Avanti Capital Share Discussion Threads

[jeffian] 30/4/2004 10:18

Andy,

I don't know either, and I accept that 'new' Avanti isn't the same thing as 'old' Cambury, but whether this deal proves to be "streets ahead of anything that the old Directors did in the past" only time will tell. All I'm saying, coming from a pub/brewery background, is that this particular area has been a nightmare for operators - AVA's bars were rescued from the Receivers; you've seen what happened at SUF; yesterday was instructive with profit warnings/poor trading statements from Regent Inns and Wetherspoons (compared to a stonking performance from Punch Taverns which lets out, rather than operates, its pubs); and today the picture is encapsulated in a trading statement from poor old Eldridge Pope, which has both directly Managed and Tenanted pubs, where performance at the former has fallen off a cliff while the good old tenanted boozers toddle along quite nicely.

As for 'winding them up and extracting the cash', well this is exactly what I proposed to former chairman Dan Taylor at the AGM a couple of years ago when that would have produced around 350p per share (allowing for the share consolidation along the way). Once they gave up being an 'internet incubator', I didn't see what an expensive Board could do investing my money that I couldn't do for myself. But they told me to s*d off and went on with their plan, and now they've got half the cash! If their latest strategy goes sour, I'm afraid a fair bit more of it will get burned up before Laxeys can extract the few remaining charred notes!

Regards, Ian

[loinerscum] 30/4/2004 00:23

Ian

I really don't know how good the Barvest investment is. I know that the guy owning the rest of the company is sucessful in the field, I know AVA have only invested £600,000 equity and that they have been taking a fine return on their now defuct short term loans to Barvest.

I honestly don't know how good Barvest will be at creating profits long term but I would hazard that even an old Cambury lag like yourself would accept that the deal was streets ahead of anything that the old Directors did in the past when investing in other companies and that if PROFITABLE deals can be found by the new Directors, this will be a fine investment. Remember too that if profitable deals can't be found, Laxey will wind them up to extract the cash.

I really see some value in ths situation. Not multi bagger, but a good return.

Cheers
Andy

[jeffian] 29/4/2004 11:25

For those who think that Avanti have (at last!) found a good investment in the managed late-night bar market, re-read my post 175 above and then go and have a look at Regent Inns' trading statement issued on RNS today. I think you'll then understand what I was getting at.

Regards, Ian

[loinerscum] 27/4/2004 21:20

Hello guys, I knew there would be someone out there. Thanks for all the opinions negative and positive which I hope will allow newcomers to get a better idea of Avanti, better to have some debate rather than no debate. I would remind people that the old guard of Directors has now been culled and its now a new team who seem to be showing excellent restraint and discipline.

We now have 60% of Barvest for an outlay of £600,000, the remaining question is how profitable it will be, for which I have no answers, one things for sure, it seems fairly cash generating.

Back soon
Cheers
Andy

[growbag] 27/4/2004 13:48

Well, it's good because Avanti are assured to get repayment of the loan - though it sounds like Barvest refinanced their debt to get more favourable terms - i understand the Avanti securred loan note was negotiated with a 30% APR - and they probably got a much better deal with Barclays.

Bad because Avanti will lose out on the interest.

Good because (a) the loan note is repaid (b) we still have a 60% stake in Barvest which will bolster NAV. This all looks good for the current years trading at Avanti - heck, we might even get a dividend this year.

Fair value right now should probably be around £2.20 - so the stock is looking cheap on fundamentals with no downside that I can see -

[langland] 27/4/2004 11:56

Arthur,
This is new management. This is really a case where you should not look back. This refinancing is excellent news because, as you say, the investment is pretty well in the books for nothing. Based in the earnings delivered so far by Barvest it would not be unreasonable to put a value of £15mn on it. This would put AVA's stake at £9mn.

[jeffian] 22/4/2004 23:42

Hi touch,
No, never used iii/ample. Used to post on Moneyworld/moneyextra. ECI had a vociferous fan club led by an Irish lass, Stephanie Molyneux(??)

Re-read my comments above about the true 'asset value' of leased pubco's before leaping back in at "real value at c. 120". In particular, look at an SUF thread headed "Is SFI Group massively oversold? " (and learn from it!)

Regards, Ian

[jeffian] 20/4/2004 01:16

Loinerscum's going to get a bit of a shock in the morning! Well, you did ask for some reaction, mate!

Regards, Ian

[jeffian] 20/4/2004 00:41

younasm,
"I thought it had potential two years ago due to net cash value". Exactly! and look what they did with your cash. Beware boards that hoard your cash and then spend it on things they know little of (think old GEC with its £3billion cashpile and what the directors managed to do with it in whizzo Marconi!). I fear this will follow the same path.

