Alpha Share Discussion Threads

[senor_sensible] 12/2/2015 20:46

hxxp://www.alcatel-lucent.com/investors/financial-results/q4-2014
Alphs biggest tenant seems to be doing ok, not such a basket case after all.



The carpark appears to be full as well.

Just putting it back into perspective.......I am pretty sure that ALU would have sought certain assurances from Alph and Barx before committing to lease extentions and new leases recently.

[cjohn] 11/2/2015 12:01

Hi Señor Sensible, you are right about interest rate and currency swaps. These were commnoplace about a decade or more ago. They were actually a sine qua non of loans from some high Street banks to small companies. Neither the relevant bankers nor the finance officers of the companies foresaw the current unusual credit conditions. Does this mean those people were culpable or stupid? In my view, it doesn't. They just went along with then current practice.


Almost two years ago now, I bought a large holding in Peel Hotels (PHO) whose share price had been utterly trashed following an interest rate swap that went sour years later. The company has survived and the share Price recovered some of the way. (Still a good bargain in my view.)

My feeling is that the survival prospects of ALPH are higher than is generally believed on this board. QE has definitely improved the prospects of re-financing. But I would be absolutely astounded if it was BARC themselves who came thorugh with new finance. This seems to me to be imposible, given the LTV.

You drew attention to the company's statutes which don't allow issuing new equity at below NAV. This rules out a whole raft of deeply discounted equity issues, which would have been the easy (and shareholder value destroying) escape from faliure. If this condition hadn't been in the statutes, I'd never have touched ALPH.

It seems to me that mezzanine finance, (with loans convertible to shares at above NAV - current NAV??) is a possible option, and I can think of a couple of others.

On the whole, ALPH looks like a decent wager. If ALPH does achieve refinancing, the upside will be considerable. I doubled up my holding at an average price of not far off 1p. I was happy to take that wager and should there be any further indication of progress, I would buy more.

Please, understand my risk profile though: I regard this share as a gamble. There is a significant risk it could go under, but less than is generally believed, in my view.

[senor_sensible] 11/2/2015 11:32

Company stated they are discussing options, with barx and 3rd parties:

The Company is in discussions with its lender regarding the refinancing options for the Company including the potential refinancing of assets by third party lenders and potential asset sales.

if barx were worried about the valuation or debt they would have called in their debt and forced the company into administration, they would have taken control of all the cash in the bank, taken all the rent and reduced the cost of the management. However they decided to extend the finance by 3 months for a small levy because the company are still able to service their debt, plus some. Not quite the basket case some here would have you believe and not a single one of them can give an accurate cash in bank value, but do their best to deflect attention from this at every opportunity.

Its simple, this is priced to fail, recent news indicates it is less likely to fail and more likely to refinance and recover. you either buy or you sell. sour grapes over what has happened in the past regarding currency and interest rate swaps are old news. it is priced in and the company is where it is. As it happens interest rate and currency swaps were common place when they were taken out, it was also common that this was a pre-requisite to getting the finance arranged, the BOD have not acted any differently than was normal practice at the time.

Once finally financed this will be trading above 10p, a 500% profit from these prices and will continue to rise as the property market recovers. it is a risky investment but the potential upside is massive - 500-2500% profit in the next couple of years.

[ibrox] 11/2/2015 11:15

So the directors have not arranged financing in the last 15m because they were waiting for QE and lower interest rates? How clever. Must have a crystal ball. or was it the same crystal ball they were using on deciding to take the hedge?

I don't buy it. Either they are stupid and continue to pay the higher rate 10+% because eventually rates will fall, in which case not my first choice to run the company, or more likely they have had no choice, because no one wants to fund it. In which case a lower interest rate is not the issue as the risk determines the interest rate applied to the new loans not the source of banks cheap funding.
Hence QE or no QE its the inability to find an alternative lender that is the problem lets face it they will have had 18m by May. If you were desperately looking for a new mortgage and could not convince a bank after 15m to lend to you, you would be worried too.

[fenners66] 11/2/2015 10:11

Closure on the matter would be the removal of those responsible for the mistakes. If that has not happened they can make the same or other monumental mistakes again because that is their ability level

[senor_sensible] 11/2/2015 09:57

Seems strange to be focussing on interest rate and currency swaps as a potential risk here, these are in the past, the swaps are closed and settled, that is the reason for the drop over the last few years and a 25mil penalty affecting the NAV but you need to get over it. it is over and is now fully factored into the accounts.

