Cable & Wireless Share Discussion Threads

[jacks13] 22/5/2012 18:41

Kiwi - 5243 - You're right about the risk, they would in effect be selling short. What prompted the thought was the business of voting on a corporate action. If twenty clients wanted to exercise their votes over 2m shares when the nominee only had rights to 400,000 that would create a problem for the nominee. Hence the thought that a nominee might in the circumstances I describe want to deny clients the right to a vote.

[jacks13] 22/5/2012 18:33

True, Orbis's holding alone could represent more than 25% of the votes cast, assuming they stick to their word and vote against acceptance. N.B. any shares held by VOD cannot be voted.

[7kiwi] 22/5/2012 18:23

djwr,

The vote is only amongst those who turn up to court or send in a proxy vote. So, 75% of those voting, not 75% of the whole shareholder base.

If the vote at court is successful, there is no choice, your shares will be purchased at 38p.

[jacks13] 22/5/2012 18:14

You're right djwr100, the vote is binding on everyone. Orbis need to organise a blocking vote of 25%+ or they have to surrender their shares at 38p. I don't see how Vodaphone can make a side agreement that exempts them.

The probability that Vodaphone will fail to make the 75% share of the vote has to be a tempting prospect for one or more of the institutions and encourage them to join with Orbis in voting against acceptance. Set against that is the fear that the share price would drop below 20p. We shall see.

[djwr100] 22/5/2012 18:03

"It seems to me that the most likely way forward for Orbis is to abstain from the vote ensuring Vodafone will get its scheme of arrangement through and then sit on its shares."


I'm still wondering, if this deal is approved by 75% what happens to the shares of those that abstained or said no? How can Orbis retain a holding?

[7kiwi] 22/5/2012 17:58

Jacks,

I have no idea.

I would be surprised if any reputable broker did what you said. The risks would be enormous.

[jacks13] 22/5/2012 17:55

7Kiwi - National Westminster, but the reply came from Coutts Investment Operations London. NatWest must farm out their brokerage operations.

One thing occurs to me about nominee accounts and that is whether every clients' shares are held by the nominee. If for example the broker has twenty clients each holding 100,000 shares in Acme Widgets PLC, total 2m shares, then surely they only need hold say 400,000 paper shares to cover their liabilities and they could liquidate the other 1.6m shares and put the cash to their own use. Does this happen or are nominees compelled to maintain the full book?

[7kiwi] 22/5/2012 17:43

Just instruct your broker to vote how you want to.

Out of interest who is your broker?

[jacks13] 22/5/2012 17:24

My CWW shares are held in a nominee account so I asked my broker when I could expect to be notified of the impending corporate action and whether I would be invited to cast a vote in respect of my shareholding.

The reply was:

'As this will be treated as a mandatory action. No pre-advice will be sent to clients'.

I take that to mean, 'We're not going to ask you'. I had expected this but I'm curious about the 'mandatory action' jargon and why this is relevant. Can anybody shed any light?

[rogermauricesmith] 22/5/2012 16:35

Orbis

It seems to me that the most likely way forward for Orbis is to abstain from the vote ensuring Vodafone will get its scheme of arrangement through and then sit on its shares.
Or Orbis knows somthing the rest of us don't. It is still inexplicable to me that there has been no interest from other bidders in CW.
Orbis's stake in CW could deliver it to another bidder who would only have to offer 45p a share to win easily.
It's not beyond possibility there will be another bidder.

[milacs] 22/5/2012 14:33

solomon8

What a load of tosh.

M

[jacks13] 22/5/2012 14:26

soloman - post 5235 - Everyone seems to assume that Vodaphone will get 75% of the votes cast. It looks far from certain to me.
Also remember that this is Orbis talking now, when their own game is there to be won, they're not going to capitulate before a shot is fired. After the vote they will adjust their position to reflect the new reality.
I think Vodaphone will stuggle to get anywhere near 75% acceptance.

[solomon9] 22/5/2012 13:50

The FY results seem to have crystallised the issues in many holders minds, exceptionals or otherwise, the co performance is very weak and it needs to be rescued before more shareholder value is rubbed out. If Orbis think as minority holders in VOD they will be better off, they are kidding themselves because then VOD will not be under any obligation.

[loganair] 22/5/2012 13:20

DB - Vodafone CEO sets out 2015 strategy.

Vodafone chief executive Vittorio Colao on Tuesday outlined his company's strategy for the next three years after economic woes in southern Europe weighed on the U.K.-based mobile giant's full year earnings.

During a presentation to investors, he said the Vodafone group will remain focused on leveraging its network assets as a key point of differentiation; improve loyalty with "healthy data pricing models", roaming offers and enhanced customer services; and continue to reinvigorate its retail store experience.

Colao also said Vodafone will aim to sustain ARPU, and work on improving its average margin per user (AMPU) by offering a well-balanced handset portfolio. He admitted AMPU is becoming an increasingly important metric at a time when device subsidies are putting operators' earnings under pressure.

"We're moving to pull back on [acquisition and retention] costs," said Colao.

