|Company: TVC Holdings
Prior Post(s): 2012 & 2013
Price: EUR 0.92
I get the feeling some readers might think I was bearish on TVC in the past two years... Not at all I saw decent upside for TVC in both 2012 & 2013, and I was also very bullish on its major holding UTV Media (UTV:LN). But yeah, I was distinctly bearish on TVC's corporate governance. Management enjoys a cushy number here, and I haven't heard a peep out of shareholders about high operating expenses & the glaring lack of new (unquoted) investments over the years. Frankly, I'm astonished by the recent wind-down announcement I suspected a possible corporate event was inevitable, but not this...
And the (main) reason cited seems pretty laughable: 'the very substantial amount of Irish and international funding seeking investment opportunities similar to those sought by TVC'. So, we're expected to believe TVC's been competing tooth & nail with other Irish/international investors to provide venture capital to 'early stage & expanding Irish companies'?! I must have missed that particular investment wave myself... But perhaps the answer's staring us in the face the Chairman, Shane Reihill, owns about 30% of TVC: Maybe he just wants to cash out & move on to greener pastures? All in all, Reihill & John Tracey (TVC's CEO) have really made out like bandits bankers here:
- TVC floated in 2007, with investors actually paying a premium to NAV. This basically reflected TVC's purchase of Trinity Venture Capital Ltd. (founded by Reihill) for EUR 22.7 million, including EUR 12.5 M of goodwill. To this day, I'm mystified by this goodwill what extra secret sauce did investors think they were acquiring? A fund management business? No. [There was some talk of organizing investment syndicates, but details were skimpy & it came to naught]. The unique skills & experience of Messrs. Reihill & Tracey perhaps? If so, why the generous compensation packages ever since?
- Since TVC floated, total operating expenses have amounted to an approximate & astonishing...wait for it, wait for it...EUR 22.1 million!?!
- I haven't seen all the gory details, but executives & staff will actually receive severance now TVC's glory days are over.
- Finally, I'm sure Reihill & Tracey will be back with a new venture in the none too distant future. Surely TVC shareholders deserve even a tiny slice of any future action in return for their unstinting generosity over the years?! Please sir...
But investors will probably have to make do with whatever smidgeon of porridge's left over here: NAV now breaks down to EUR 67.3 M of cash, a 27.5 M stake in UTV Media, a 5.6 M unquoted 24.4% stake in CR2 & 0.6 M in net working capital. We should revalue the UTV stake, plus we'll add a full year's worth of operating expense (to be safe). There's also outstanding options the last annual report listed 2.5 M options outstanding (with an average EUR 0.80 strike), but management's presumably snaffled up more since then. In fact, the proposed 91 M distribution's noted as equivalent to EUR 0.95 per share on a fully diluted basis, suggesting 4.3 M options are now outstanding. Oddly enough, there's no mention of any option-related cash inflow 3.4 M of cash (say) isn't to be sneezed at shareholders would do well to track it down... I'll simply assume it's soaked up by fees, expenses, severance, cigars, fine cognac, etc:
(EUR 67.3 M Cash + 9.6 M UTV Shares * GBP 220.25p / 0.8135 EUR/GBP + EUR 5.6 M CR2 Stake + 0.6 M Net Working Capital 2.8 M Op Expense) / (91.5 M Shares + 4.3 M Options) = EUR 1.011
TVC's only marginally undervalued at this point, but it's still interesting as a specific event-driven opportunity. Management promised a EUR 91 M capital distribution to shareholders in cash & UTV shares (equivalent to EUR 0.95 per TVC share) for July. Assuming the cash component (63.5 M) remains constant, we're now looking at a total distribution of 90 M (or EUR 0.935 per share) based on the current UTV share price. [Implying a 7.6 ct post-distribution NAV - equivalent to management's 9 ct indicative NAV, after adjusting for an additional 0.9 M of operating expense I've included in my NAV calculation & some rounding]. Go long TVC now, and your main exposure's UTV Media price risk. However, UTV's now a much smaller NAV component, plus I reckon it trades close to fair value at the moment it might be worth a flier for the next few months, otherwise you may wish to hedge your exposure with an appropriate UTV short position.
