Omega Share Discussion Threads

[mikey34] 22/12/2008 13:11

moonlight,

Don't hold any more but you're probably right.This seems opportunistic.

[moonlight83] 16/12/2008 09:16

Hello! Anybody here??? Some opinion on this offer would be more than welcome...

[cyberpost] 12/12/2008 11:55

Recommended Cash Offer (Omega)

RNS Number : 0334K
Omega International Group PLC
12 December 2008


Not for release, publication or distribution, in whole or in part, in, into or from the
United States, Canada or Japan, or any other jurisdiction where to do so would constitute a violation of the relevant laws of such other jurisdiction.

ANNOUNCEMENT
FOR IMMEDIATE RELEASE

12 December 2008

RECOMMENDED CASH OFFER FOR Omega INTERNATIONAL GROUP PLC ("Omega") BY Omega BIDCO LIMITED
("Bidco")

Summary
The Directors of Bidco and the Independent Directors of Omega are pleased to announce the terms of a recommended cash offer to be made by Bidco for the whole of the issued and to be issued share capital of Omega (other than the
Omega Shares subject to the Exchange Agreements).

Highlights
The Offer is being made at a price of 108 pence in cash for each Omega Share. In addition, if the Offer is declared unconditional in all respects, Omega Shareholders on the register on 12 December 2008 will be entitled to an additional dividend of 2 pence per Omega Share for the year ending 31 December 2008 (the "Additional Dividend"). The payment of the Additional Dividend, will be made as soon as practicable, but no later than 14 days, after the Offer is declared unconditional in all respects.

Omega Shareholders on the register on 12 December 2008 will also be paid the interim dividend of 0.94 pence per Omega Share in respect of the six months ended 27 June 2008 (the ''Interim Dividend''). The Interim Dividend will be
paid, irrespective of whether or not the Offer is declared unconditional in all respects, on 9 January 2009.

The Offer values the entire issued share capital of Omega at approximately £30.5 million. The Offer and Additional Dividend together represent a premium of approximately 74.60 per cent. over the Closing Price of 63 pence per Omega Share on 11 December 2008, the last Business Day prior to the issue of this Announcement and the commencement of the Offer Period.
Including the Interim and Additional Dividends, Omega Shareholders will receive under the terms of the Offer a total cash payment of 110.94 pence per Omega Share, a premium of approximately 76.10 per cent. over the Closing Price of 63 pence per Omega Share on 11 December 2008, the last Business Day prior to the commencement of the Offer Period.

If the Offer lapses and Omega Shareholders are therefore not entitled to the Additional Dividend, then the Omega Board will consider a final dividend for the year ending 31 December 2008 in accordance with Omega's usual annual
final dividend timetable and any payment due is expected to be made in July 2009.

Bidco was formed specifically for the purpose of making the Offer and is a wholly owned subsidiary of Omega Topco Limited ("Topco").

Both Bidco and Topco are newly incorporated companies in England and Wales. Following the Offer becoming or being declared unconditional in all respects, Bidco and Topco will be controlled and wholly owned by the Management Team.

In view of the involvement of the Management Team in the Offer, and the esulting conflicts of interest, an independent committee of the Board of Omega comprising Prudence Margaret Leith and Kevin McDonald has been formed to consider the terms of the Offer on behalf of Omega Shareholders.

The Independent Directors, who have been so advised by ING Corporate Finance, consider the terms of the Offer to be fair and reasonable, and unanimously recommend that all Omega Shareholders accept the Offer. In providing advice to the Independent Directors, ING Corporate Finance has taken into account the commercial assessments of the Independent Directors.

Bidco has received irrevocable undertakings from the Omega Directors, including the Independent Directors, and irrevocable undertakings and a letter of intent from certain other Omega Shareholders to accept or procure the
acceptance of the Offer in respect of a total of 17,769,370 Omega Shares, representing, in aggregate, approximately 62.92 per cent. of the existing issued share capital of Omega. Further details of these undertakings are set out in the following Announcement. In addition, Bidco has conditionally agreed to acquire 1,815,400 Omega Shares pursuant to the Exchange Agreements.

