Fdm Share Discussion Threads

[orinocor] 09/7/2009 21:41

paulypilot says he wont pay more than £1 for the shares but wants the MBO to be at £2. What planet does this guy live on.

[davidosh] 03/7/2009 10:55

Where are the odds better then Paddyfool ?

AXA have been buying here very recently above £1.20 and they are the main institution. So clearly not looking for cash at the current mooted price !

[paddyfool] 03/7/2009 10:51

Wishful thinking all round here. There is no reason to withdraw anything at the moment. The market has spoken, if the bid was ridiculously low some other VC would be playiing in or through the buying of shares investors willing to take the risk that the upside is there would have bought and forced the price up, they have not because there is no new money which believes the story you guys are running. You will know that you are right if either of these things occur. Institutions would prefer cash right now and most will have done relatively well out of FDMG.
I am waiting to see wht to do. As I do not believe from the data to hand there is any serious liklehood of special dividends and/or anincreased bid, i am not investing, the moment the odds shift percepatably I would invest here. My capital is in places where I percieve the odds to be better.

[rbcrbc] 02/7/2009 17:03

I see the offer price on these is now 118p and some were bought at 119p, So I think we can assume the bid has been withdrawn ???????

Will they do the honorable thing and issue an RNS in the morning ?
Hopefully to include the 20-30p special dividend as they have no reason to hold so much cash.

[davidosh] 27/6/2009 02:06

Absolutely spot on Paul. I told the FD only a couple of days back that shareholders will be keen to see stronger non exec representation when we come out of this debacle. AXA will I am sure have a firm view on that too. AXA have been buying at prices above the mooted offer so they are giving a very clear signal.

[davidosh] 26/6/2009 20:15

Paddyfool....AXA have been buying heavily and shareholders believe the company is worth much more. The directors are going to need to offer much more if they want to take the company away and that is likely to be at least £1.80 IMO or no deal. The upside is therefore very significant too, whether by staying with this good growth business or not. I do not fear a short term drop to say £1.10 in these conditions and I do wonder why you are so keen to worry shareholders with the possibility....After all we were happy with the company pre bid suggestion in any event.

[paddyfool] 26/6/2009 16:29

its only holding at £1.20 because thats whats offered. If this was withdrawn we are back to a £1 or less.

[davidosh] 26/6/2009 10:47

I think going forward if we hopefully continue with this excellent business without being taken out cheaply...In other words we block an MBO, then we will need at least one new totally independent non exec on the board to build a relationship with the shareholders.

[rbcrbc] 26/6/2009 10:42

160p after the special dividend of 40p might be moving in the right direction, but personally with the ease of self-funded expansion of acadamies into Europe following the setting up of the sales offices I would prefer to stay in for the long term (and build a proper stake) than sell out for a quick profit.

I wonder how Karl Monaghan is doing on his own evaluating the offer.
Is it a 20% stake needed to appoint another Non exec ?
Can that 20% be a group of shareholders?
Would any of the institutions be interested in sponsoring one?
Maybe an option to persue if we dont get a statement after the weekend.

[greek islander] 26/6/2009 10:22

David

They have had plenty of time - the share price seems stuck around 120p which rather indicates 150-160p minimum. Would be interesting to see how shareholders here would react to that.

[davidosh] 26/6/2009 10:16

They will no doubt be having meetings with the private equity backer to see what sensible level a bid can now be funded at.

[greek islander] 26/6/2009 10:09

Strange we have heard nothing at all as PP says.
I tend to agree that the chance of a successful bid at that level is now dead and buried.
Just awaiting a reaction to the reaction.

[paulypilot] 25/6/2009 03:55

Hi,

Come on, this is getting ridiculous.

Exploratory RNS about 120p mooted MBO put out on 4 June, blown out of the water by shareholders within 24 hours, and here we are 3 weeks later & nothing!

The Chairman should resign. This is a shambles.

Regards,
Paul.

[paddyfool] 22/6/2009 19:11

Still dont see any sign of it not going for £1.20 and imho no chance of £2. The market does not belive £2 in a year otherwise it would buy this share which it emphatically has not. This share is also quite tightly held so any serious belief in a £2 future by the end of the year would have manifested itself by now.

[alunmorris] 19/6/2009 18:59

Shareholders can register their opinion and holding:

[rbcrbc] 18/6/2009 15:07

It's ludicrous to suggest that this company should keep 2 months TURNOVER as surplus cash in the bank, as someone suggested, it's just not necessary under any circumstances.

I do sometimes overemphasise a point in order to make one (which really annoys the wife). ;-)

So how much cash should they keep?

I cant see much in the accounts by way of fixed assets that they could monetise or borrow against (i.e.property) so any overdraft facility may be limited.

FDM had over 350 employees in 2008 - If we assume an average salary of £35k each as I suspect most are junior mounties. that gives a monthly salary bill of just over £1m. I suspect that is their biggest outgoing but if you double it to allow some other costs and contingencies that gives £2m.


