Northgate Information Solutions Share Discussion Threads

[grlz] 13/12/2007 12:30

Northgate, which last year received a number of unsolicited approaches that came to nothing, added that comments about its debt facilities were "inaccurate" and that it was trading "comfortably within its covenants".

It said committed facilities amount to £513m and net debt stood at £416m at the end of October. "

[grlz] 13/12/2007 12:29

Northgate said it had received a bid approach. It is thought a private equity suitor is behind the approach and an offer for the group could be north of 100p a share, valuing the group at over £580m.

[grlz] 13/12/2007 12:29

Telegraph article..

Bears got their fingers scorched in Northgate Information Solutions after the software group announced it was a takeover target, writes Yvette Essen.

In early trading, the stock tumbled 27pc after Morgan Stanley published a gloomy note on the shares, slashing its target price from 100p to 65p and downgrading from overweight to equal weight following Monday's interim results.

It called the stock "too high risk" and said "on our forecasts, the company will be very close to breaching the covenants of its credit facility in 2008-2009".

Northgate fell as low as 43¼p as investors rushed to short the stock, recalling that Numis had also warned on Monday that it saw a "pressing need for Northgate to raise cash". Volumes swelled to 52m shares - more than 15 times the usual daily average.

However, the shares ended the day up 12¼ at 71½p after Northgate said it had received a bid approach. It is thought a private equity suitor is behind the approach and an offer for the group could be north of 100p a share, valuing the group at over £580m.

Northgate, which last year received a number of unsolicited approaches that came to nothing, added that comments about its debt facilities were "inaccurate" and that it was trading "comfortably within its covenants".

It said committed facilities amount to £513m and net debt stood at £416m at the end of October. "

[grlz] 13/12/2007 12:26

chrisc + jdung + simon - How negative are your shorts again? LOL assuming your all different people which I doubt as u do tend to post the same rubbish at the same time and within a few minutes of each other.. Reminds me of a past poster who once had numerous alias, works with AIM stocks but as yesterday demonstrates when the market moves against shorters as the Telegraph stated "they get scorched"

[cyberpost] 13/12/2007 12:20

LONDON (Thomson Financial) - Northgate led the sliders, down 8-1/2 pence to 63 pence, as traders took the view that a bid approach, announced yesterday, will be unsuccessful. That sentiment follows the collapse of a takeover approach for the company just over a year ago.

Brokers remained positive with Landsbanki reiterating 'buy' after the offer
was made, saying it thinks the perceived "execution risk" noted a year ago has
now reduced.

Altium, which restated its 'buy' rating, said it thinks the higher
probability of a strategic buyer and the recent weakness in the share price make
it more likely that a deal will be agreed this time around.

[simon gordon] 13/12/2007 12:16

From the FT's Alphaville blog this morning:

NH: got some thoughts on Northgate

NH: before we get back to the banks

NH: stock had a rollercoaster ride yesterday

NH: tumbled in early trading after Numis and Morgan Stanley warned clients that the company, which has loads of debt, could breach its banking covenants

NH: stock then rallied sharply, to end the day higher

NH: after the company said that analysis was flawed

NH: and that it had also had a bid approach

PM: they just thought they would slip that in then

NH: why not???

NH: anyway, most people thought the stock would open higher this morning

NH: after all the press have been talking about a 100p a share bid

PM: and?

NH: they are down 9.5p at 62p

PM: Ahhhh!!

NH: that's a fall of 11%

PM: Why??

NH: well, first no one believes Northgate will be bid for

NH: and that's not surprising

NH: The group has received a takeover approach about 15 months ago (we believe the offer was in the mid 90p levels ),

NH: but Northgate walked away from it as it felt it didn't fully reflect the underlying value of its

NH: various businesses

NH: and second Numis has renewed its attack this morning

NH: published another really bearish note

PM: Saying?

NH: that the share price risk is asymmertric -

NH: on the downside that is

NH: Repeating our view on covenants: Our calculation method of the group's net debt/EBITDA multiple is, and always has been, in line with the approach used by Northgate's banks.

NH: We forecast trailing net debt/EBITDA at April 2008 at 4.25x (£440m/£103m). The group's net debt/EBITDA covenant is 4.75x until April 2008, falling to 4.25x at July 2008.

NH: Our calculations therefore suggest that any trading weakness in the next year could lead to a covenant breach.

NH: What price a bid? The FT suggests that "a private equity group [is] hoping to achieve a price of around 100p per share". We estimate that 100p would be a 1-year forward EV/NOPAT multiple of 18.5x. When bid talks failed a year ago, in much more favourable markets for private equity, the 1-year forward multiple at the then mooted bid price also of around 100p was 18x.

NH: A bid at 100p now would therefore be at a higher multiple of future NOPAT than the best available bid 12 months ago. Even at the current 71p share price, we think that the CY08 EV/NOPAT multiple of 15.5x would be a good take-out multiple in current markets.

NH: Debt change of control? We don't know whether Northgate's debt facilities contain a change of control clause, although we believe that these are common. If such a clause is in place, then we think that any new owner of Northgate would almost certainly end up paying higher interest rates, and conceivably might not even be able to raise as much debt finance.

NH: Asymmetric downside risk: We think that a bid at around 100p is highly unlikely, and even a bid at the current level would be a good price. Given the risk that a bid might well not emerge, we think the share price risks as highly asymmetric on the downside

PM: Hmmm - taht is aggressive - and they clearly dont beleive the bid story either

NH: Now this note has been penned by Will Wallis and David Toms

NH: and Mr Toms has an excellent nose for spotting software companies with problems

NH: Torex, he spotted that disaster

PM: Ah, did he?