The Offer has significant support from Omega Shareholders, with Bidco having secured irrevocable undertakings and a letter of intent in respect of, or having conditionally agreed to acquire, a total of 19,584,770 Omega Shares representing approximately 69.35 per cent. of the existing issued share capital of Omega.

Bidco will despatch the Offer Document to Shareholders and, for information only, to holders of share options in Omega, and publish it on Omega's website (www.omegaplc.co.uk), as soon as practicable.

Commenting on the Offer, Kevin McDonald, Independent Director, said:
"Given the current trading outlook for the UK retail sector, the Independent Directors believe Omega Shareholders are unlikely to be able to realise value similar to the Offer in the medium term. Moreover, as the Offer is at a significant premium to the current Omega Share Price, it represents an opportunity for shareholders to realise their entire investment in Omega at a time of great economic and stock market uncertainty."

Francis Galvin, Chief Executive Officer of Bidco said:
"I am pleased that we have been able to raise the necessary funding to announce the recommended cash offer for Omega. In the current economic environment, the management team believes that the interests of employees and other stakeholders will be best served by taking the company back into private ownership. The offer represents a very significant premium of approximately 75% to the current Omega share price and it is being recommended to shareholders by the Independent Directors and their financial advisers."

[mikey34] 10/9/2008 08:19

PB,oranges,

Agreed.Probably one to come back to in a few months time for another look.

[oranges] 10/9/2008 07:55

pbracken, I agree with your comments, it all looks ok, however market sentiment and the dismal news from across the atlantic will depress all UK equities. In the long term Omega will do well, however in the near term Cash is king.

[oranges] 10/9/2008 07:55

pbracken, I agree with your comments, it all looks ok, however market sentiment and the dismal news from across the atlantic will depress all UK equities. In the long term Omega will do well, however in the near term Cash is king.

[pbracken] 10/9/2008 07:33

The headline figures are obviously very good, but the profit warning for the year as a whole (whilst not unexpected, by any means) is going to weigh on the shares. It appears that OME will still make between £6-£7m for the full year (perhaps more) and the cash and land assets are worth more than 100p a share alone. So, yes, OME is cheap at these levels, but I doubt very much if the market will notice.

Edit: I would add that the raising of the dividend is a pretty bullish statement.

[oranges] 09/9/2008 16:58

we will see, tomorrow results are out!

[slapdash] 07/9/2008 10:02

oranges... I doubt it... demand for kitchens will have collapsed.... Slap

[oranges] 06/9/2008 21:10

I think that the interim results out Wednesday will be very interesting. Perhaps a suprise or two for investors. Nice suprises I hope, perhaps a special dividend, been done before, trading update may be good, smallbone delivered robust figures last week, I am now thinking positively about this outfit.

[moonlight83] 19/8/2008 14:55

Pbracken - You're dead right. It would be nice if the share price fell even further in the short term, it would give us the opportunity to buy into the co at a cheaper price.

[pbracken] 19/8/2008 12:40

L&G has almost doubled it's holding.

oranges: short term? Difficult to be precise, but OME has been mauled so badly that it's hard to see much downside. I mean, profits would have to halve to justify this rating - and even then, OME would still be trading on a p/e of less 8. Given that OME has already said that profits will be ahead at the half year (ie over £4m), that outcome is, to say the least, unlikely. Also, it has cash of £4m and land worth around £20m.

Short of some unforseen (or unannounced) catastrophe, OME seems dirt cheap. L&G seems to think so, too.

[oranges] 11/8/2008 18:34

pbracken, that is good news, have they been mopping up some of the overhang? what do you think the short term outlook is for Omega (insofar as share price).

[pbracken] 11/8/2008 15:51

F&C has increased its holding.

[neefax] 11/8/2008 15:42

I asked a broker, his comment was that AIM stocks have had a really bad press of late, with a lot of them losing 90% of value !!!! (stunning if accurate). He then advised that a lot of investment funds were making it policy to not invest future funds and perhaps withdraw from that market. He did add that it was not accross the board and that perhaps F&C had acquired stock from another fund. No doubt it will become cler in due course.

