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Will sir Roger be happy about losing the ships from Folkestone?
At £360 per diem, these ships should be the most profitable in the UK, yet they barely will make £30-40m EBITDA pa each. It would be better to sell the entire business to someone who can leverage it and increase the fleet size. Saga management are too incompetent to get anything right.
They could have sold titan travel now for £100m but instead decided to consolidate the business within the wider saga travel business in 2021, spent about £20m in restructuring costs at the time. Euan was truly clueless
What Sir Roger is charging is cheaper than getting commerical rates from the banks, the 2% arrangement fee is similar to what the banks usually charge, the chairman did not conjer it out of thin air. Even Saga's 2026 bonds are trading at 80% of Par. Add that to the 5.5% coupon and see what YTM you get.
You see the 10% interest on the De Haan loan is only £5m, and that is if they utilise the facility, most RCF's are not fully utilised.
If they refinanced the ship debt, it would likely be an additional £20m a year. The current rate on the ship debt is about 4% pa for the next decade or so. If they refinanced this they would likely pay 8+%. Thats a lot more money over the term of the loan.
Don't worry the price will trend towards 30p, you will be able to fill up to your hearts desire.
Good money after bad.
They did not reduce headcount nor did they claim furlough, the latter would have been worth 50M, weird that is the amount they need for working capital purposes post payment of the 150m bond.
Thanks Hounddog10, that is a great explanation.
I think you forgot to add the client relations as a asset, let's say a conservative 100gbp for each client (only 1.3m of these are current accounts) so about gbp270m (2.7m *100) which reduces the deficit slightly.
What I can't understand is why after over 3 years of being on the job he is only now talking about cost control. I wish we can give him the boot, but I fear Roger won't allow it since he got him back on board the sinking ship.
The bondholders must be crazy pumping in 600m, even if the current shareholders were wiped out the market would only value their new equity at between 20-25% of book value, so they would be taking a loss of 450m on day one (on the provisio the entire amount is equity). Show me a bank in the UK which trades above book value even VMUK and BARC trade at 33% of book value.
I plan to sell stuff and top up here as a result. De Haan ultimately is backstopping this and the presentation they did was very bullish from a revenue and profit perspective albeit for YE 2025 (pinch of salt I know).
Rupans they were valuing AICL at 3-400M correct, but since the pandemic we have enjoyed dividends of about 100M from AICL. Given where SBRE trades at, I think AICL could be sold for double the 80-90M which was agreed when things finally settle down. The size of Roger's loan is 85M so I think that number was the final agreed transaction price before being aborted.
I don't think you can really blame the BoD for not selling AICL, since this business gives them a lot of optionality when setting prices with the panel and therefore having it is important from a strategic perspective. Therefore to some extent it sets the brokerage prices for motor.
In 2021 they merged and integrated Titan into Saga's travel business with 10-15M of restructing costs. If they had not done this they could have tried selling that now. Again poor timing and foresight.
Re AICL, I think they didn't sell mainly as a result of seeing them increasing rates by 60% and realising that this is profit in the buyers pocket in the next 36 months. This was the right decision, taking Rogers Money even at a coupon of 10%+ is better value than selling right now. BTW the 2026 bonds currently trade at a rate of 15%+.
They generated 17.7m of exceptional below the line losses in H1, food for thought.
What this business needs is a cost cutter, Euan talks a good game but when you see the numbers you know he does not run a tight ship.
I hope so, we will only know in 6 months time whether the those things come to fruitition. I would rather wait and see then jump in now and get trapped again for the third time.
The BoD really have form here in terms of timing, they tried to sell Titan travel during the pandemic for 100m and failed and now they are tried to sell an underwriter in the softest market I have seen in the last 20 years.
Personally I think this is an amazing business, but completely let down by the BoD. Just look at how out of control some of the expenses are in the broking divisions.