Regards, Ian

[younasm] 20/4/2004 00:33

Got rid of Avanti for around 143-145p couple of weeks back - I thought it had potential two years ago due to net cash value. Decide to sell and realise a capital loss.

Might buyback once interest rates get past 5% (next year).

[jeffian] 20/4/2004 00:21

OK, but you won't like it! I, too, was an old Cambury hand. Went to several AGM's; hugely unimpressed by the playboy board featuring 'my dad was very rich' Aspinall and 'so was my dad and grandad' Bilton. Serial entrepreneurs? Pah! Pointed out to Dan Taylor, then Chairman, that if he dished out the cash to shareholders, it would have represented a 50% premium to the then share price (we're talking £3.25 per share before the 'restructuring!!) and shareholders could then go and invest it in whatever they wanted (or even put it in the bank and do better!). He told me they had lots of grand plans and if I didn't like it, I should take a hike. So, being persuaded by such good investor relations, I did.

And what did Cambury/ECI/Avanti do with your money? Well they went and bought a chain of late-night bars which were bust. Ah! "Cherry-picked" I hear you say. Well, maybe, but this is an industry I worked in for years (I'm a huge fan of asset-rich tenanted pubco's like ETI, PUB, GKN, etc. etc.) and believe me that leasehold 'fashion' bars are a nightmare. Po Na Na, SFI, Old Monk,Regent Inns etc., they've all struggled or bust and for whyY
1) Leasehold. No real asset value.
2) Huge investment in fit-outs which need to be amortised (written-off) over a very short timetable a) for accountancy reasons and b) because it's genuinely required - the bloody things need to be re-fitted every few years
3) 'Fashion'. Death - one day you're in; the next you're out. I had a Whitbread 'Hogshead' open near me in West London a few years ago. Fit-out cost? Oh, I don't know - £1m? Didn't work so they ripped it out and made it a Cafe Somethingorother 2 years later. Expensive!

Traditional community pubs are timeless, but late night bars, comedy venues, discos, 'theme pubs' etc. come and go like the night. And that's what will happen to this lot. They didn't know anything about being an 'internet incubator', they didn't know anything about 'value investing' and I bet the know damn-all about bars except the time the playboy Directors spend on the 'customer' side.

It's a stinker. Always has been, always will be. (IMHO!)

Regards, Ian

[loinerscum] 19/4/2004 23:29

I'm getting lonely here posting on my own, I put a nice piece together detailing the merits of AVA and in a fortnight have a reply from the one other poster, Growbag who seems the only person interested in the company apart from me. Does nobody have a contrary opinion or are you all sulking because your thirteen shares were dragged away from you at the market price without any dealing costs.

Speak to me, post here anything at all will do, I'm getting desperate. Starsigns, football results, recipes anything. Now I know how Lister felt in Red Dwarf.

Talk to me!

[growbag] 06/4/2004 12:07

Thanks for that - I think I'll hang in there for the time being. I do like the story around the Po Na Na deal - the interest rate on the loan note (37% pa)! That's even more than Alfie Moon on Eastenders is paying to Andy the loanshark!

Certainly, things appear to be looking better at Cambury/ECI/Avanti than they have for a long time.

[loinerscum] 01/4/2004 23:07

Growbag

I'm pleased to see you're still here. I can beat your ECI days, I go back as far as the Cambury days (pre ECI) I remember the feeling when the 35,000 shares I had bought at 2.25p on 12/10/99 hit 18.5p on 9/11/99. Its been a rollercoaster ride since then, profits taken, profits lost, profits shrivelled completely and finally now back to profit again. I hold 3,500 shares and 23,923 warrants so I might be regarded as somewhat biased, but I am positive for the future.

Reasons are:

1. Virtually new board, clean slate etc with much to prove.

2. Large shareholding held by Laxey Partners who are noted for shaking up Boards if unhappy with performance. Check my previous posts but they hold around 19% from memory at around the current level. They WILL motivate the Directors.