[moonlight83] 11/8/2008 14:55

Neefax - call them up and ask, their investors' relations bloke is very friendly.

[neefax] 11/8/2008 14:20

I wonder if F&C have added or reduced their holding as regard todays announcement!

[oxfordrun] 07/8/2008 20:57

used and to full potential, i keep saying it, we are now entering a period of people staying put and the whole DIY thing will kick off again and first on the agenda ..the kitchen, TV programs, as in the 90's will pick up on this and we will see a batch of programs advising on how to put value back into your home. bring it on. also a good time to get conservatories, bathrooms, etc etc.

if you have the money of course.!

[oranges] 01/8/2008 12:31

Is the factory extension being utilised or is it mothballed?

[oxfordrun] 30/7/2008 20:46

they are not planning to go bust, who is actually planning it ? lol

[moonlight83] 30/7/2008 12:53

oxfordrun - I can see you are a bit concerned about the macro picture coming from the US. But here we are talking about buying a business at a price equal to Net Assets which should make us feel safe regardless of all the disastrous things that could happen in America in the next year or two.

Now, how safe are we buying Omega's Net Assets? How comfortable are we with their valuation and Net Realisable Value if we decided to sell them off the day after buying them?

Let's have a look at the most relevant items in their financial statements.

Their freehold Land and Buildings land was revalued on 31/12/2007, at a time the general market was already in the doldrums. Sanderson Weatherall, Chartered Surveyors put a value tag of 20m.

Trade receivables and payables (excluding VAT and other provisional items) are at the same levels they were last year. They are 4.9 and 6.9m respectively. This adds a slightly positive note as the 19% increase in turnover experienced in 2007 did not come together with prolonged payments and collections periods - as would be the norm when volumes increase sharply.

Cash and Inventories add up to c. 8.3m. Let's bear in mind that their inventories don't suffer from obsolescence to the same extent as, say, medical or computer devices. A good kitchen is still a good kitchen even after two years you bought it. This implies that the value of their inventory would not deteriorate materially if we decided to sell everything over the next year or so. The latter is only an assumption and I'm not 100% comfortable with it - I'm still new to the kitchen industry.

Trade payables (excluding deferred income and dividends) are the only liability I would take into account if I looked at buying the co and liquidate it the day after.

3.6m in deferred income tax liabilities is only a result of an accounting convention that recognises timing differences between depreciation and capital allowances. They are not a liability that would squeeze my working capital if, again, I decided to sell the company tomorrow. A deferred income tax liability is not the same as trade payables as only trade payables will materialise into real people knocking at the door and asking for their money.


Now, let's sum it all up (in £'000 - figures are rounded)

Land and buildings 20,000
Plant and Eq. 2,969
Inventories and Cash 8,350

Total 31,319

less: trade payables (5,926) (this excludes 1m def income and divid's)

Net value 25,393

Market value at 30/08 25,980

Excess 587

According to Mr Market, today the cash generating capacity of Omega plc deserves a price tag of 587,000. Last year Omega generated over 8m in cash from operations.

The numbers are self explanatory and don't seem to justify a market valuation of 26m – not even if Omega's revenue were to half as of 2008. On the other hand, today's market valuation seems appropriate if these guys are planning to go bust in the next few months.

[oxfordrun] 29/7/2008 18:59

they are, the customers, in a sticky situation at the moment, do we buy a new kitchen for ourselves and stay put, do we get kitchen to help sell the house or do we just make do? in the early nineties the kitchen business did very well with people staying put and having what they wanted, this time round no credit no interest free credit and no confidence on where we are heading, until some good news arrives from USA we are in limbo, i would also say that their core business is from retail outlets not much from new build. a good price to get in at

[pbracken] 29/7/2008 13:19

mikey - OME sells its kitchens through a national network of retailers; it's not one to deal through the 'sheds' (Homebase, B&Q) or big builders merchants.

It's kitchens are also mid market - average well over £2.5K. I don't think it is being as heavily impacted by the slowdown as others are, though clearly there is some effect; profits have been revised downwards to marginally above last year's.