High-Point Ren. Share Discussion Threads

[land rover] 01/9/2003 14:13

Could it be a qustion of enough is enough, the instiutional investors have been bitten once before and with this being the only real serious offer, is it simply a question of lets get out now while we can and move on.

[hooley] 01/9/2003 11:48

A thorough reading of the interims and accompanying notes shows that clean of the one off reorganisation costs - and amortisation of goodwill, not a cash item - this business reported a profit, after loan interest and before tax, of over £600,000. There have been no warnings from the company that the second half would produce a nasty and no indication of the performance along with the MBO statement. Management accounts should show the broad outline for the full year ended July, 2003. If 57% hadn't signed up for the fourpenny one, I could be almost certain that this was a try-on. The unanswered question is - why have the majority holders accepted?

[minesapint] 01/9/2003 10:08

It seems to me that the only rationale for the INDEPENDENT shareholders to promote the current derisery offer is the possibility of the withdrawal of banking facilities. The continuation of banking facilities appears to be contingent on the collection of (disputed) fees.
It seems totaly wrong that it is the CONTINUING directors (Hingley and Trendel) who are attempting (or not)to negotiate the collection of these claims. The sums involved appear to be greater than the market capitalistion. There should be a totally independent report by a qulified accessor on the collectibilty and amount of these claims. Anyone able to indicate where to find this critical information?
Incidentally shareholders have been hung out for nearly a year for this offer.
Remember this:


What happened to that premium to the then current share price?
Where is the rationale?
Why are Instutional shareholders seemingly so complicit?

[ken50] 31/8/2003 11:54

Couldn't have put it better.

[ken50] 29/8/2003 18:00

When they invested the mkt cap was much larger and the shares much more liquid.
As investment companies they are probably just not interested in companies this small.
Also many will have invested at 60p and above and are simply cutting their losses and moving on knowing 60p and above will not be achieved anytime soon.
The interests of the investment companies are simply different , which they are showing by voting for an offer which is not in the best interests of small shareholders.

[hooley] 29/8/2003 17:08

Ken50 - We're thinking along the same lines. The downside is 4p and the upside far more substantial. Still, the unanswered question remains - why have holders of 57% committed to 4p a share?

[ken50] 29/8/2003 13:53

The institutional holders have not lent any money to the company.They simply hold shares like the rest of us albeit on a larger scale.
The management hold in total around 1.5%.
The banks not extending the loan is still a possibility and is nothing new.
The management are simply implying that if we do not take 4p they will withdraw the loan.The banks have made absolutely no connection between accepting the offer and renewing the loan.
This is simply management trying to scare small shareholders to sell up cheaply.
Worth noting that the loan has been rolled over several times already and that the second half year is likely to show substantially increased profits through slashed overheads.
Management have deliberately not mentioned this and until the audited accounts are due do not have to.
They are simply emphasising what supports their case and doing their legal best to hide what does't.
I shall wait for a reasonable offer along with my 1.8%.

[hooley] 29/8/2003 11:50

Too many omissions in the MBO statement to make up my mind. My biggest worry is that the institutional holders have agreed to 4p when they could have financed the business through to the announcement of the audited accounts. The comment that the lenders MAY NOT extended the loan seems a bit shifty - what would they gain if they put in an administrator? We appear to have a backstop at 4p and even if MBO gets no more stock, the board may decide to cancel the quotation. Non-assenters would then hold 43% of an unquoted and if there was a continuing profit recovery, the should be a good prospect of a later, substantially higher bid for the balance, based on the full year's results and this year's prospects. My guess is that if there is a lot to go for the MBO will pay up to take the whole lot. If this business is able to generate £1.5m profit at the operating level, with fincing on firm footing, then a potential share price of 30p is not unrealistic. I wouldn't feel mugged if 15p or so were offered.

[ken50] 28/8/2003 19:02

Spot on.
Just a matter of doing nothing.
The maagement will be under increasing pressure with every passing day.

[iantc] 28/8/2003 18:54

me to ken ,reckon they will have to double the offer to get the 90% they need for mbo

[ken50] 28/8/2003 18:12

I disagree.
I think the management are trying to buy on the cheap just as overhead reductions are showing results and money owed is about to be recovered.
Their motivation is the large gains they stand to make.
If things were as dire as the scare stories put out by management they would not have been able to secure funding even for this low initial offer.
They have not actually lied.
They have just pushed the worst possible scenario very very hard.
I shall be holding my 1.8% for a reasonable offer.

[land rover] 28/8/2003 15:01

The MBO scheme is primarily driven by the options available to senior management and what they stand to lose. I wouldnt hold your breath for long on the returns, 6m debt, and 3.9 m shortfall in pension contributions and a diminsihing market in the far east where a substantial portion of HPR's turnover used to come from!

[ken50] 28/8/2003 14:43

No bidder starts with their highest offer.
Patience and a little calm thinking will pay off.

[hooley] 27/8/2003 22:51

Why would the lenders put in the liquidator if the business is profitable and has 57% of the equity for 4p a share? The lack of additional funding is the problem. If the business requires another £2m, the figure mentioned in the MBO statement, Apparently the major holders rejected an equity fund raising option, but the management and Charco parties are willing to put up a £1m for the existing equity. It is hard to believe that the MBO scheme is not driven by the expectation of a substantial return. The 57% who have agreed to take the 4p a share have been persuaded it is a fair offer. I can't help feeling that must have been given more info than we the outsiders.

[garth] 27/8/2003 18:44

Or let the liquidators have it and then buy it for even less?

G.

[ken50] 27/8/2003 17:43

Even if another bidder doesn't emerge their greed will make them pay more if forced to.

[hooley] 27/8/2003 16:23

Having read through the bumph on the offer, I would underline the fact that the lenders 'MAY NOT' renew their facility and an administrator might then be appointed. Some of the directors and managers would end up with shares in Charco, the principal. No indication of how trading went in the second half and any pointer as to the current year has been given. Best to await events in the hope that another party or three spoils their fourpenny game plan.

[hooley] 27/8/2003 15:52

Clean of exceptionals, this business, based on the interims, looked set to record 3p of fully taxed earnings per share. No profit warning and the year has just ended. 57% of the issue is committed to the MBO at 4p a share. The lenders rolled over the £6m of loans and the management is evidently to pay £1m for the equity. It's illogical. Either the equity is worthless for reasons of hefty losses not yet disclosed, or the shares are worth 10X the eps - say 30p.

[land rover] 27/8/2003 13:31

Yes, it certainly smells. HPT have been in this situation before but managed to survive, only just. The problems stemm from club culture management, bad investments, i.e. surepower and vantage point and the objectives of management not being aligned with those of the company and shareholders. Can't see anything being different under the new banner of Charco - its essentially the same players, lets wait and see!

[hooley] 26/8/2003 22:24

You may well be right about there being collusion, but it's useless if you can't prove it. Why the big funds should be party to such a scheme begs the question as to their motive. They would hardly want to run the risk of being exposed as acting against the interests of their investors - so what is in it for them? This one needs some media attention to stir it up in my view. Don't you think that if there is an unidentifiable concert party, the MBO won't get pretty close to 90%. I'd be amazed if the strategy hasn't been carefully worked out, based in part on the LSE nodding it through and the fear of outside shareholders. Perhaps the FSA should take a look?

[ken50] 26/8/2003 17:18

If they don't get to 90% they will simply up their offer.
With so much for them to gain the first bid will not be their best.