NH: he was also bearish on isoft, another disaster

NH: in fact some of the most spectualar blow ups in recent years have come from the software sector

NH: there is just something about it

NH: anyway, the market listens to this guy

NH: and if he is worried about debt at Northgate

NH: then so should investors

PM: given those debts levels it does look like an unlikely bid candidate

NH: I agree

[jdung] 13/12/2007 12:03

big city boys sell, UBS sell at 66P, SEG selll at 65P
so not bid,
if bis only 60-70p.

[chrisc168] 13/12/2007 12:02

I wonder if is gona do another reversal today :@)

[grlz] 13/12/2007 11:11

tradx - ur a funny guy, but some how I think given how the market reacted yesterday so sharpish your shorts were closed out for you - At least u acknowledged that all your bearish posts were rooted in your desperate need to spook investors - quite why I have no idea as nothing said on a BB makes much difference because this event was led by Numis & MS.

The board regardless of Stone will be forced to recommend a decent bid pitched anything over 90 - current market conditions dictate it - I don't rule out Stone counter-bidding as an MBO - GAP hold 13% and have supported his expansion strategy to date without question, they may well support a Stone MBO - Barclays banking involvement is due to Stone and over the last 3 yrs they have throw money at the guy. Northgate's statement yesterday RE its banking would only have been released after consultation with BARC, it's stupid to think otherwise.

all imho/DYOR

[argy2] 13/12/2007 11:02

What about the 325k sell that followed at a discount?

[chrisc168] 13/12/2007 10:56

hifkdmer
Looks like the big boys are back. I am thinking of buying in now. I juat want to see if there's anymore announcement before lunch time.

[hifkdmer] 13/12/2007 10:53

someone just paid 4p over the ask for 200k!!
This is only going up from here!

[tsmith2] 13/12/2007 10:39

I am expecting this to finish the day relatively unchanged from yesterday's price


Telegraph article..

Bears got their fingers scorched in Northgate Information Solutions after the software group announced it was a takeover target, writes Yvette Essen.

In early trading, the stock tumbled 27pc after Morgan Stanley published a gloomy note on the shares, slashing its target price from 100p to 65p and downgrading from overweight to equal weight following Monday's interim results.

It called the stock "too high risk" and said "on our forecasts, the company will be very close to breaching the covenants of its credit facility in 2008-2009".

Northgate fell as low as 43¼p as investors rushed to short the stock, recalling that Numis had also warned on Monday that it saw a "pressing need for Northgate to raise cash". Volumes swelled to 52m shares - more than 15 times the usual daily average.

However, the shares ended the day up 12¼ at 71½p after Northgate said it had received a bid approach. It is thought a private equity suitor is behind the approach and an offer for the group could be north of 100p a share, valuing the group at over £580m.

Northgate, which last year received a number of unsolicited approaches that came to nothing, added that comments about its debt facilities were "inaccurate" and that it was trading "comfortably within its covenants".

It said committed facilities amount to £513m and net debt stood at £416m at the end of October. "

[jdung] 13/12/2007 10:10

big trade is 48p, 71p, so faire price is 59-61p.
today, UBS sell 2m shares at 66p,
so bid is 65-70P

[hifkdmer] 13/12/2007 09:58

Telegraph article..

Bears got their fingers scorched in Northgate Information Solutions after the software group announced it was a takeover target, writes Yvette Essen.

In early trading, the stock tumbled 27pc after Morgan Stanley published a gloomy note on the shares, slashing its target price from 100p to 65p and downgrading from overweight to equal weight following Monday's interim results.

It called the stock "too high risk" and said "on our forecasts, the company will be very close to breaching the covenants of its credit facility in 2008-2009".

Northgate fell as low as 43¼p as investors rushed to short the stock, recalling that Numis had also warned on Monday that it saw a "pressing need for Northgate to raise cash". Volumes swelled to 52m shares - more than 15 times the usual daily average.

However, the shares ended the day up 12¼ at 71½p after Northgate said it had received a bid approach. It is thought a private equity suitor is behind the approach and an offer for the group could be north of 100p a share, valuing the group at over £580m.

Northgate, which last year received a number of unsolicited approaches that came to nothing, added that comments about its debt facilities were "inaccurate" and that it was trading "comfortably within its covenants".

It said committed facilities amount to £513m and net debt stood at £416m at the end of October. "

[powwow] 13/12/2007 09:54

ouch, when i left this yest is was 45p, did it really bounce back up yest.. must have burned a few shorters.

[hifkdmer] 13/12/2007 09:33

back to 65p in the next hour

[typo56] 13/12/2007 09:30

Do you think think the approach announcement would have been made yesterday afternoon, had it not been for the shorters getting their teeth into the possible debt issue?

[hifkdmer] 13/12/2007 09:19

back up we go!

[hifkdmer] 13/12/2007 09:08

they will hold it here for a bit then walk it back up!

[alexx] 13/12/2007 09:02

tsmith2
Where does TW say that, looking at the T1ps home page I cannot see any link to that.

His call yesterday was brilliant wasn't it. I didn't add.

[tradx666] 13/12/2007 09:01

M&C,

I'm not so sure it failed!

However, I do think that Numis should be held to account for a serious misjudgement - perhaps it wasn't in error?

regards

T..

[mercier et camier] 13/12/2007 08:59

tsmith2

My thoughts exactly. They bear raided the company yesterday and failed. They're trying again today. The £415M is nothing if the income stream is coming in. Given today's markets its all about consolidation. NIS are large and influential. Other approaches for the company can materialise.

[togglebrush] 13/12/2007 08:57

Volume yesterday was over 25 times the median (middle of sorted sample). Nearest other example was 40 million back 4 October 2006 when share price hit 99.5.

Median is around 2 million. A lot of action and a lot of different agendas. Next week will be quiet but this week who can tell???