Fdm Share Discussion Threads

[gengulphus] 10/11/2009 19:50

To my mind there is absolutely no question of FDM picking up the bill for an MBO which shareholders clearly didn't want. Management and/or the VC will have to pay these fees themselves.

Hmm... While I agree entirely that that ought to be the case, I wouldn't place bets on it actually being so. We'll see what the outcome is with regard to the "inducement fee", but it may well end up that FDM and its shareholders are liable for what the management have already committed us to and all we can do is limit their power to make further such commitments...

Gengulphus

[gengulphus] 10/11/2009 19:44

RBCRBC - 10 Nov'09 - 14:58 - 485 of 487
...
The NMS quoted on lse is 500.

supreme mo - 10 Nov'09 - 14:59 - 486 of 487

Broker said that it was 2500 ...

I'm pretty certain that's the difference between the NMS (the number of shares that market makers are obliged to maintain two-way quotes for) and the online limit (the numbers of shares that RSP providers choose to quote for).

Any attempt to deal online on the standard "quote good for 15 seconds" basis is dealing exclusively with RSP providers and their online limits, not with market makers and their obligation to quote for NMS-sized blocks of shares.

Brokers have an unfortunate tendency to refer to RSP providers as market makers - I think as an attempt to refer to them in terms their customers have heard of, but it causes a lot of confusion because the RSP providers don't have any obligation with regard to the NMS - they can take online limits right down to zero if they want.

Gengulphus

[paulypilot] 10/11/2009 16:55

Hi,

Well we're approaching the deadline for management to put up or shut up, re the 135p MBO. My feeling is that they clearly have not been able to get the Institutional support necessary to proceed with the 135p bid (and why would they, since it's a ludicrous under-valuation of the business!).

So management are really in a tight spot now, because they will have racked up a lot of fees on this. Either they increase the bid to 150p, which is the next logical price, and I think a bid at that price could actually succeed.
Or, they pull the idea of a bid altogether.

If it's the latter, then what happens next, and who picks up the substantial bill from advisers - these things don't come cheap, and it wouldn't surprise me if advisers have already levied fees running to £0.5m-ish, maybe more, who knows?

To my mind there is absolutely no question of FDM picking up the bill for an MBO which shareholders clearly didn't want. Management and/or the VC will have to pay these fees themselves.
Then the Chairman should resign in my view, as this whole exercise has been a farce, and never should have happened if we'd had a Chairman in place who was doing his job properly (i.e. to inter alia liaise between shareholders & management).

I don't see any pressure for existing Executive management to go, unless they decide they want to go.

If I was a betting man, my money would be on a revised 150p bid shortly, which might succeed, although it would be a close-run thing.

Regards, Paul.

[supreme mo] 10/11/2009 14:59

Broker said that it was 2500 - the last trade at 1.35 was 2500, mms short of stock, interesting to see what happens here...

[rbcrbc] 10/11/2009 14:58

I'm probably just being cautious in my thoughts
What makes you think that the 140p was not a rollover ?

The NMS quoted on lse is 500.

[supreme mo] 10/11/2009 14:52

They are obliged to give you 2500 at 1.34 still bidding for 50k - thats an awful lot of shares...

How come you don't see a higher bid? Shares were exchanged at 1.40, whoever has picked those up is going to want a return on their investment

[rbcrbc] 10/11/2009 14:48

I'm not sure I see a higher bid as this extra 8.61% is conditional on 'effectively' the original 'bid' failing.

But If the original 'bid' doesnt materialise I see these guys coming in with a bid at 135p.

So I see a floor to the share price and who knows we may get a third consortium joining and making a bidding war - That'd be nice....

(I tried to pick up some more but couldnt get any under 134p)

[supreme mo] 10/11/2009 14:18

thoughts pauly? whats the likelihood of higher bid?

[supreme mo] 10/11/2009 14:16

l2 strong pauly, can sell 50k plus but cant buy any on machine - trying to pick up some now as we speak nms 2500

[rbcrbc] 10/11/2009 14:16

The 2*140p could be a rollover ???

[paulypilot] 10/11/2009 14:08

Hi,

Something seems to be going on here.
Looks to me as if a group of existing shareholders have agreed to buy 2m more shares at 135p (from whom??? family perhaps??) if the 135p MBO lapses. Is that how others read the Rule 8.3 announcement just made?

Also interesting to see 140p large trades go through - precursor to a higher bid perhaps?

Regars, Paul.

[jeff h] 10/11/2009 14:05

Yep noticed that....and he's paying £1.35

Had a 5k punt at £1.31 on a higher bid materialising.

[rbcrbc] 10/11/2009 14:01

And wtf is Rex Harbour ?

[davidosh] 10/11/2009 13:58

Blimey 600,000 seem to have been traded at £1.40

[gengulphus] 03/11/2009 15:41

If no offer actually gets made and the "inducement fee" nevertheless gets paid because some of the "certain circumstances" apply, then either the board has decided not to do something they agreed to do (or done something they agreed not to do), or they have agreed to pay a fee to induce the Management Team and Inflexion not to do anything. In either case, I'd be happy to support a move to replace most or all of the board.

If no offer actually gets made and no inducement fee gets paid, I won't be too dissatisfied - but I'd be happy to support a resolution prohibiting the board from agreeing to pay inducement fees and the like prior to an actual offer being made. I'd be happy to support such a resolution at any other company, for that matter - in my view, costs incurred by someone who is merely considering buying an asset are entirely their own responsibility, and if they're not interested enough to incur those costs off their own bat, then I'd just as soon they didn't bother and so saved everybody a load of work...

