Member Info for wealthtrasfer

Paddy - for me it just needs Hybrid sorting. If NASB is sold to do that then we need more than £500m in order to reinvest for growth or reduce other debt (ie ongoing interest payments) further to take into account the loss of income from NASB (normalised income). We need c. £1b ideally but I assume most would accept £750- £800 (or $1b).

Flatliner - please enlighten why does the current SP tell you that this will go bust with no chance of recovery?

Facts would be preferable !

Paddy - Im not trying to be obtrusive today but am struggling to see it your way. The debt levels are higher than 2019. The covenant net debt may be but with the IFRS rules and importantly the Hybrid (which for all intents and purposes is debt as Im sure you would agree), then the debt is higher.

The hybrid is the first call on repayment in Nov 25. This can be ignored with a premium increase to 8.4% or thereabouts and that interest can also be rolled up at a cost of about £40m p.a. But at a significant cost of reputation and breach of covenant as then the whole £500m Hybrid loses any equity credit and takes us over 3.5x covenant debt to EBITDA. If EBITDA can be increased from £400 to £500m then maybe they would get away with it but still paying 8.4% which wouldn't make sense as pure bond would likely be less even at the high covenant levels (but probably not by much). This adds c. £20m to annual interest payments, so not impossible to fund and wouldn't necessarily cause an immediate crisis particularly if a sale was imminent but it wouldn't look good at all, which is why NASB is up for sale and cash needs to be raised in the bank by next summer/autumn.

I agree with you on the other debts, they are currently manageable.

Poker - let’s hope someone pays 2.5x revenue for MCG then we will all be laughing. £80m spent on £5m adjusted ain’t 17.5%.

You’re missing my point that we should be informed if it’s a good deal. If it’s that good then it should support the SP.

Kando - if you can explain why there is little wrong with the acquisition and have the. Numbers to back it up I’d love to hear it as there no information available from the company?

It might be the best acquisition in the world but we simply don’t know and in the current circumstances it should be explained. If you don’t want to know and fully believe the board can do no wrong then fine but I’d like to know what I’m investing in.

Lara - we associate with Cosmens by reading the press as it’s the only information we are given. Press reports stated that MCG were the preferred buyer as had close relations with ALSA/Cosmens over many years. No idea if it’s true but all we have to go on.

I don’t really care why to be honest but I do care that we weren’t afforded any respect by outlining the merits of the deal (before or after) and why it was worth doing even at this time of high debt when their ‘focus’ is stated as being on reducing debt as the no.1 priority.

We cannot go along with anything the board want to do without a fair amount of concern if we have to guess what they are doing and why.

This has nothing to do with interest rates, hybrid or whether this will or won’t turn around, it’s about communication and informed decision.

If things are all gong well then less communication maybe acceptable but now it is very important in keeping the owners of the business on side and supporting the companies value. I think this is where the board largely fails.

I wasn’t going to look… but 5% down again today, I couldn’t resist! Ballantye post is spot on and something I cannot get my head around also. Spending £70-£80m on Grupo didn’t make sense unless returning high margins above 10% which from the numbers in the press is nowhere near. We don’t know the price, we don’t know the returns, we don’t know the structure of whether it was a cash deal or not!!! It appears to be a vanity project that Cosmens have been courting for some time. It doesn’t send a good message to investors concerned about debt. the lack of information / communication again is typical of the problem.

We’ve heard about standing tall and not bed wetting etc and that the board are doing their best (which is mostly true and they are dealing with inherited issues and macros out of their direct control) but it’s the lack of care towards the shareholders that concerns me as much as anything. How do you stand tall when we don’t know what’s behind some of these not insignificant decisions. We are all aware that the board isn’t going to communicate day to day operational issues but an £80m spend when cash is so important with no communication at all, other than “by the way we’ve just bought Grupo” is unacceptable.

We need more communication particularly when things are this bad so we can have an informed decision of whether we want to ‘stand tall’ or take a rinsing.

It feels like we are currently cut adrift.

Paddy - Im not sure most of the longer term holders discussion this are 20p-30p down. However, take your point we are not invested in a tin pot company. However there have been frustrating missteps and there are genuine concerns over where this is heading and what an eventual recovery may look like. Anyway I'm taking my own advise and signing off until HY report.

MCG did a 20% equity raise in 2020 and the Hybrid Bond.

JG - right now thats about all we've got and with potential upside. Until the Hybrid becomes more of an issue in 9-12 months then we might as well sit it out.

Jcj - Im in a similar situation and Im not selling. Ive been there too many times when you capitulate and the stock turns around and 2-3 years later the investment you'd hoped for appears. I'd rather go down with the ship (and might :0)

Jcj - are you going short? no II is going to sell for 40p.

JG - probably best to not look on here or at the SP until at least end of July. It is the most painful investment I ever made and its very hard to watch. Only recent buyers will be selling out now, free float will be v tight. Re-evaluate in March which is what Im going to do.

If that is the plan, why would the II's go along with it and pretty much unanimously support the board?

Well if this doesnt put a rocket up Garat's backside I dont know what will

It would be nice to see Mr Garat putting his hand in his pocket and make a large purchase now he's kept his job.

The shorts called it right so far and read MCG situation well. I wish Id seen it too. As to why they are still there and increasing in some cases, I guess they are either smelling blood or covering long positions. As SmokeyTime says they will be long gone on early news if things start to organically improve. I guess their risk is just equal and opposite to mine but they are better informed and so stay ahead of the game.

My view is that Cosmens bought to prevent a low ball sale or dilution and to position in case they can make an offer for the whole. They obviously value the business well above their purchase level and they are better informed again than we are. So I guess its a game now between Cosmens and Shorts. Either way I think Cosmens win.

HV - I don't think anything less will get past II's.

Lets say that NASB doesnt sell and Cosmens get ALSA. Its worth probably £1.5b, but say they sell for £1b. UK is worth a few hundred million. Lets just say that all debt (£1.2b + Hybrid) is removed barring £400m which stays with NASB and US Transit.

ZUM which has a much smaller footprint that NEXLLC is valued at $1.3b. Increase that for our scale and footprint, add in US Transit (WeDriveU) take off whats left of our debt (£400m) and there is a value well in excess of £2 ps.

Whichever way you look at it then the sum of the parts is well in excess of a low ball offer. So there is value for a purchaser.

The next 6 months is the end game in terms of whether this recovers or a low bid is incoming. We have several things that are to happen that could change the direction and quickly move the needle in shareholders favour. From now until end of July though there is nothing much happening bar something out of the blue.

The first crucial stage is Half year reports and as long as there are no further skeletons in the cupboard then this should stop the slide with improved NASB results (as stated in Q1), US Transit improving rapidly, ALSA staying strong and importantly there could be a reversal of a chunk of the provision for German Rail. The German Rail provision could be a big number and the renegotiation is contractual so something will come but its a question of how much.

Then there is NASB sale progression update sometime in Q4.

Then there is West Midlands bus contract renegotiation in Q1 2025. Another major milestone and may be announced prior as the contract needs certainty before expiration in Jan.

Culminating in March with FY24 showing a marked improvement as long as no further impairments (which should be the case now as long as macros continue to improve).

If those things hold then shorts will reduce. All put together and there could be a significant recovery over the next few months.

If they don't happen then a low ball offer (still at around a £1 in my view) will come from Cosmens or consortium with them involved.

A pretty much unanimous approval. Quite remarkable. Perhaps now he's finally agreed to sell something to address the debt the II's want to roll with it.