Member Info for Wigwammer

The market may think yer a chump amtech, but I want to personally thank you for creating liquidity at sub 4p. Without some noob pedalling irrelevancies near the lows the rocket may never exist. Still not too late.. :)

Yeah - and the share are still 50% above where you discouraged people from buying sub 4p. It’s the market that thinks yer a chump pal, don’t shoot the messengers! :)

Of course amtech discouraged people, and he knows it. 50%+ offside within a matter of days = touch of an ape :)

You did indeed, mcatee, and amtech - by contrast - discouraged people at sub 4p… perhaps we award him the “touch of an ape” award :)

The black swan is opening her wings and illuminating the noobs. Nice to know they are still watching :)

We may have liftoff, mcatee! Over 16p tangible equity per share, which will rise even further if/when debt is repaid and if/when assets are revalued upwards. But as it stands, the discount to current nav is way too large at today’s price.

16.6p equity per share. This looks way undervalued, imo.

“The Group is also currently assessing if secondary alternatives to the equity raise exist to prevent the issuing of warrants if the second tranche of equity is not placed by the end of 2022. This initiative is supported by the opportunity to significantly reduce leverage levels, through improvements in underlying trading results driven by the positive outlook.”

?Strong pipeline of long-term contracts currently being tendered.? ? and continuing commodity strength consolidating likelihood these contracts are realised :)

Indeed. Many people believe they see the future. Libor will multiply. Indebted companies will fail. GMS will go to zero.. the world will fall apart….. but then on the other hand .. :)

On the contrary, I’m very happy to discuss your musings. You stated that a 2% rise in libor would significantly erode the bottom line progress at GMS. I have demonstrated to you that this perception is very much not “on the money”, because the $7m increase in the interest charge is not material in the context of a $50-60m increase in the bottom line. If you now want to change your scenario and multiply the rate of libor many fold then yes, of course, that will have a significant impact, but of course - is of much lower probability than a 2% move. I think we are all “on the money” in believing that an unprecedented multiple rise in interest rates will be bad for indebted companies, but I’m not sure the point is all that illuminating, with respect.

With respect, another 2% on libor would add $7m to the interest charge. In the context of EBITDA moving from the $50m region to the $100m region, and free cash flow moving from zero to about $60m pa, I do not think $7m is really that material. This is especially true when the market cap is currently little more than 1x that free cash flow.

The point is we do not know at what price they will raise, and you will likely have to own the shares to participate. MCatee is right - they are likely to annualise over $80m EBITDA in H2, and given the market continues to strengthen, there is the the possibility of $100m+ into 2022. It don’t take a lot of nous to work out if that is the case, both demand for the shares and associated rights to participate will be very high, and the current 4p a distant memory. And this is all predicated on the view that the issue goes ahead, which is not a certainty in the event the debt is renegotiated or refinanced on better terms.

Hi Beza. Happy to answer, but please accept some context about CAR without thinking me arrogant, but I made a lot of money there which colours what I’m about to say. I bought in volume around 6p and sold large quantities between 40-67p. So bottom line - I like the story, and retain a much smaller holding. The reason I haven’t repurchased yet is because I believe the selling may be linked to fears Carclo may struggle with current supply chain disruptions - hgv scarcity, higher fuel prices, brexit uncertainty - given high volumes of product in and out it is a business that may prove sensitive to those things. So I’m waiting to see what they say next before adding again. My concerns may be entirely misplaced but happy to wait. Hope that helps.

That’s correct, am. Bear in mind also that to participate in any further issue, you will likely have to own the shares and consequently the rights. If GMS can demonstrate an ability to generate $100m+ EBITDA annualised over the next 6-9 months, both the shares and attached rights are likely to be in high demand.

Yes. But 2 points. 1) if they demonstrate they are annualising $100m+ EBITDA then any raise is likely to happen at a significantly higher market valuation than today, and hence be materially less dilutive. 2) banks like to lend against highly cash generative and asset backed businesses - they compete to do so - so if these fundamentals bear out there is every possibility GMS can refinance at least part of the debt on better terms, that do not require dilution. I suspect neither of these possibilities are priced in at sun 4p.

Apols - should read “may prove unnecessary”

Hi Amtech.. if they can refinance part of the debt over the next 15 months then the $50m equity raise may prove necessary. In 2022, EBITDA may well be annualising north of $100m, net debt below $300m, at which point the debt multiples and asset backing would suggest further dilution is unnecessary. In that event, the equity, currently capitalised at around $60m would be many multiples higher.

Sometimes it requires patience, 4corners. If you don’t want to wait any more then you can always sell up, move on, and prove there is some conviction behind your cynicism. Otherwise, you just sound like a whinging toddler repeatedly asking the adults “are we there yet?”. ATB

Oil and gas prices motoring..few companies more geared to that cycle than GMS :)