Assuming a EUR 0.935 distribution's locked in, you'll realize a small profit vs. TVC's current share price & also enjoy a free bet on TVC's residual value essentially, the eventual realization of its current CR2 stake (plus related appreciation/depreciation) less ongoing operating expenses for another few years (potentially). [Or think of it as creating a stub equity position...at a negative cost!] Either way, it promises a rather astonishing IRR, no matter how big or small the eventual payout. ;-)
Price Target: EUR 1.011
|Mach, Well done here! Two way undervalued shares are Providence Resources(PVR) and Petroceltic Internatioal(PCI). DYOR of course.|
|Winding itself up with a payout plus UTV shares, Nice investment for me and looking for a good home to reinvest my gains here. 77.5P payout ( not sure if we also get UTV shares?).|
|Well it has managed to sell down its stake in UTV without substantially hitting the share price Wonder if it will now move to buy the hotels group. Might be getting value as Ireland is post-bailout. TVCH are well supported by Irish shareholders so could be attractive to them. Only wish I had punted for more at 56p as I knew this was substantially undervalued. Got to work out a Target Price now as these are up 50% since I bought. I have a feeling there is more to come!|
|2013 The Great Irish Share Valuation Project (Part V)
I take a look at TVC Holdings, plus a batch of other Irish stocks:
|A large discount to cash is warranted. They have made bad investment decisions in the past and its unknown if future investments will results in shareholder returns or if current investments will perform in the future. If the company was to be broken up the cash distributions would be subject to tax so this also warrants a discount to cash. Also FYI "TVC's quoted investment in UTV Media plc was valued based on its closing bid price on 31 March 2012". Since then the UTV shares have fallen from 1.50 to 1.30.
Trinity flotation document bares fund wounds
Sunday, July 15, 2007
Trinity Venture Capital, which raised 50 million in a flotation Dublin and London last week, wrote off half the value of its last fund during the technology downturn
"The shares were trading at 1.55 late last week"|
|Evening all, TVC Holdings issued its FY results earlier today - I've just blogged about it (link here: http://pdosullivan.wordpress.com/2012/05/15/market-musings-1552012/ ) - I think the stock looks attractive at these levels (85c)|
Just posted Part V of The Great Irish Share Valuation Project, including valuation and some commentary about TVC holdings:
|have just started looking at this one, and am a bit surprised that there is no mention of Norkom issues in the latest RNS? ostrich syndrome? did they try to hedge(short)? was the drop in Norkom share price partially predictable? is someone else using their collateral in Norkom to short it(Norkom)? imho, dyor...|
|Norkom posts 8% drop in revenue
|Value of TVC portfolio fell by 12m
A hotel investment project in Washington DC backed by Irish investors has been repossessed by Barclays Capital which is trying to recover loans.
At the time the purchase was hailed as a 'unique investment opportunity' by Claret Capital owner Domhnal Slattery.|
Davy Stockbrokers downgraded its earnings estimates for Norkom in light of the technology group's recent profit warning.|
|Prices in that joint way too high and reproduction paintings throughout. Pleazze...|
The 197-room Four Seasons Hotel in Dublin was the last inn anyone in Ireland expected to go under in the Recession. But go under it did, suffering a $2.6 million loss last year. Now the property is up for sale.
Paul Gallagher of the Irish Hotels Federation told the Belfast Telegraph the the pending sale of the property in the Ballsbridge section of Dublin will send "shockwaves through the industry" and "raise distress."|
my banker friends -- yes, I still have a few -- whisper to me that even firms they previously reckoned were rock solid are now coming to them with serious problems.|
|Norkom stock plummets 30pc on revised forecast
|Norkom warns on profit and revenues. Time to buy Norkom shares?
Ireland on Tuesday said it would extend certain government guarantees for its troubled banks in a bid to quash concerns about the health of the nation's financial sector.
Irish Bond Spreads Now Highest Since Height Of Sovereign Debt Crisis
Read more: http://www.businessinsider.com/irish-bond-spreads-now-widest-since-height-of-sovereign-debt-crisis-2010-9#ixzz0ysaconYl
Right now, the pressure on Ireland is rising as yields on the country's 10-year debt have increased to 6%|
US bank Citigroup is predicting that Irish bond prices will slide further, even though the company is one of the National Treasury Management Agency's primary dealers in government bonds|
|I wonder did TVC invest in Irish government bonds? Still like Norkom but IMHO
"I'm not in a rush to buy Irish bonds," said Robin Marshall, a director of fixed income at Smith & Williamson Investment Management in London, which manages $20 billion in assets. "The government has done all it can to address the problem, but that doesn't cap the rise in bond yields. It's just a reflection of the sheer size of the banking problem there."|
|had to laugh at that Hermana. Ireland no longer has any HNWI cos they threw all their spare cash at people like Davy and Goodbody|