"At the end of the day it is the margin that matters," he added.

His comments were made after Vodafone reported profit attributable to shareholders in the year ended March 2012 fell 12.7% to £6.96 billion.

The decline was driven by a £4 billion writedown on its operations in southern Europe, namely Italy, Portugal, Greece and in particular Spain, which saw revenues fall 7.2% to £4.76 billion.

"The tough macroeconomic and regulatory environment in much of Europe has made revenue growth in that region increasingly challenging", said Vodafone, in its financial report.

Indeed, the reduction in mobile termination rates alone wiped £928 million off the company's group voice revenues, and prompted Vodafone to lower its 2013 service revenue growth outlook to "slightly below" its previous range of between 1% and 4%.

However, the problems in southern Europe and the regulatory impact were offset by ongoing data revenue growth, improved performance in northern Europe, the Middle East and Africa, and continuing growth at Vodafone's emerging market operations, particularly India, which saw revenue increase to £4.27 billion from £3.86 billion last year.

This helped Vodafone's group revenue edge up 1.2% to £46.42 billion from £45.88 billion in the year ended March 2011.

[djwr100] 22/5/2012 13:19

OK, Orbis, it looks like it's me and you voting NO. ;-)

[jacks13] 22/5/2012 12:20

djwr100- post 5229- This information may be out of date so a bit of Googling may be required.

from 'The Investor's Guide to Understanding Accounts' isbn 1-8975-9727-4
(Financial Reporting Standards FRS 9, Nov 1997)

A company (the holding company, or parent company) may own all or some of another company's shares. This is broadly accounted in three different ways depending on the percentage of the other company's shares owned.

1) Up to 20%, the shareholding is treated as an investment. An investment simply means that the investment is included with the holding company's (VOD in this case) fixed assets.

2) Over 20% and up to 50%, an associate company. The holding company takes a percentage of the associate's (CW.in this case) assets, liabilities and profits and adds them to its own.

3) Over 50%, a subsidiary. The holding company takes the whole of the associate's assets, liabilities and profits and adds them to its own.

It's not yet clear where non-accepting shareholders will stand, that will depend on the outcome of the takeover process. There are clearly defined circumstances concerning when a bidder can compulsorily acquire shares and unless those conditions are met you cannot be forced to sell. You would then presumably join Orbis as a minority shareholder.

[plastow] 22/5/2012 10:48

the new data centre sounds promising

[djwr100] 22/5/2012 10:13

Ok, so maybe Vodafone is forced to share the company with Orbis. How does it do this, and does it share it with me too, or am I somehow excluded from the arrangement by being forced to sell?

[loganair] 22/5/2012 10:01

Vodafone could be forced to share Cable & Wireless Worldwide (C&WW) with the beleaguered telecoms company's biggest shareholder, Orbis, in the face of considerable shareholder unrest over its £1bn bid to buy the company outright.

Orbis, which owns 19pc of C&WW, voiced fierce objections to the telecoms giant's 38p-a-share offer but is now pushing Vodafone simply to buy the 81pc of C&WW that Orbis does not own.

The scheme of arrangement in place means that Vodafone needs to win the support of 75pc of those shareholders that vote, so Orbis could block the deal if it can persuade other investors with a collective stake any higher than 6pc to also vote against it.

However, Orbis has made clear that it is willing to back off if it can instead retain its stake in C&WW with the hope of later selling it to Vodafone at a higher price.

The fund is putting increasing pressure on Vodafone to accept this deal, as concern grows among independent shareholders.

Eric Carter, who heads the UK Shareholder Association and has shares in C&WW, said he opposed the offer, and was "deeply suspicious" of the scheme of arrangement.

[loganair] 22/5/2012 09:39

BRITISH telecoms firm Cable & Wireless Worldwide said yesterday a drop in earnings and no prospect of a quick upturn showed it was right to back a £1bn takeover by Vodafone despite the reluctance of its largest shareholder.

"The board believes the Vodafone offer represents an excellent opportunity for shareholders to realise an attractive valuation in cash today," chief Gavin Darby said.

But Orbis, CWW's biggest stakeholder, has refused to be seduced by Vodafone's £1bn offer.

An Orbis spokesperson said before CWW results were published that even if the company continued along its disappointing trend, its current performance is not a good indicator of the inherent value of the company. Orbis said it had nothing to add after seeing the results. Orbis is standing firm in its view that the telecoms provider was worth more than the £1bn Vodafone had agreed to pay for it, regardless of any further decline in trading.

[rogermauricesmith] 22/5/2012 09:10

CW's debts

For the first time CW's accounts have spelt out how its debt is structured.

Cash in bank £106 million

Overdraft facility (unused) £260 million

Convertible Bond ( £219 million)

Leases (£55 million)

Total Net Debt £168 million

Total cash available £366 million

In reality CW is swimming in cash. if it hadn't paid out £185 million in pensions and dividends last year it would in a net cash position of some £20 million and able to pay of its convertible bond off at will.

The notion being propagated that CW is somehow short of cash and in danger of running out anytime soon is really just so much nonsense.