Ashtead Share Discussion Threads

[bracke] 02/8/2017 18:49

Thanks fenners

"the spending part"
===================

Little doubt there will be further acquisitions...the concern is how much $.

[fenners66] 02/8/2017 18:37

The rate they offer today should be based on market rates vs say 5-10 year dated bonds.


US 10 year treasury at 2.3% add some for the PLC risk - even 3% you are looking at

$1.2bn at say 5.3% or less

BUT that is on top of the 6.5% rolled up to redemption + $2.7m + fees etc

It pains me every time I read about these ..... in years 8-10 they may save some money against the HUGE cost they are committing to now....

But what do I know....

[fenners66] 02/8/2017 18:37

Double post

[fenners66] 02/8/2017 18:31

Bracke its definitely going to cost more.

They will be paying interest twice on the $900m and a probably a higher rate on the senior facility.

But the argument from their " whispers in the ear advisers" will be that if they wait to renegotiate the facility in 2020 the market rates will by then be much higher and would they want to risk it?

I would say to that - pay down the damn debt and worry about the interest cost then on the peanuts you have remaining - but of course that would leave them without the flexibility to spend in the meantime and they know the spending part much better than I do.

However I have to say why stop at 2025 -27 up from 2022 make it 2032 and then we dont have the constant rolling over with all the associated fees, but what advisor is going to suggest not paying more advisor's fees???

[bracke] 02/8/2017 18:24

2flat

The share price has closed below the blue LP.

[fenners66] 02/8/2017 18:24

You can imagine their esteemed advisors...


" there has never been a better time to get us to help you raise $1.2bn in loans whilst interest rates are so low. All this can be yours if you just pay us say $20m"

tick tock months maybe even a couple of years go by

" there has never been a better time to get us to help you raise $1.2bn in loans whilst interest rates are so low. All this can be yours if you just pay us say $20m"

tick tock months maybe even a couple of years go by

" there has never been a better time to get us to help you raise $1.2bn in loans whilst interest rates are so low. All this can be yours if you just pay us say $20m"

They are not rich bankers for nothing you know

[bracke] 02/8/2017 18:23

fenners

Excuse my ignorance but given that interest rates are likely to increase will not AHT have to offer a better rate on new borrowings as opposed to the notes they are buying back?

[fenners66] 02/8/2017 18:19

The other RNS says they are raising only $1.2bn which is to pay for the remainder of the $900m , fees and a proportion of the first priority senior debt.

That first priority debt is LIBOR + 1.5%

Longest dated $ LIBOR I can find is around 1.72% so they are probably at 3.22%

So all they are doing is rolling over the duration into a 2025 to 2027 offering at a combined cost of ....?

Some 3 year extension some 5 year extension

OK so the threat of a $2bn loan note and subsequent spending goes away....

BUT we are back to my first point about these notes NEVER being run to maturity and you can bet your bottom dollar the costs will "ADJUSTED" away. I really don't like that s hit.


So looks like its just a costly jobs for the boys exercise after all !

[bracke] 02/8/2017 18:18

To-days candle is Bearish Engulfing. What makes it concerning is that it closed below 1630 support.

[bracke] 02/8/2017 18:07

There are only two s/holders with more than a 5% holding. Both have just over 25 million shares apiece.

[fenners66] 02/8/2017 18:07

Hold the front page - I just noticed there are 2 RNS's so have to read the other one......

[fenners66] 02/8/2017 17:53

Yes we are thinking the same and maybe we are not alone.

But after the bolt on story for the last few years?

Why oh why?

I have to say that in the long run they got it right last time but it took a long time to come good.

It has to be close to $1bn acquisition or more to make it work I'd guess

[fenners66] 02/8/2017 17:40

Thanks Bracke I had not seen that.

Are the notes currently traded? If so at 6.5% I would be surprised if they could not be sold for more.

The price offered is $3 per thousand nominal over redemption yield (assuming 5 years to go to redemption)

So it will cost $2.7m + transaction costs to redeem early.

I had this beef a couple of years ago - where the cost of redeeming and reissuing loans was parked as exceptional - and was taken to adjusted profits so it could be ignored - when they do it nearly every time and by definition it then becomes the norm not exceptional.

Why redeem now?

There can be no gain in replacing them with a lower coupon - because they are paying ALL of the interest and more anyway. I have seen this manoeuvre elsewhere this year but it was a discount to redemption cost.


I can only imagine that they want to launch a much larger lower coupon bond /loan note etc and the covenants say that this remaining in place prevents that. I hope someone has properly done the maths on this one and its not just jobs for the boys.

Next question would be what are they needing to raise very large loan for?

Errrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrgh !

[discodave4] 02/8/2017 17:31

1550! thanks bracke :(

[bracke] 02/8/2017 17:23

fenners

What do you make of the cash tender offer for notes? (See news above).

Buying back debt?

[discodave4] 02/8/2017 16:14

Fenners,DiscoDave4 - 20 Jul 2017 - 12:23 - 54076 of 54137 - 0Still cannot find any financials for CRS.However, based on a couple of recent UK acquisitions (Liontrack Hire and Mather & Stuart), their purchase price came to twice their respective annual revenues. So whilst a bit of a finger in the air, the revenue for CRS could be circa £89m pa.Both in the same ball park on revenue for CRS.DD

[bracke] 02/8/2017 14:09

The share price has once again dropped back to support at 1630.

If it holds then another attempt at 1660. If it fails a fall to 1580 and probably 1550.

[2flatpack] 02/8/2017 13:54

Too much money, Don't know what to do with it.
Has to be a good sign.
Hope others see it that way as I've jumped in again.
cheers

[ianwwwhite] 02/8/2017 10:42

My understanding is that A-Plant represents 13% of Ashtead Group revenue

[fenners66] 02/8/2017 10:25

Seen similar articles , but UK really is very little of AHT business nowadays.

[bracke] 02/8/2017 10:24

No messing this morning. Sellers straight in to send it back in two hours to where it was two days ago. 1660 resists.

[ianwwwhite] 02/8/2017 10:18

fenners66

Nice one, thanks

[fenners66] 02/8/2017 09:55

Ok for what its worth:-


Lets say they bought CRS on a similar multiple to the current AHT share price.

That makes the $275m something like 2.6% of AHT

Using that assumption they should be buying 2.6% of turnover - About £82m of turnover

Interestingly if I use the AHT accounts turnover by employee and multiply by 400 ( the number we have from the acquisition news ) that would give us a turnover of around £93m.

I think this actually re-enforces the lower assumption as the smaller standalone business probably has a higher relative admin staff number.

Pre-tax profit is about 24% so £82m x 24% = c£20m

We trade on a multiple of say 16.3 at the moment so that's worth £321m and we used cash of £211 to get it.

I anticipate once they have been integrated there will be savings and efficiencies and a profit increase.

It may well need more cash to improve the life of the plant ( if you are selling a business you sweat the assets and generate cash and profit at the expense of capex for a few years to make it look good). There may even have been a negative impact with their customers if they had to put up with old plant.

Overall though bolt on profitable acquisitions are probably a good way of diverting cash to build the share price long term.