Ashtead Share Discussion Threads

[bracke] 04/8/2017 19:02

Good day ian

There is the 'noise' ie. the daily ups and downs which are really only of interest to
day traders and intra-day traders. Then there is the 'serious' ie. the price changes which matter to longer term holders.

In the year to date chart link below longer term holders are likely to become agitated if the share price closed below 1550. Yes it did spike below 1550 on a couple of occasions but it quickly pulled back so no harm done.

It seems to me the biggest threat to AHT is unlikely to come from within the company but from the US market.

So forget the 'noise' and watch what happens when the share price goes to 1550.

[ianwwwhite] 04/8/2017 17:32

Good volume and nice rising trend this afternoon. That's more like it!

But are we seeing an emerging lower highs and lower lows trend forming like before? Only time will tell. (and possibly bracke, our resident soothsayer who understands these things).

Never mind the weekend is here, have a good one all :-)
.

[fenners66] 03/8/2017 23:17

Its ok Dave - just make it up - we do

[fenners66] 03/8/2017 21:25

ian looks like a good find - a bit heavy handed anyone found if the existing loan notes are traded?

[ianwwwhite] 03/8/2017 20:44

Hi Fenners

It looks like they are making an offer you can't refuse! This small extract from the Ashtead Capital Inc Offer to Purchase document:

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
We currently intend to exercise our right to call for redemption any and all Notes not tendered in the Offer at the redemption price of 103.25% of their face amount, plus accrued and unpaid interest to, but not including, the date of redemption. We may provide such notice as early as the Settlement Date.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Lots more detailed info in the Offer to Purchase document 33 pages (!) which can be found at:


However we will know the result in a little over a week, so given that AHT has done this sort of transaction before, I am content to await the outcome.

[fenners66] 03/8/2017 19:45

What I don't get is how they can offer 3.5% and then get away with a market rate of 4.25% to replace it.

If the market rate of the debt is say 4.3% then if its traded on a five year redemption basis the current value should be about 109 per 100 ( or 1090 per 1000 !)

E.g. As is 5 x 6.5% = 32.5
Redemption 100

Return over 5 years 132.5

But that is at 6.5% (simple interest calc)

To get the same return at say 4.3%

buy the debt for 109

receive interest 32.5
redemption 100
But loss on buying - 9

Net return 123.5

Then 23.5/109/5 = 4.3%

So if market value is 109 or 1090 per $1000 why tender at 1035.5 ?

[ianwwwhite] 03/8/2017 18:01

Hi fenners,

Thanks for your clarification, appreciated.
.

[fenners66] 03/8/2017 17:24

Apologies guys I got so caught up in the numbers I read the 35.5 dollars as per 100 & deemed it the five years redemption yield.

My error it is only 3.5% not 35% !

So they are getting out at a premium cost but not the expense I had calculated.
But I then question what is the market value of the loan notes?

Will anyone take them up on it?

[bracke] 03/8/2017 17:08

2flat

I don't want you to become too excited about what follows so just keep calm.

The share price has so far failed to make it to the red ML but it did retrace down exactly 62% from the high on 21 July and the low on 07 July.

I am early in drawing an ascending PF which places a ML at approx 1706/1710.

Possible flies in ointment are:

1 Fails to hold above 1630, slips back and continues down to red ML.

2 Continues up but has insufficient pressure to move above 1660.

As always in Elite Guru fashion I will take full credit if the new ML is reached and point to my two caveats if it doesn't.

[ianwwwhite] 03/8/2017 16:11

2flatpack,

Lol! You and I both!!!
.

[2flatpack] 03/8/2017 15:55

Thanks ian ,
Missed that .
Problem is this bankers talk is turning my brain to muss (whats left of it).
cheers

[ianwwwhite] 03/8/2017 15:34

Hi 2flatpack

We agree - see my edited post 54170
.

[2flatpack] 03/8/2017 15:22

Taken from RNS 02.08.17 :-
.

