African Battery Metals Share Discussion Threads

[c1d] 07/10/2013 14:31

EJ,
Good luck with your investing. Whatever happens it will make an interesting case study.

[hvs] 07/10/2013 14:23

Time has already told.

Lender in debt upto its eyeballs with NO PROFIT and only expenses.

Nice Board of Directors in charge here.

Well done boys you desrve a cheap bar of GOLD shall we make it TOBLORONE ?

[simon templar qc] 07/10/2013 14:00

Agree with HVS their largest shareholder is also into pawnbroking and they don't want to know. Gold price isn't good and as the economies improve the gold price will fall further. Its a very competitive market, spent some time now sifting through the finances and they don't look good. Shutting shops costs money leases and all that.

Good luck guys you will need it.

[c1d] 07/10/2013 13:54

QuePassa,
I agree with your post 779 above. I'm sure that they would have to reclassify the bank debt as due < 1 year (on demand more like!) if they thought they had/were likely to fail any covenant tests and this was a big factor in deciding to delay the results. If, as I expect, the banking agreement says that covenant test failures give the bank the right (but not the obligation) to demand immediate repayment then I think the results would have to say there was serious doubt about whether the business is 'a going concern' under accounting rules.
For this reason I don't expect the results to be announced before new arrangements are agreed with the bank.
I agree with your other points too but IMV I think it is most likely that the bank's preference will be to tighten up on what management can/cannot do but then give them a second chance.

[hvs] 07/10/2013 13:42

lol !!!!

lol !!!!

It gets better and better here.

Chris Gillespie as the new Chief Executive Officer

How are they going to pay off £ 50 mill in debt ?????? And growing.

[quepassa] 07/10/2013 13:31

I just don't know how much appetite banks have left in general for restructurings at this point in time. Whilst I am not suggesting this is the case with ABM, restructurings frequently involve provisioning and that is a very dirty word in banking circles nowadays.

The banks almost certainly in my view would have seen/demanded internal management projections from ABM. So it seems unlikely to me just to be an inconsequential technical or temporary blip on the covenants.

Also, it seems likely in my view that ABM saw that a crunch-point was coming as they had been negotiating with EZcorp for four months on the rights issue.

The structure of the banking facility should be noted:-



1. As a result of the covenant test date deferral, the facility has been reduced in size from £65m to the current level of outstandings of £53.5m. This would seem to indicate that they have no scope to increase borrowings at this point in time under that facility.

2. The structure of the facility should be noted carefully as per pages 50 and 51 of the 2012 Annual report. It has a maturity of 2016. However it is NOT a term loan facility payable back in 2016. It is rather structured more akin to an overdraft facility. Under the facility, ABM can draw down slugs of money for periods of three or six months. At the end of the 3/6 months periods, they have to repay the drawings. They can do that from cash-flow or by re-drawing under the same facility. IE Rolling-over the drawings.

3. If they are not in compliance with any Covenant test, one presumes ( although I have not read the full facility agreement) that this would prevent them from making further drawings under the facility.

So effectively they may or may not, in my view only, technically have to repay up to £53.5 million of short-term debt in short order if they are not fully covenant compliant

4. One also notes that although drawings are for 3/6 months duration, they have classified this debt as long-term/2016 debt as they have stated in their 2012 Annual Report that they were confident they can roll over the drawings.

5. One asks oneself if they can possibly have the comfort level to consider these drawings as longer term borrowings for today's purposes or whether these would need to be reclassified as short term borrowings which makes the balance-sheet look much, much more stretched in my opinion.


If they cannot comply in the normal course of business on 30th. October with the earnings-based covenant Tests, or by some third party action/intervention, they are entirely in the hands of the banks, in my opinion only, who may or may not have further patience or who may or may not demand a high price for further concessions on the banking facility agreement, repayment, repayment dates, covenants and terms.

ALL IMO. DYOR.

QP

[c1d] 07/10/2013 13:25

EJ,
I have only bought a small stake (around 2% of my total portfolio) as I think this is a very high risk situation. I'm happy to have bought in early but don't want to overcommit as it may blow up.
I want to preserve capital so that I can invest in the next 'special situation' if I end up losing my stake here.
Regards

[mister md] 07/10/2013 13:06

2seansflag - LOL - funny you think the opposite about a similar situation then:


TravelZest - Bull Run in sight - TVZ
2seansflag - 30 Sep 2013 - 11:58:07 - 613 of 662
If a deal is done the terms will be very tough, the only winner here will be the lender.

