Member Info for wealthtrasfer

There cant be many shareholders on here that voted as Garat still at 99.5%

I don't think liquidity at least for now is the issue so dilution is, at least in my thoughts, the least likely outcome.

The only outcomes are we either successfully sell off part(s) of the business to at least repay the Hybrid (and a bit more for investment) or there's a fairly low ball offer from the Cosmens. I cant see anything else playing out (such as dilution) that would be acceptable to shareholders (especially the Cosmens who hold the cards).

Where does the SP end up under each scenario is impossible to guess but I would assume £1+ and potentially better under the scenario of a decent NASB sale.

Which will happen first and when?

John - the sum of the parts is still worth multiples but if that isn't the game for the current board then someone else will do it (and keep the uplift) unless the board can turn it around and quickly. It currently all rides on NASB or Cosmens get what they wanted but Im guessing the price they would have to pay to get ALSA wouldnt be worthwhile and they would be better taking it all and breaking it up.

Lara - agreed a low ball offer doesnt have to be accepted but when the SP is managed down to such low levels a low ball offer in the context of 18 months ago looks very tempting to many today (im not one who would be tempted and hope large holders also wouldnt be). This is a scenario that I was concerned about on here when many were saying we didn't need to sell assets to reduce debt and that this was a panic situation and we dont want to sell off parts of the business. Well we are now here! I sincerely hope it doesn't happen as I'm very under water but its a very real possibility. I also recognise this could all turn on a sixpence but Ive stopped holding onto wishful thinking and am focusing on worst and real world reality.Im stuck in an all or nothing situation now. If there is no sinister agenda here then I am still hopeful of a return to some normality over the next 2-3 years but not to levels previously hoped.

Looking at NASB offer and ZUM highlights problem we may have achieving a full bid. ZUM have beaten Durham (MCG) recently at a bid higher than Durhams (incumbent for 15 years) for around 70m$ worth of contract. Stated by the school board as being worth the extra due to the services and technology ZUM are offering and the levels of driver availability. National Express LLC (and the state brands like Durham) are in managed decline without the investment needed to compete with the newcomers looking to upend the existing school bus market. This is what Garat alluded to as the reason to sell, as school bus needs intensive investment. If Zum are winning the bids the question for them and others is do they accelerate their growth by acquiring the likes of NEXLLC NASB businesses and brands or grow through wins on merit, over time. The original $1.5bn guide from Goldmans for NASB looks over egged on that basis and thats likely why the sale is delayed. The focus of Hybrid repayment may bring the aspirational price down to more realistic level.

Or they dont want to go over the 30% (in their name or in concert) bid threshold and trigger a mandatory bid. They would wait for another 9 months and be able to make a lower offer than if they triggered now as they have to offer at a min. of the highest priced purchased in last 12 months. No one else is going to offer as Cosmens can now block, so no rush for them.

JG - the debt covenant is 3.5 x (max) net debt to EBITDA. If Hybrid was refinanced as a straight bond then covenant net debt would be c. £1.5b, requiring EBITDA over £430m but realistically closer to £500m to have a comfortable cushion. That may be possible inn 2025 but unlikely and risky. 2022 was around £420m.

p.s. the debt numbers below are based on half year 2023 and have changed slightly at year end but principle is same.

The voting results will be notified shortly after the Meeting to the London Stock Exchange and posted on the Company’s

website at www.mobicogroup.com/agm.

In person

I think so on current covenant levels, unless profit recovery is substantial enough to offset (which I would think is unlikely by next year)

And not to forget the £250m - £300m in cash in the bank to offset

Im looking at the debt in a more simplistic way to understand affordability. It shows that its only the Hybrid debt that needs sorting and preferably by Nov 25. This can only be achieved by refinancing which will increase the debt ratio to unacceptable covenant breaching levels or by selling off the silver. The asset sale to repay can be delayed beyond Nov 25 though but preferable to be sooner. Other elements of the business could be used to raise finance not just School Bus.

Debt

Bond EU500,000,000 November 2028 (Fixed medium cost)

Bond £250,000,000 November 2028 (Fixed low cost)

Divisional Bank Loans £72,000,000 2023-2028 (Floating medium cost)

Private Placement £415,000,000 2028-2032 (Fixed low cost)

£1.2b of low and medium cost - this is the usual run rate debt of Mobico / National Express over many years

Equity / Debt

Hybrid Bond £500,000,000 November 2025 (first call) (Fixed medium cost but increasing to high cost in Nov 25)

Operational Future Costs

Leases £250,000,000 2023-2028 (used to be treated as overhead but now as debt under IFRS so I ignore it as 'true debt' for comparison)

JG - on the Hybrid: The current rate to reset date is 4.25%. Ive dug around and found the reset margins. which are:

(a) the Reset Period ending on (but excluding) the Second Reset Date, 4.135 per cent. per annum;

and

(b) each subsequent Reset Period, 5.135 per cent. per annum

Therefore from Nov 25 the rate should be 4.25% + 4.15% margin = 8.4%

This can also be deferred and rolled up at £42m p.a. compounded. So its not necessarily a drop dead date but not paying it off is not going to be a good look or good for MCG ratings. They should be able to refinance as a bond on much better terms than 8.4% assuming the credit rating remains.

I'm annoyed with my choice of investment which with hindsight was not a good one. However I strongly believed in the model and recovery, but I feel that the recovery has been hampered by both terrible management decisions and more concerning the smoke and mirrors that management knew things were worse than they were telling us. My major concern is now that the CFO will uncover new untold issues in contracts / accounts.

If not and everything is out there (which I have zero confidence that it is) then it took 10 years to recover from the 2009 lows following the 08 crash. Maybe 2034 will be a good year to look at the SP again!

One positive is that something has to end this pain in the next 9 months because if we continue to follow this path down then we are at 0p by March next year!

Yes and I got back same bland emails not answering anything. I cannot believe that the II's are just happy to take this management.

There are many things I would like explaining which never get an airing and management feel no need to inform their owners of: Why do they keep going off-plan (evolve) and take low margin contracts (German Rail / UK Bus) with high risk? Why did they buy Grupo 1844 and other bolt-ons at such a time when margin and cash is so important (how much better is going to deliver than say reducing debt) and how much did they pay and on what terms? What is the Plan B for the Hybrid (they bridged-to-bond for the expiring bond last year and we knew about it well in advance). When will Garat fall on his sword? When will the excuses (exceptional items) run out and profits return to historical rates? When will shareholder value become a priority? and many many more unanswered questions !!

JG - I think HopelessValue is correct as Hybrid attract a risk premium and therefore on current rates 11% at the anniversary would be right. I would assume that this could be refinanced as a Euro Bond at better rates than sterling as I’m not convinced sterling or US is coming down as quickly or as far as hoped 6 months ago. Half of the hybrid could be refinanced without effecting the debt ratios as my understanding is that 50% of the hybrid is already recorded in debt with the balance becoming debt at the 5yr anniversary. Others on here will know more about this than my limited experience.

Zum may be a buyer as I’d hoped 9 months ago. They are rated by Goldmans (Rita Narayan got an award as highly rated CEO) so a connection is there with the bankers. A raise may be timely for NABus purchase. Let’s all hope so.

Kingrav - perhaps tongue in cheek or have you now turned short from April Long.