I'm not exactly keen on break fees associated with actual offers, for that matter. I suppose they're OK when they're for people doing something other than what they've agreed to - e.g. directors withdrawing a recommendation when they've agreed to recommend an offer. But when the cause of the offer not going through is simply that overall, the shareholders decided not to accept, I don't see any good reason for any of the offeror's costs to be reimbursed - and good reason for them not to be, because the break fee is basically a form of "accept this offer or be hurt financially" blackmail of the shareholders...

Anyway, with some weeks to go yet, I'm happy to wait and see. If there is no offer, there will be plenty of time afterward to decide what needs doing about the situation. And if there is an offer, any effort spent now on deciding what to do if there is no offer is likely to end up being wasted...

Gengulphus

[rbcrbc] 03/11/2009 14:00

OK, so it is now over a month since the RNS with the Divett family agreeing their 29.54% at 135p conditional on an offer being made by 30th November (less than one month from now).

It looks to me like the offer is dead.

Is it now time to replace (more than half of) the board so we can ensure that Under the terms of the Agreements the Company, in certain circumstances, would be obliged to pay to the Management Team and Inflexion an inducement fee of up to 1 per cent. of the value of the Revised Proposal. does not get paid.

As we dont know what the certain circumstances are it is not necessarilly dependant on there being a bid.

[supreme mo] 28/10/2009 21:53

buyers been made to purchase over the offer... good sign imho, proves market short of stock.

[paulypilot] 17/10/2009 04:12

good to see another significant purchase today ;-)

[gengulphus] 14/10/2009 15:49

Agreed!

The additional point I was working around but not quite getting to is that words like "... shareholders have allowed this to happen, by being so passive ..." are likely to be unhelpful. We've got a system that makes it ridiculously difficult for small shareholders to be anything other than passive or ineffectual, and a political climate in which a lot of them could be motivated to try to get something done about it - but not by telling them that they're to blame. Leave that way of putting people's backs up to the government and its spin that it's all due to "greedy shareholders"!

Gengulphus

[gengulphus] 13/10/2009 21:19

Instead we have seen a separate management class develop, who look after their own interests first (excessive salaries & bonuses, options, etc) and treat shareholders with contempt. This is all wrong.
...
The problem is that most shareholders think & act like short term speculators, instead of long term owners. Fix that, and all the other underlying problems of the credit crucnh will automatically get fixed too.

Agreed - with the proviso that "shareholders" means the legal owners of the shares, not the beneficial owners. The trouble is that the legal owners of most of the shares in most companies are one of:

* A fund, where the beneficial owners have no rights with regard to the underlying shares, and the legal owner (i.e. basically the fund manager) gets judged on short-term performance.

* A nominee company/broker, for whom letting the beneficial owners of the shares use their rights over the shares simply means unwanted extra costs. They're not legally obliged to allow it so far as I know (I'm fairly certain provisions that they should be in the last bill on the subject got watered down to saying that their terms & conditions have to make it clear if they don't allow it). And while some will allow it on request, they're generally quite happy for investors not to realise that they can request it...

I.e. it's basically not just the growth of a self-serving management class, but also the growth of a legal owner class whose interests are not aligned with those of the beneficial owners, and the growth of those two classes feeding off each other.

On top of that, things like AGM resolutions have been made just about as tedious and "how the heck should I know?" as possible from the point of view of ordinary shareholders. For instance, resolutions to re-elect directors: there are generally no alternative candidates, you've got to dig through a densely-worded corporate governance report (in an annual report most shareholders only receive if they take active steps to get it) even to find out simple facts such as how many board meetings the director attended, and you're pretty unlikely to get anything else factual about what the director has done for the company - just something saying the board considers him or her valuable and recommends re-election. Or buyback resolutions: just about every company proposes them every year, whether or not there is any intention to actually do buybacks, and the question of whether the buybacks should actually happen is generally left to the directors' discretion, with at best a statement of intent that they'll only be done if the directors consider they will be earnings-enhancing.

The combination of having to take active measures to vote (when it's allowed at all), the fact that the matters you vote on generally don't have any direct effect on what the company does, the difficulty of getting good information on which to base a decision how to vote, and the chances that the votes of individual shareholders will be completely swamped by the block votes of fund managers adds up to a highly discouraging case for getting involved with a company even at the simple vote-at-general-meetings level...

Gengulphus

[paulypilot] 13/10/2009 16:52

Hi,

I'm not afraid of mixing it up with management of any company, have had loads of threats (incl. death) before.

The bottom line is that we as shareholders have every right to fight for our interests, as owners of the business. I'm totally passionate about shareholder value. I think if shareholders generally were more proactive in monitoring & controlling errant management, then the credit crunch would not have happened.

Instead we have seen a separate management class develop, who look after their own interests first (excessive salaries & bonuses, options, etc) and treat shareholders with contempt. This is all wrong.

But shareholders have allowed this to happen, by being so passive they might as well just bend over, lube themselves up & let management ... no that's going too far. but you get my drift.

The problem is that most shareholders think & act like short term speculators, instead of long term owners. Fix that, and all the other underlying problems of the credit crucnh will automatically get fixed too.

Regards, Paul.

[paddyfool] 12/10/2009 14:09

lets hope he doesnt bare grudges then!

[red square] 12/10/2009 09:18

The only person upset by that comment Paul will be Rod Flavel !