Member Info for Wigwammer

I was lucky enough to have bought some LWB shares in the weeks running up to the takeover. A 100%+ premium. The reason I mention this is not to gloat but to point out that the list of negatives there was far longer than the list of negatives here. ANYBODY can produce a long list of negatives on any stock, if motivated to do so. You could have done it with Apple in 2002! This is a well established company with prime assets, trading at 0.25x tangible book, and circa 0.2x sales even adjusting for the BEE stake. It shouldn’t be here and while incremental longs and shorts will drive the price short term, the risk to the latter at this level is tremendous. GLA :)

Basurman - they generate sufficient cash flow currently to service debt and pay for extensive exploration work. If they find hydrocarbons then the same geared effect that has taken the price down will work in the opposite direction. Regarding your previous point about a shareholder vote prior to the acquisition, they have clearly stated that shareholder approval will be required. It isn’t clear why shareholders would approve an acquisition that results in their stake being wiped away. My guess is - people have been waiting for the results of wells 41 and 631 since early September and no news is being taken as a bad thing. Perhaps they are right. My view is that even if the wells aren’t commercial, the company will have cash to drive exploration in its proven areas over the next 2 years. The shares may fall further but medium term a positive story remains - aided by the imminent reserve reports and completion of GTU3.

Thanks basurman. Certainly worth reflecting on :)

Thanks basurman. Will have a look - strange that they would accept the deal if the result is hammering existing holders. You stated yesterday this is a strong buy, why have you changed your mind?

Thanks pipe. With 2-3 years of current production and around $50m cash left (assuming they go ahead with asset purchase) - that leaves them quite a lot of time and cash to find hydrocarbons, no? They only need circa 11m boe pa to service debt and keep looking. Also, when the tolling agreement with Ural starts next year, won’t that use a decent part of the capacity and generate cash? There are large and persistent sellers, so I don’t want to be conceited, but at the same time the 25p Berenberg downgrade knocked the sails out of it and I wonder if the market has overreacted.

They have op cash flow and cash on balance sheet to fund drilling. Think it through.. what if the drilling is successful and they can pay down the debt? $2bn infrastructure asset and a 270km squared exploration area. It won’t be sub £30m equity valuation then :)

Finding oil and gas, then selling it :)

The value of the equity here is the enterprise value minus the net debt. The same as any other share. You can call it high risk or “option-like” if you want to sound knowledgable, but the underlying mechanics are the same. EIG group and AAZ and hundreds of other companies have also had high debt levels to equity, they were “option like”, and they have gone on to multiply many fold off the lows. The point in itself does not help a great deal in understanding where the shares go from here. ATB

The equity value remains positive to the tune of £500m+. What do equity markets infer about the value of the bonds here.

“Debt stack”.. lololol :)

Thanks for conceding that you were wrong, and Debs and Arcadia are not Intu’s biggest tenants. Btw anyone who uses the term “debt stack” is a victim and a prize one plonker. Hope that helps :)

“What planet are you on? Their biggest tenants are Arcadia and debs.”... what planet is this zcc plonker on? Intu’s biggest clients are Next and Boots (not disappearing anywhere) and Arcadia and Debs make up just 6% of their rental mix. You only have to read the interim presentation to know this :)

:)

But you don’t know it’s going into admin - it’s just a story you read in a paper along with thousands of other punters. Crowded short = losses hit quickly and aggressively. ATB :)

This is the most crowded short in the market, simple maths shows the gargantuan risk to that short...

Peak property value = £9.6bn
Current property value = £7.88bn
Net debt = £4.7bn
Market cap= £0.5bn
Enterprise value = £5.2bn

So any bid for debt+equity that comes in valuing the estate above £5.2bn will leave shorts out of pocket. At £5.2bn a purchaser will be paying a 34% discount to current valuations and 46% discount to peak valuation. Think no one is going to be interested at these discounts? It was only last year hammerson and then peel seriously considered paying multiple billions just to take they equity. They know with 35m unique customers pa these are prime assets currently trading at a massive discount. Property is their business. There are better places to find short ideas than reading headlines in the popular press :)

Zcc. I’m sure many people do understand the point. It is not complicated and you are not in possession of specialist knowledge. The 30% discount you describe from here implies a 45% reduction from peak, or tripling of the valuation reduction seen so far. Repeat - tripling. Too much rhetoric from the bears, not much analysis :)

Toast pops UP! This is the most crowded and unoriginal short in the market. Never mind shops - I see a lot of sheep going bust :)

I agree time2buy. When the armageddon story is appearing as headlines in the popular press, and jumped on by 2nd tier hedge funds, you know that every tom/dick/harry who is going to get sucked in by it already has been. When this turns it will be fast and aggressive. IMO :)

So now we know one of the prominent shorters is Och-Ziff - a second rate hedge fund with poor returns and teetering on bankruptcy. Sounds bullish :)

Lignum/zcc - indeed. A practice they have been so successful at over the years that their returns have been paltry and the firm teeters on bankruptcy :)