Member Info for WolfofWarks

This share is so exposed to the macro it's unreal. My whole portfolio has been slaughtered this week. Hard to think a couple of weeks ago I was a whisker away from breaking even.

I thought you were doing one?

'That’s why the board want to sell North American plants so there isn’t any ties outside of Russia and to get money from it to add to there account then ditch all non Russian investors and share it out between Russian investors , clever directors'

Apart from they can't ditch the non-russian in the plc as it's not domiciled in Russia ....

PeePee - to control the company you only need to control the BOD voting. You don't need the shareholding &. That is why BH interted it's own directors and engineered Bob out.

Plus I would wager they are nearer 50% of the voting rights, especially if they team up with MA and the founder shares are considered to be null and void, remembering they haven't participated in any of the recent voting.

They've got control now. Especially once Bob goes and all the director changes are put through. It'll all be sorted by the next AGM.

'I also think it's a great fit Wolf, which is why until recently I believed Boo would go for the full purchase. In a way I hope they still do I just don't think it is probable.

Wrt the price they would pay, it's currently 26p so 40p is a significant premium for a business with debt and significant shareholders who I believe would be in a forced seller scenario

Time will tell'

I think there's too many unknowns in play at the moment. What is happening with the founders shares being the biggest - can they even sell in light of all the investigations going on? Plus they are only moving towards pretty fundamental standards of cash management, governance, financial reporting etc, etc. We need to know that is all in place and working so the numbers they give us can be relied upon. I'm extremely suspicious of Bob's 60% revenue growth. Will the investigations have any impact on the company is another big question is it susceptible to fines, further investigations, etc, or will the major impacts be on the former management?

'Oke - investment activity includes the purchase of other businesses or companies.'

They brought a slice of REVB - that's investment activity. A basic principle of acquisitions is that you back them with medium to long term underlying finance. I think one of the problem BH has is that they went on a shopping spree for brands and a fancy London office using the massive stock pile of cash they had. No rainy day planning so to speak.

'So Boohoo may have brought in HSBC, a third corporate broker, to help them to raise long term and more stable capital to buy all of Revolution Beauty.'

I never said that. I don't believe they want to acquire it. I think it's a strategic partner which they now control in order to further our commercial aims. If a bargain basement opportunity becomes available I think they will add again.

'Sales are forecast to be flat this year and as far as i remember the Rcf runs out in September 24. So the processes we have in place should be good for this year atleast. Stock is going directly into the USDC and there will be duplicate costs and inefficiencies but I'd expect these to be in the tens rather than the hundreds of millions '

TFG - this isn't on day one and is a bit rough and ready but BH turn their stock ten times each year with stock of £180m supporting sales of £1.8bn. So if the plan is to rachet up the turnover of the US NDC to £2bn of sales they will need additional stock of £200m assuming they continue to turn it ten times per year. These are levels also where stock has been managed down to the minimum so the reality is the UK & ROW operations will need more stock as well as they rachet back up, new acquisitions kick on, etc, etc.

This will utilise a big chunk of the RCF over time especially is there is a drag on sales while the restocking is happening. I've seen it countless times. Expansion swallows cash long before you start making it back.

PeePee - The RCF is for working capital. We are gong to have to stock the USA DC, restock world-wide operation once sales return to normal levels. That will swallow up cash.

Oke - The RevB founders are up to their eyeballs in it. I very much doubt they are in a position to profiteer from their holdings. I consider their holding to be null and void and I suspect Boohoo do too given their corporate actions over the last few months and the confidence they had in getting the desired outcome.

It couldn't be wise to make such a large acquisitor using what is essentially working capital finance. If they were to make such a move I would expect them to perhaps sell some of the freehold and leaseback and look to raise other long term and more stable capital.

‘ Boo would be better off buying back their own shares than buying out Rev B 70% that’s even if the 2 ex founders would sell’

Oke - why? Surely they would be better off buying a potentially high growth generating asset?

I’m not too sure why you are obsessed with buybacks when BH clearly are not in the right place to be delivering them. If you like buy backs buy some of the large FTSE 100 where you’ll find it’s a very long haul before they deliver any actual value to shareholders.

'Thank you WeeWee - the point is if boohoo did end up with £70m net debt as stated by them. I think you need to read the whole post in full again and not simply the bit you copied.'

I was being nice it's full of errors. The £5m cash figure you have stated is actually net cash. In terms of notes in the bank they had over £300m which had been drawn against the RCF.

If BH move from £5m net cash to $70m net debt then they have moved by £75m from net cash into net debt. Not the £400m you claim.

'Thank you WeeWee - I think you need to read it in full again.'

I've read it again, you're still wrong.

'I am sure the so say wage inflation figure is misleading and just an excuse. The reason being is that those lucky enough to have been given rises of say 7-10 or more percent will not have had a pay rise for three or more years.'

Absolutely not. Wage inflation is being driven by professionals in industries like finance, IT, marketing, etc. It's been very difficult to recruit in these areas and has been for a few years now. These are in a perpetual employees market created by Brexit, COVID and advancements in technology. My last 3 years earnings increases have been 21%, 16% & 25%. I'm earning 75% more than I was three years ago.

'The terrible working conditions/pay of some Boohoo factories were publicized in July 2020. '

They were not actually Boohoo factories. They were suppliers ot Boohoo. Not that renders BH blameless because a company should be working in partnership with major suppliers.

'This is a total of £330m plus Boohoo’s stated £70m net debt takes Boohoo to £400m availability for the year end 2024, i.e. 28 February 2024. This gives Boohoo plenty of money to buy all of Revolution Beauty at the present time. '

PeePee - This isn't correct. If Boohoo end up with £70m net debt then they would have made inroads into their credit facilities/cash reserves. It's not new working capital.

These figures do not appear to be as good as they seem from what I am reading. If you strip out energy they are stubbornly stuck. Which means the government's plan to reduce core inflation isn't working particularly fast.

We have £300m of liquidity - why on earth would there be a placing?

They might well be so , but it's definitely not fully operational.

Jeremy - The USNDC is open. It is far from fully operational. If you listen to the last analysts call it's going to tack time to be fully up and running.