debt. No way. He's struggling enough as it is with HoF and as a 30% shareholder in DEB, has obviously access to greater information than us.
For me, DEBs is finished. There's no coming back from this (for the reasons above). Sure, they're closing down stores but it's too little, too late. There is a prisoners dilemma here with the landlords and it's unlikely they'll get through it in everyone's best interests...that is, DEBs as going concern with reduced rent.
As another poster has mentioned, DEBs real test will be Christmas trading and there is a strong possibility that bad trading will tip them over. For me, it will most likely be triggered by the liquidity covenants as they get a working capital squeeze. DEBs could have saved themselves by cutting their dividend earlier and recapitalising when the shareprice was c. £0.50 but continued to "believe" for too long. Unfortunately, this time it's different."
It is really sad that the directors appeared to make this personal - clearly, the best outcome for DEBs is operate in a consolidated market. Clearly, the consolidation needs to take place with HoF or John Lewis - the last two big high street department stores.
By making this personal, the directors are going down a dangerous route and if there was one person i wouldn't want to infuriate, it would be someone who holds grudges and has money. Good luck to them and I for one, hope they never, ever get a role in a public company again.
If they don't get pursued by our friend, MA, i suspect they will get pursued by other regulatory bodies given they signed off accounts as a going concern only a few months back and also touted that the business had been stress tested for "worst possible scenarios" and that it came out the other side fine. Well, clearly not. My very first post alluded to their problems, and if it was as clear to me as an outsider back in Dec-18, it should be have been clear as day to them.
KNIGELK,
This is true - we all have confirmation bias. I closed my short at c. 3.5p so have been out for a while now....never saw any positives to buy in fortunately...
KNIGELK,
You were one of the more rationale bulls on here and you did openly state you believed it was high risk / high reward.
Sad times for DEBs but they will continue....just without the shareholders of yesterday.
Hi all holders,
Sorry to see the news today - hope everyone is doing ok and there is a good result to come out of this.
Unfortunately, seeing references of £720m in debt, it looks unlikely.
UU
KNIGELK,
Of course MA was never actually considering an offer - he's just been trying to create as much carnage and disruption that he can and wind down the clock.
His "considering offer" RNS release was to tick the regulatory boxes...of course he could have pulled off an offer of 5p a share, taken on all DEBs debt and all DEBs future commitments....but would he really want to do that? It's enough to bring his empire down, so probably not.
MA will pick up the pieces.
....MA just wants to do his own due diligence?
MA is putting across this message that he wants to be CEO to "save DEBs." My view is he only wants to become CEO so he can get access to all available management information to perform his due diligence and then take the pieces he wants.
Let's face it, his investment is worth peanuts to him now...he cares for the future and that's him controlling the bits he can.
https://www.ft.com/content/3289a462-547b-11e9-91f9-b6515a54c5b1
Since I’ve been out of DEBs, I’ve been keeping my distance but came across this. Simply awful!
DEBs will not trade out of this now...all cost savings swallowed up by fees and mezzanine financing rates. Your only hope is a bid but IMO this won’t happen. Chances are pretty much near nil for equity holders to receive anything here.
Great articles Warik - Ashley has been playing games the whole time.
He doesn’t want DEBs as a going concern and he will get this for pennies in the dollar of debt. Equity holders will get zilch.
Unless you can handle a high chance of DEBs going to nil, stay clear. This is not a 50/50 game.
isoltofcamelot,
Why wouldn't he say stuffed to his own shares? They're only worth £10m after today's rise.
Do you really think he wants to sink £1 billion to chase £10m of share value? You couldn't make this stuff up.
Exactly right donotpanic. They have been battling him the whole time but they NEED him to go forward....unbelievable.
It's funny isn't it. DEBs have already fully exhausted their funding lines. The next £99m is contingent on new equity and on MA.
People say the board has out played MA...but now they want his help. Good luck with that! Not after he openly said the advisors should be put in prison....do you think he's happy with the deal?
https://www.bbc.co.uk/news/business-47744335
Do you really think this is going to rise until the 8th April and then MA will come out with a statement?
What does MA do best? He does brash best. Bet your bottom dollar that he will come out with something early next week to say something along the lines of "get stuffed". If he says that anytime before April 8th, it's game over. GAME OVER.
Did anyone read point 3. of the RNS this morning?
"n the event that the conditions pertaining to the availability of the first tranche of Facility B are not satisfied by 8 April 2019 the company is likely to utilise restructuring options which would result in the core operating subsidiaries of the company (and in particular Debenhams Retail Limited and Debenhams Properties Limited) being transferred into the ownership of a lender-approved entity. The company confirms that in these circumstances Debenhams Retail Limited and Debenhams Properties Limited, together with the other operating subsidiaries of the group, would continue to have access to the facilities with no disruption to Debenhams' business, customers, suppliers or operations."
I draw your attention to this part:
"....being transferred into the ownership of a lender-approved entity...."
Do you understand what that means?