In this case seeing as FDM is a people business, it doesn't really need much capex to expand, and since their business model is proven both in the UK & overseas, there is huge scope for relatively cheap expansion of the existing business.

As far as I can tell their only current acadamies are in the UK, with just sales offices abroad. So the next logical expansion step is an overseas acadamy.
How much would an overseas acadamy cost?

Let us assume 100 people are involved mounties / trainers and overheads. (I have had to guesstimate that figure and it may be viable as a smaller unit).

Again let us assume a £35k average salary.

Now the problem is that mounties take 4-6 months to train, they are then placed and I assume invoiced AFTER the first months work debtor days are about 2 months, so that is a total of 9 months (worst case) before they generate any revenue. So 100 people £35k pa 9 months gives a manpower cost of £2.65m to setup a new acadamy. You should probably double that to allow for the other involved costs so £5m.

Add the £5m for the next acadamy to the £2m sensible working capital and you get £7m leaving £3-5m excess cash to be distributed. So maybe 15-20p per share special dividend is more appropiate.

Thoughts ???

[shanklin] 17/6/2009 16:20

Paul

Point taken. Apologies for my imprecise use of language in post 291 which I have now corrected.

Anyway, back to the question I was trying to ask... ...have you had any sensible/constructive conversations with the FDMG management team? Or is there currently an impasse with nobody prepared to give ground.?

IMHO, with this level of opposition to a £1.20 bid, the tentative bidders are going to look pretty stupid if they send out an offer letter at £1.20/share to all shareholders

Cheers, Martin

[paulypilot] 17/6/2009 15:55

Hi,

Martin - just to be clear, I definitely DON'T speak for 40% of the shareholders! All that can be said is that 40%+ of shareholders have, by one means or another, let it be known to me that they will NOT accept a 120p bid.

All shareholders are clearly independent & look after their own interests.

We need to be careful to avoid the amusingly termed "concert party" rules (I'll play the tamborines, you take the tenor sax!!).

But that said, there is nothing to stop all shareholders discussing amongst ourselves how things are being dealt with. The concert party rules were brought in to prevent manipulation, and it's a shame that all too often they scare shaerholders into not speaking with each other (which it is entirely reasonable for us to do).

Regards,
Paul.

[shanklin] 17/6/2009 15:25

Paul

Have you managed to have a sensible conversation with any of the FDM directors?

Given that you have been told by people holding 40% of FDMG's shares that £1.20 is unacceptable, I would have hoped that FDMG Board members would, by now, have been prepared to have a sensible conversation with you.

Cheers, Martin

[paulypilot] 17/6/2009 15:13

Hi,

It's obvious that management here like to sit on a thick wad of cash, which is no bad thing in these difficult ecomomic times. And it's also good to note that the growing cash pile (must be up to £11-12m by now?) has NOT been burning a hole in management's pockets.

With most companies you would expect to see a cash pile of one third of the mkt cap being spent on either reckless & earnings diluting acquisitions, and/or heavy expansion capex.

In this case seeing as FDM is a people business, it doesn't really need much capex to expand, and since their business model is proven both in the UK & overseas, there is huge scope for relatively cheap expansion of the existing business. This is why I like this company so much, and why I DON'T want to be bought out at a derisory price! This is what all FDM shareholders are saying to me too, jeez this company should be proud of their shareholder base, everyone thinks the business & management are fantastic! Seriously.

Well, they are fantastic at running the business, but they are rubbish at engineering an opportunistic MBO!!!


Going back to the cash pile though. There is no reason at all for FDM to maintain such a large cash pile which is earning shareholders a virtually nil return.

THIS SURPLUS CASH SHOULD BE RETURNED TO SHAREHOLDERS - EITHER VIA A SUBSTANTIAL SPECIAL DIVIDEND OF 40P/SHARE, OR THROUGH SUBSTANTIAL SHARE BUYBACKS TO ENHANCE EPS & DPS.

Like many shareholders, I am earnings spectacular returns on my investments right now, and it is most irksome that FDM are just inefficiently sitting on surplus cash, and doing nothing with it. Return it to the owners of the business!

At the absolute least, I would expect to see a doubling or more of the existing dividends, perhaps to 7 or 8p/share. There is plenty of cash to cover it, and no risk.

Incidentally, spikes & troughs in cashflow do occur, but it is perfectly acceptable to have an overdraft facility to give headroom for such movements. It's ludicrous to suggest that this company should keep 2 months TURNOVER as surplus cash in the bank, as someone suggested, it's just not necessary under any circumstances.


So come on FDM management, please come out from hiding, and get on with your jobs, to run this fantastic business. Shareholders own the business, and we love it. We want to remain shareholders, and be paid better dividends please.

If you want to buy the business outright, then cough up a fair price (200p+).

Silence is NOT golden. Let's get this sorted out a.s.a.p., and send those money-grabbing Private Equity boys back to where they came from - do they think we are stupid or something ???

Onwards & upwards, and here's to a fantastic company in FDM !!!

Paul.