Candover Investments Share Discussion Threads

[masurenguy] 14/7/2015 08:19

Just starting to DD this. Is the full interest payable only triggered when the loan is drawndown - and just on the amount that is drawndown - and if so is there an arrangement fee applicable, or does it apply to the whole facility within a certain target date whether drawdown has occurred or not?

[mad foetus] 13/7/2015 09:28

OK, understood. So potentially they sell one asset in the next few months, pay off the debt (or return some to creditors) and then try to sell off the rest. I can see that if it is short term lending that rate is more understandable. Having said that, I'd like to be able to lend at that rate!

[skyship] 13/7/2015 09:23

MF - the key point here is that CDI is in voluntary liquidation mode. They are looking to sell all their assets and return capital to shareholders; ergo that discount disappears...

[rcturner2] 13/7/2015 09:19

The interest is rolled up, they are not paying anything annually.

[mad foetus] 13/7/2015 09:16

RCT,
I'm aware of all that and yet it is still extremely expensive. Banks are, after years of avoiding lending, doing business in this space again. Although it is very different, a comp[any like Burford got away bonds last year at a much cheaper rate, backed by nothing more than the hope that they win legal cases.

I don't know much about CDI, but what I do see is a commitment to pay 6.5m Euro pa in interest and a market cap of around 84m Euro. In other words, it needs to manage 8% growth in order to just service its debt. That seems to me a very high hurdle to jump. Add in the costs of running the fund, which I am guessing are going to be pretty high in % terms given the market cap, and it looks to me like the prospects are reliant mainly on the hope that the discount narrows, rather than any intrinsic growth in the assets themselves.

I wish everyone the best of luck, this was on my watchlist, but I don't see a case to buy following today's news.

Skyship - just saw your post and I guess it partly addresses my question, which is whether it is better to just sell something rather than enter into lending of this sort. I suppose the facility gives the company breathing space to negotiate the best deal, so we will see.

[skyship] 13/7/2015 09:15

Yes, a great deal for the lender; but also a good deal for CDI as it provides the flexibility to start capital repayments to shareholders.

If they sell just one of their principal holdings they will be able to repay that 100p. That would leave shareholders with an equivalent share price of 180p versus an equivalent NAV of 445p. Rather puts the VALUE into perspective!

Of course, I'm expecting an NAV write-down at the end of August; but that could be an unnecessarily over-cautious view.

CDI are headed higher...

[rcturner2] 13/7/2015 09:08

mf, fair question, I don't think such rates are that uncommon in PE, especially when you consider they are not set against predictable income. The lender has only the sale of assets to protect them which is far more uncertain than income, hence the higher rate.

[mad foetus] 13/7/2015 09:05

I'm just an interested observer but is it a good deal?

"A term loan of up to EUR52 million attracting payment-in-kind interest at 13%
per annum, which will roll-up and be paid when the loan itself is repaid."

That seems eye-wateringly expensive to me. It suggests that CDI cannot access traditional funding, which would be half the price or less.

[rcturner2] 13/7/2015 08:51

Yes it certainly is a great deal as it removes that uncertainty.

If Greece gets sorted, we could get a good boost from the euro just in time for the revaluation.

[felix99] 13/7/2015 08:37

Great deal - they have removed the possibility of shareholders being screwed in December if no sales agreed or forced on them at a knock down price to repay the debt. All for a few million in interest - great deal to me . added a few more today

[n0rbie] 13/7/2015 08:09

I know, but their plan is to realise assets so it's a nice scheme to have as a sale could be at any time.

[rcturner2] 13/7/2015 08:05

norbie, I don't read that as meaning it will happen any time soon. It just means that after realisation of assets, shareholders will get a minimum of 100p a share before any debt is repaid.

[n0rbie] 13/7/2015 07:55

100p per share return to shareholders - nice !

[skyship] 09/7/2015 15:46

275.0p-276.25p - closest spread seen here for quite some time...

[davebowler] 06/7/2015 14:45

Fallen .....his name at least is aligned with the share price!
That said, I'm in!

[flyfisher] 06/7/2015 08:28

JGH03, Thanks for that.

£500,000 p.a. for running a small portfolio of minority stake investments is still way too much. He has very little say in how the underlying businesses are run and can exert no influence with such small % stakes. I recollect he was awarded 325k free options at his appointment.
The requirement to invest a small regular amount in CDI looks like a cheap trick to infer value to shareholders.

[skyship] 03/7/2015 17:54

JGH03 - Thnx for that - I missed it during a quick scan...

[jgh03] 03/7/2015 17:26

The monthly investment by Fallen should not be construed as a comment on the share price versus value, but as part of aligning his interests with those of shareholders generally.

The Annual Report for 2014 (page 34) says that "... the Board agreed a revised remuneration structure, to take effect from 1st January 2015, comprising solely of a fixed salary of £500,000 with no further pension contributions or performance-related bonus. As part of the revised remuneration package Mr Fallen is required to invest £10,000 of his gross monthly salary, net of taxation, in the shares of the Company throughout 2015."

Of course, he may well be very happy about this at the current price.

[n0rbie] 03/7/2015 16:42

And why not, when 275p is half the price of the NAV at last count (540p).

50% discount

[skyship] 03/7/2015 15:25

CEO Malcolm Fallen buys another 1990 @ 275p:



I see that at the end of every month since February he has invested c£5472 into the shares through the Market.

[n0rbie] 02/7/2015 18:41

The share price is at a large discount to the NAV (at the last valuation). I can't see the NAV going much lower, Expro looks like healthy especially with fresh capital.

[skyship] 02/7/2015 17:36

Frankly I'm surprised these haven't already recovered above 300p with those EXPRO figures.

The figures show that EXPRO still has value; and that value is surely underwritten by the Rights Issue.

The 30th June valuation will be revealed with the Interims at the end of August; that figure will be particularly important this time around...

[jitters3] 02/7/2015 13:41

Was tempted to invest in WCPT but have read it maybe has got ahead of itself wait for a pullback maybe thanks for your advice will have a look at Morningstar

[rcturner2] 02/7/2015 13:34

Morningstar is pretty good, as an example. There is a private quarterly magazine out there that specialises in ITs.

The IT world is as big as the investment world, there are ITs for everything under the sun, miners, bonds, small cap etc etc. You need to think about what sector you want.