No one is saying they were not big mistakes for the company to make but it is now time to move on. Do some of you really need closure on this matter? do you understand that you cannot change something that happened in the past?

[envirovision] 11/2/2015 09:30

red army, yes nice work if you can get it.

I still rather think somethings amiss though, because as you point out that anyone, even a monkey or say a child could run a company at a loss daily and pay themselves.

However a child or a monkey could never engineer such monumental interest and currency swap losses over the years.

[fenners66] 11/2/2015 00:12

So some read the RNS this morning and bought the "good" news?

Lets get this straight - they entered into an arrangement with Barclays at libor +10% and all their cash pooled with no prospect of being able to repay the €25m until after the rest of the borrowings were paid off, in NOVEMBER 2013.

So now 15months later they are paying € 1.35m just to extend that relationship for 3 more months but still incurring interest at the above rate.

Please just a little bit longer I'm sure things will get better.....

Why could they not come up with a solution in the last 15m?
Why are 3m going to help anyone else than Barcs?

I thought this was a dead duck as far as shareholders were concerned in 2013 and have not changed my mind.

[red army] 10/2/2015 23:57

Its the easiest thing in the world to run a company and make losses every day and what's more pay yourself for it . In addition you make yourself director of associate companies and basically work for your self interest and not the shareholders interest until there is nothing left.

[mgalle] 10/2/2015 16:37

Sleepy - the cash is held by Barclays in a special account.

Sensible is making a guess about how much cash. Alph does not give full information for you to stay informed about the company's progress. Cash has increased by selling some properties. A few were sold over book value, however a loss was made due to having to pay interest on money owed in this special account and lower occupancy. I think they are cancelling each other out so no progress was made in 2014. There should be a few years of dividends in the account though.

Let’s hope the price of the share did not go up over 100% at start falling to just below 50% on the day the Alph board gave away the last bit they owned for a short term extension. Is the world and the board that mad?

[hosede] 10/2/2015 16:15

I thought cash was included in the NAV but I could be wrong. However France is a basket case and in deep recession. According to the Nov report, vacancies are increasing and rents falling - ergo property values will do likewise. We are in a massive deflation which could go on for decades.
Sleepy
Read the report - the banks have control over it

[sleepy] 10/2/2015 16:02

Is the cash available to shareholders or does a bank/banks have security over it?

[orchestralis] 10/2/2015 15:28

I think there may well be some life left in this.

[senor_sensible] 10/2/2015 12:24

not thought not, the cash in the bank is approx. >5 times the current market cap, there is also the increased property valuation and the additional ALU footage. QE will open up finance prospects, that why BARX want the 1.3% levy now, they know cheap finance is going to be available in a few months.

Todays news was quite good, it was not excellent because there is still the small matter of signing a finance contract, but at least it is another step in the right direction.

[senor_sensible] 10/2/2015 12:07

how much cash in the bank?

[hosede] 10/2/2015 11:31

Enviro
exactly!
Sleepy
90%? its around 97.5% by my calculations now 5.65m equity in 225m!

[sleepy] 10/2/2015 11:08

Would someone confirm that the LTV is over 90%?

[senor_sensible] 10/2/2015 09:57

The key part of the statement:

The Trust is compliant with its borrowing covenants on the test date of 10 February 2015 and no further covenant tests are scheduled before the amended maturity date

property values on the increase IMO as previously stated, the LTV also improving. They have cash in the bank higher than the current market cap.

QE will find a better finance source and this will be valued on true nav. this is good news

[envirovision] 10/2/2015 09:31

Its a ruse to wipe out any argument of equity so that the entire portfolio can be passed onto someone else.

Gob smacked at the rise, clearly the RNS must have been miss read or simply attracted a mini swarm of private investors who know little about ALPH.

As I say, I can only hope people still in used that spike to dump on them.

[mgalle] 10/2/2015 09:24

This is the agreement for the short term extension until May if anybody is confused by the comments. (Not surprised that Barclays want a bit extra for this or pleased either.) QE should have opened more possibilities by then.

[hosede] 10/2/2015 09:23

7m NAV just going to be whacked about 20% by the 1.35m fee - Barclays must be loving this