[2seansflag] 07/10/2013 12:55

£3 down to 30p, think there will be a few taking a punt on them odds

[c1d] 07/10/2013 12:52

QuePassa,
I think you are correct to be sceptical about the covenant being met at the end of October. However, I don't think that this means that all is lost.
I think the most likely outcome is that the debt and covenants will be renegotiated. The bank can make sure the board has much less room to screw things up further while giving them time to prove that they have learnt from their mistakes. The bank will also collect a fat fee and I'm sure will charge a much higher interest rate to compensate them for the increased risk. If management don't rise to the challenge then the bank can always put the company into administration later (having banked their fee and higher interest charge) while there are still sufficient assets to enable them to get 100% of their money back.
Just my opinion, although I was once employed in a business that was in a similar situation and this is what happened.

[2seansflag] 07/10/2013 12:52

Course you do mr md, coz u want back in at a lower price

[simon templar qc] 07/10/2013 12:50

They have deferred the rights issue as the largest investor snubbed it so that put paid to that. As for reducing the facility that is probably being forced on them by the banks. Have no position here myself just watching out of interest.

Its either going bust or they will sort it out and the share price is undervalued. Take your pick.

[quepassa] 07/10/2013 12:31

Look,

In my opinion only, if they seem unlikely to have been able to pass their earnings-based covenant test with the banks last week on 30th. September ( why else would they need a deferral or a rights issue?), one must ask oneself what chance they may or may not have of passing the same test in just over three weeks' time on the revised date of 30th. October.

I ask myself, if the banks thought it were likely, why would they have wanted an immediate Restructuring Officer appointed to the Board and also why would they have reduced the current £65m facility to £53.5million?

Annual figures scheduled for release in September have been delayed. But for how long?

Even with store closures and cost cutting measures, I ask myself will trading have normalised to the extent that the covenant can be complied with on 30th. October in the normal course of business and/or without some significant restructuring or third party intervention or corporate action/event?

Let's hope so but that is a major question not without its challenges.

ALL IMO. DYOR.

QP

[mister md] 07/10/2013 11:56

hope everyone took the opportunity to get out this morning

[hjfe] 07/10/2013 10:45

Level 2 4 vs 1 - topping up opportunity here.

[c1d] 07/10/2013 10:35

It is true that CG is almost certainly not experienced in business turnarounds/reconstructions but Colin Whipp the CRO is. I imagine that they will divide up the task in hand between them according to their relative strengths and experience. Hopefully they will be able to work well together but, given the circumstances, I would expect the CRO to have the upper hand until the ship has been steadied no matter the official pecking order.

hxxp://www.dofonline.co.uk/index.php/interim-management/3838-the-turnaround-expert

[2seansflag] 07/10/2013 08:23

Do you want me to pay for your eye test ghost of a hangman ?

[mister md] 07/10/2013 08:23

in at 25.5p out at 40p, enough for me !

[skinny] 07/10/2013 08:01

Albemarle & Bond Holdings PLC, the specialist retail financial services provider, is pleased to provide an update to the announcement made on 30 September 2013 with respect to the appointment of Chris Gillespie as the new Chief Executive Officer.

Chris Gillespie will now join the Board as the Company's new Chief Executive Officer on 7 October 2013 instead of the previously planned date of 18 October 2013 and Greville Nicholls will simultaneously revert to his former role of Non-Executive Chairman.

The Company is also pleased to announce the appointment of Colin Whipp as Chief Restructuring Officer and Executive Board Director from 7 October 2013.

Colin is an experienced turnaround executive who has worked in public and private companies in the UK and Ireland. A Chartered Accountant and a Fellow of the Institute for Turnaround, Colin has extensive wide experience in consumer facing companies in delivering improved financial change and results. Prior to this in his early career, he qualified with BDO Stoy Hayward, and then worked for Procter & Gamble UK. This was then followed by financial and commercial roles with Scholl Plc, BacardiMartini Inc. and Bertelsmann UK.

Greville Nicholls commented:

"In the current environment, Chris' experience and leadership will be very valuable to the business. The acceleration of his appointment to the CEO role from the previously planned date is in recognition of his energy and enthusiasm to take up the role and the Board's confidence in the difference he can make to the Company. We also welcome Colin on his appointment and I am sure that he will be of great assistance to Chris in his new role."

Save as set out in this announcement and the appendix below, there are no further disclosures required under Rule 17 Schedule 2 (g) of the AIM Rules.

[2seansflag] 06/10/2013 23:13

Straight up to 50p I reckon. Oversold last week. New guy coming in to sort finance

[hjfe] 06/10/2013 21:38

Not sure how this will play out on the bell - we're in for an interesting day tomorrow either way.