3. NAV in last figures was 198p per share.

4. The Directors have already brought in one fine deal with the Po Na Na purchase through Barvest, summarised below. They have 60% of the company for £600,000 and a loan note for £6,400,000 with an interest rate of 37.5% per annum. Granted the loan note is quickly being reduced, down £1,800,000 in first seven months, but if one assumes the final interest bill to be twelve months interest on the original sum, that represents £2,400,000 and they would still retain their 60% shareholding. Given the speed that the loan is being cleared, the clubs are obviously very cash generative. I don't believe people have woken up yet to how good this deal was. Taken from the annual report the detail is as follows:
On 20 August 2003, Barvest agreed to pay up to #6.0 million (#1.0 million was
for tangible assets including cash, stock and site equipment) for the buyout of
up to 28 bars and nightclubs selected from the Po Na Na portfolio.
The group agreed to provide Barvest with up to #7.0 million of acquisition and
working capital finance made up of #0.6 million for60% of the equity of
Barvest, with the balance of #6.4m being committed by way of a secured preferred
loan note bearing a return, payable on exit, of 37.5% per annum.
The group supported a management team, which holds 40 % of the equity of Barvest
and which agreed to invest #0.8 million in the transaction. The management team
also has an option to invest an additional #0.2 million in the loan note within
the first twelve months from completion.
Since completion, the group has received partial repayment of the loan note from
profits made by Barvest and as at the balance sheet date #5.1 million was
outstanding to the group. Since that date a further #0.5 million has been
repaid, making the current balance outstanding to the group#4.6 million.

5. Lots of cash in bank, almost £12,000,000 at last results, possibly more now as loan to Barvest reduces.

6. Directors are looking around for new investments, for example the rumoured Slug and Lettuce purchase, but don't seem interested in overpaying.

I believe they are at present a buy, certainly if the price shows any weakness, if it went down towards £1.40 I would consider more, funds permitting. Also consider buying through the warrants depending on your circumstances. They convert in August 2004 at £1.05 per warrant/share on a 1:1 basis and you can sometimes buy them at less than the shares price. For example the current offer price for the shares is £1.55 while the warrants are £0.55, if you could hypothetically pick up warrants below £0.50, they would be cheaper than the share even taking into account the £1.05 per warrant you must pay in August. The real plus is the gearing, you get exposure to three times as many shares for the same pot of cash by using warrants. Always remember though that if you don't sell the warrants or pay the exercise price by August they will expire worthless. If however you do exercise, providing you can bridge the funding gap you will be able to sell some of your new shares to cover the exercise cost.

I hope this helps

Andy

[growbag] 31/3/2004 12:30

Loinerscum - Ok. I still hold these as well. Where do you think the company is heading over the next six months? What do you think is going to be the main driver of returns for the shareholders. I've held these since the pre VEO days of ECI - but fortunately got in long after the dotcom crash (about 4p per share in old money - something like £2.50 average in new money). Hold out, or cut losses and look elsewhere?

Many contributors to the thread no doubt no longer on the share register after all these recent shinanigans!

[loinerscum] 30/3/2004 22:33

Touchy

Don't leave me this way! Its starting to get lonely round here, I'm starting to miss people whining about having their 23 shares rationalised.

I trust positive things happen before September which will make raising cash for the warrants more fun!

Good luck
Andy

[touch2002] 30/3/2004 15:57

Growbag,

comment on results, nothing new, but even the mere mention of a buy and the stock moves. I'm out, back in hopefully before FY in september,

touch

[growbag] 19/3/2004 12:39

touch - what does the IC piece say - is it a comment only on the results. Anything bullish?

[touch2002] 19/3/2004 08:11

A welcome boost today from the IC, just a shame on the timing - was looking at the warrants at 45 yesterday and being a little greedy on the limit order.

touch

[touch2002] 16/3/2004 15:31

Picking up again now, better late than never. How can the company working on putting the cash in the bank to better use be -ve for the stock price - particularly when its 'more of the same'.

odds on a further recovery tomorrow? Andy?

touch

[touch2002] 16/3/2004 08:56

Why on earth has this fallen on the news? SFI would be a great target for Avanti, cost synergies on killing off their head office and better terms for their purchasing - particularly since SFI's terms are likely lousy given their lack of financial stability.

views please

touch

[vatattack] 16/3/2004 07:59

Avanti aiming to buy Slug & Lettuce


AVANTI Capital, the private equity investment group that bought nightclub chain Po Na Na out of administration in August, is hoping to add the Slug & Lettuce brand to its portfolio.

Slug & Lettuce was acquired in 2000 by SFI, which lost its listing last year after the discovery of accounting discrepancies. It has continued as a going concern under waivers from its banks.

Avanti is understood to have approached the banks with a view to acquiring all or part of SFI, which also owns the Bar Med and Litten Tree chains. The Slug & Lettuce chain is thought to be its primary target as it attracts a similarly youthful market to Po Na Na. SFI said it had listened to Avanti's plans, but was focusing its attention on refinancing and restructuring with its banks.