The total consideration for each $1,000 outstanding principal amount of Notes validly tendered prior to the Expiration Time or the Guaranteed Delivery Date and accepted for purchase by the Company will be $1,035.50, plus any accrued and unpaid interest on the Notes up to, but not including, the Payment Date.

From this I take it the interest is only paid up to the repurchases date .
Cheers

[2flatpack] 03/8/2017 15:04

Thanks ian,
They will, I expect be closed companies where all the dirty washing is stored or washed ,outside the accounts.
Very interesting must look further.
cheers

[ianwwwhite] 03/8/2017 14:47

Hi 2flatpack
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Q. From the Ashtead statement:- ("Ashtead Capital"), an indirect wholly owned subsidiary of Ashtead. How can a company be a INDIRECT wholly owned subsidiary .
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~


A. Direct vs indirect wholly-owned subsidiaries...

A "direct" ownership is obvious where a parent company directly owns shares of the subsidiary. So, for example, 2 companies, A and Z , Company A owns shares of Company Z.

But "indirect" ownership would be where a company owns shares of another (1 or more) company and that company owns shares of the subsidiary. For example, 3 companies, A, Y and Z: Company A owns all shares of Company Y which owns all of the shares of Company Z. This would be an indirect whole ownership of Company Z by Company A. (Company Z is directly owned by Company Y.)

Hope this helps :-)

[ianwwwhite] 03/8/2017 14:40

Hi fenners,

Interested to read your views on the AHT Cash Tender Offer, but I question the ongoing interest commitment that you mention.

I assume that the bonds fall within the definition of 'Callable (Redeemable) Bonds', and as such might be treated as follows:
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Callable or redeemable bonds are bonds that can be redeemed or paid off by the issuer prior to the bonds' maturity date. When an issuer calls its bonds, it pays investors the call price (usually the face value of the bonds) together with accrued interest to date and, at that point, stops making interest payments. Sometimes a call premium is also paid. Call provisions are often a feature of corporate and municipal bonds.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

I understand that in AHT's case the buyback is subject to tender, and a 'break penalty' or call premium is payable.

Do you have a source for your interest commitment comment which might help?

EDIT>> This from the Ashtead tender document:
'The total consideration for each $1,000 outstanding principal amount of Notes validly tendered prior to the Expiration Time or the Guaranteed Delivery Date and accepted for purchase by the Company will be $1,035.50, plus any accrued and unpaid interest on the Notes up to, but not including, the Payment Date.'


.

[bracke] 03/8/2017 14:13

fenners

Thanks for you patience. Now I understand.

It would be interesting if the AHT Directors were questioned about the deal and had to justify it but of course that will not happen.

2flat

It's managed to move back above 1630 but needs to close above it.

[2flatpack] 03/8/2017 13:38

bracke
Identifying the end of a pull back, I leave to elite guru's.
I use the falling knife and cut finger method.
The only problem is typing is quite difficult with your nose .
cheers

[fenners66] 03/8/2017 13:28

but hey we KNOW it will all get written off to exceptionals - cos it never normally happens Huh?

JUST every time!

[fenners66] 03/8/2017 13:27

They are paying twice in effect - 5 years interest up front now - like they got the loans from the worst loan shark - and again at 4.25%

[fenners66] 03/8/2017 13:25

Its 10.55 % Because..............

They are tendering for the Nominal value of $900m loans + interest to redemption at 6.5% that is the next 5 years worth + a small premium .

And replacing with new debt at 4.25%
But we start paying interest on that NOW

So they have swallowed the argument that

1, they need to do it now rather than wait
2, they pay 5 years + of interest instead of say 2 years - but that will be because this debt must be traded above par in the market
3, they need to pay the bankers FEES!

[bracke] 03/8/2017 13:16

Good day 2flat

Buying pullbacks is a good plan providing the end of the pullback can be identified.

[2flatpack] 03/8/2017 12:41

From the Ashtead statement:- ("Ashtead Capital"), an indirect wholly owned subsidiary of Ashtead.
How can a company be a INDIRECT wholly owned subsidiary .
cheers
naive