Avation Share Discussion Threads

[cc2014] 05/8/2020 15:44

We are all so polite.

Jeez 70p in the pound equals around 60% return on annualised basis.

Which is telling me the bonds are going to have to be reconstructed. And that means shareholder pain too.



ARticle out today in the press saying Virgin Australia is going all Boeing. Not sure how that fits with today's RNS

[quepassa] 05/8/2020 14:54

Maybe. maybe not.

What is your view please as to why the bonds are currently trading in the low 70's?

[harrogate] 05/8/2020 14:31

Maybe that's all that is available for sale ?

[quepassa] 05/8/2020 14:20

The question is why they aren't buying more back......

Who wouldn't like to retire debt at c 70% of face value?


They've made a few small debt repurchases in their issue of $350million 6.5% Senior Notes due 05/21 as follows

1. $2.43million at 71% on 5th. August
2. $1million at 76% on 10th. July
3. $1million at 76.25% on 2nd/3rd. June



But that's hardly a scratch in the total size of $350million which is now maturing in around just 9 months time in May 2021.

In April, they declared total cash of $129million some of which is restricted.

Unencumbered assets only totalled c $54million.

Given their ratings downgrades by Fitch and the parlous aviation markets, the refinancing of the May '21 $350million Notes is going to be a major task not without its challenges in my view.



Good Luck All.

ALL IMO. DYOR.
QP

[russman] 05/8/2020 13:15

Planes, leases & security of loans are going to become more confused.
Possession is 9 points of the law.
AVAP can buy the bonds back at 71% at the moment.

[quepassa] 04/8/2020 17:41

All eyes on the Virgin Australia restructuring announcement due tomorrow Wednesday, including job cuts and potential cuts to fleet of aircraft.

ALL IMO. DYOR.
QP

[quepassa] 27/7/2020 09:32

Just checked Fitch Ratings on Avation.

On 9th. July, Fitch MAINTAINED their rating of B with NEGATIVE WATCH


ALL IMO. DYOR.
QP

[quepassa] 27/7/2020 09:28

EasyJet and Spain will further weigh

[russman] 16/7/2020 10:03

You should ask Jeff for any financial advice.
The minimum purchase may be over your limit.

[bubloo] 16/7/2020 09:10

Dear Russman,
I am new to senior notes. Can you please advise where I can buy them please.

[russman] 13/7/2020 20:40

Survival is their best strategy.
This is Jeff's pension pot.
Just buy as much (& cheaply) of the senior notes as possible.

[cc2014] 13/7/2020 12:14

With regard to 2,3 and 4 I'm sad to say companies not providing important information by omission has become common. (And why I'm sitting on lots of cash as there appears be be huge amount of inexperienced retail investors in the market bidding up share prices too high)

I think this comes back to your point 1. The directors have a vested interest in keeping the share price up. Any answer to 1 is conjecture but my assumption was that despite the directors public statements about the company being undervalued, they wanted out whilst the market was bouyant. My view is that even before Covid they were carrying far more credit risk than the market was pricing into the share price.

[quepassa] 13/7/2020 11:23

Listened to the full presentation.

Useful presentation but several important items were not mentioned and i personally would like to understand more prior to considering re-investing.

1. It remains a mystery to me as to why they put the company up for sale earlier this year by inviting other bids - as they had said just a few months beforehand said they wish to grow the company.

It does not follow that by receiving one unsolicited bid that this should have triggered a general for sale sign being put up.

So their future strategy is not clear to me. Do they wish to put the company back on an even keel with a view to growing the company or with a view to trying to flog it again when markets normalise and air travel regains former momentum and more stability?

2. there was zero mention of the recent Fitch downgrades, nor whether there is any realistic scope for the current rating/outlook to be upgraded in the near future from the current negative outlook, nor any mention of ongoing discussions with ratings agencies.

3. whilst the banks may have been supportive, there was zero mention of the fixed rate bonds which they have issued and how they may or may not seek eventually to refinance such bonds in the capital markets. this will likely be a task not without its challenges given the ratings downgrades.

4. the price of second-hand planes has fallen. i would like to know their estimate of the CURRENT market value of their fleet versus book value.

5.no mention of shareholder dividend outlook.



I like Avation but there remains for my liking a lot of open questions.


Good Luck All.


ALL IMO. DYOR.
QP

[tomps2] 13/7/2020 09:49

Avation investor presentation, July 2020.

Richard Wolanski, Finance Director, gives a comprehensive overview of Avation, how they’ve managed CV-19, and how he sees the outlook.

[sharesoc] 12/7/2020 15:21

The Avation Stockopedia report and presentation from our recent company webinar can be found in our members area here:

To access the presentation, you'll need to be a full member of ShareSoc, which is a not-for-profit organisation that supports individual shareholders and campaigns for shareholder rights. If you're not already a member you can join here: hxxps://www.sharesoc.org/membership/

Once you've joined, you'll receive an invitation to register for our "members network" private social network, from where you'll be able to access the presentation (and presentations on 100s of other meetings). If you're already a member and have any difficulty accessing the report, please do not hesitate to contact us here: hxxps://www.sharesoc.org/contact-us/

[russman] 30/6/2020 12:07

Carnival managed to tap the bond market at a high cost.
Airlines are doing some sale/leaseback deals & rights issue.
AVAP has the bond repayment deadline.
It could do a repo deal on a portfolio of leases to a financial investor.

[sogoesit] 29/6/2020 11:16

It'll probably change between 1 April and 30 June and we'll hear about it in September.
Mean time, guess the future is my guess or, in this case, the past 3 months!

[russman] 29/6/2020 09:30

This $41m on purchase rights looks odd, considering the circumstances.
Valuations seem to be falling across the aircraft leasing industry.

[sharesoc] 29/6/2020 07:39

We are hosting a ShareSoc Webinar with Avation plc (AVAP), 7 July 2020 which may be of interest. Registration and more can be found here:

[russman] 05/6/2020 19:15

I doubt AVAP will be able to utilise the bond market for years.
Need another source of funding; no growth just survival.
Spurs tapped the BoE for 175m so there are other options.

[fastbuck] 05/6/2020 18:12

As bonds come up for maturity newly issued bond will get issued, same for all companies that use the bond market. If you worry that they can't issue any further bonds the company is not an investment for you.Of course they could raise more bank funding as a alternative but that will need to be fully secured against the assets of the company which won't be a problem but will stunt growth.

[russman] 05/6/2020 10:28

Cashflow will not cover the bond repayment.
There will be more distressed sellers; Jeff has not got deep enough pockets.
Could make sense buying the bonds back at a significant discount.

[fastbuck] 04/6/2020 23:15

A US bond fund was a distressed seller, forced liquidation, AVAP picked up a small piece but other existing investors picked up most of the holding.

16 of their 18 airline customers are flying.

Rent deferrals amount to 7% of annual rental income, those deferrals should be repaid by year end. With no leases expiries before August 2021.

[russman] 04/6/2020 19:11

A token effort; need to think bigger.
Either take out a jumbo mortgage and tender for all 2021 bonds.
or
Find an investor / asset manager with deep pockets, offer them a prefs & warrants mix. A deal they cannot refuse; then tender for all the 2021 bonds.
Removes the bond repayment deadline; gearing no worse.