Carclo Share Discussion Threads

[kron76] 04/12/2019 10:29

Market has realised that the inmates are still running the nuthouse?

[heeley3] 04/12/2019 10:10

Something happened? Sharp drop this morning and no news or comment?

[1gw] 22/11/2019 12:20

Had a trawl through the accounts.

From note 3, it looks to me as though they're expecting to get a bit over £20m for Wipac on a "distressed sale" basis, excluding pension liabilities (and debt). Does anyone else see it the same way?

The amount of net assets shown in note 3 for the LED technologies segment is £21m and they say in note 12:

"The valuation of the LED Technologies CGU has been determined by a FVLCOD model based on an estimated value which would be expected to be recovered through a distressed sale process and is also based on an indicative price of what a third party would be willing to pay for the business. This valuation also includes the estimated costs of disposal...
...The recoverable amount of the LED Technologies CGU is shown in the Segment reporting note 3."

Would the pensions regulator be happy with Carclo retaining the (accrued) liabilities, especially if the buyer was financially stronger than Carclo? If not, and the buyer has to take on the accrued liabilities then that would reduce (or wipe out) the proceeds accordingly.

[onjohn] 21/11/2019 18:31

didnt rollason put kleeneze in administration

[wigwammer] 21/11/2019 17:26

Ok. But if medium term profitability is within sights and it just needs working capital to get there, someone with working capital will likely be interested in buying it. Anyone got a view of reaction to that likely scenario?

[pldazzle] 21/11/2019 16:27

wigwammer - the group is desperately illiquid and that is self-evidently the main priority. Even if Wipac were already profitable - and I'm not confident about that - it will be thirsty for working capital, which the rest of the group is unable to provide. Hence the watchword has to be "dash for cash".

[wigwammer] 21/11/2019 11:51

Thanks, but I'm still not clear about the trading position of wipac. They have rationalised the business back to where it was before - a low volume high value added supplier of LED light fixtures to high end cars. So why will the profitability position not return to where it was?

[pldazzle] 21/11/2019 01:15

Respectfully disagree. Whatever one's views on the chairman and BOD, at this stage there can be little doubt that successfully turning Wipac round would call for more liquidity than CAR could realistically muster before it runs out of cash altogether and goes bust. Doubly so given the horrendous pension deficit (now up to >£49m) which has to be repaid over time. From where I sit, selling Wipac - provided it can be achieved cleanly and without CAR having to pour vast amounts of cash into it first - looks like the least worst option, and that by a country mile.

That said, it remains touch and go whether CAR will be able to survive its present difficulties. I hope so, but I'm not holding my breath.

[gordongekko4] 21/11/2019 00:20

Because the Chairman Mark Rollins is not an operator but a chartered accountant. He does not know how to turn around Wipac operationally so he opted for the “easy way out” which is to sell Wipac off in pieces. Disgrace

[baner] 20/11/2019 22:51

Wigwammer

Total agreement! This entity made 5-6m until a year ago - now they peel the ugly onion back to its origin - why sell this in panic now??

[wigwammer] 20/11/2019 14:48

If someone with better knowledge could help me with the following I'd be grateful... my understanding is wipac used to have a successful niche in the low volume high value added LED market, and after an ill advised foray into the higher volume market, they have rationalised their position pretty much back to where they were before. So why can't they themselves make wipac work again as a low volume high value business?

[1gw] 20/11/2019 12:45

ok. Any reason? My thoughts were they put a lot of money into buying their Carclo equity position and will want something to show for it. At the time they bought in I read their interest as being taking control and turning round some or all of the business. Wipac is what is available now and while they might be able to get ctp later, I think they wouldn't want to see the whole company (Carclo) fail before that happened. So if no-one else was prepared to take wipac on I think Duroc may have been willing to try hard. But they may have been outbid I suppose if the reason only 1 counter-party is left is competitive process rather than lack of interest.

[gordongekko4] 20/11/2019 11:53

It is highly unlikely that Duroc is the remaining party in negotiations regarding Wipac

[1gw] 20/11/2019 07:15

Looks like we're getting to the crunch point on wipac negotiations. My guess fwiw is that the single party is Duroc.

[beeezzz] 19/11/2019 21:13

Is the company undervalued at 11p or are the debts weighting heavily on future investment...

Does the pension put off any takeover..

[pejaten] 19/11/2019 14:18

You only need to look at last 12 months to see why they did not buy. Kind of irrelevant to where we are today. Given that CEO and CFO are temporary would not surprise me if company isn't broken up and sold piece meal.

[queeny2] 19/11/2019 14:09

Pension liabilities (and debt etc) were fully public before the approach, it was looking at the books and business that did for the deal. What exactly we don't know.Yes, it's an ok business, I agree. I thought more ok in hands of a merger, as part of larger business. Scale within CDMO an issue.

[wigwammer] 19/11/2019 13:51

Thanks queeny. If I had a price a £1+ offer on the table and then saw the the pension liabilities, I may may well scarpered too. I think the underlying business is an attractive one. They are trusted by many large companies, operating in fields where quality service and supply is a necessity, and they have been trusted for many years. I suspect eventually they will trade out of the current hole. Fingers crossed anyway :)

[queeny2] 19/11/2019 12:37

wigwammer, yes price matters, that's fair. It was the speed at which CSRT decided to run, and the finality, that influenced me. But it could have been Wipac they spotted, we don't know. I was extremely bullish on the bid, I bought a ton of CAR during it, the implied price for CTP as multiple of sales was I thought extremely attractive for CSRT and the steady if unexciting sales growth and steady if unexciting margins just fine.

It was after that iirc that the new Chair revealed he was suspicious of the aggregate margin at CTP, that the margin on ongoing sales was pitiful and all the profit was made in new tooling, which he didn't like. But maybe that's being gradually fixed too. I didn't go through the last delayed accounts at all, so can't comment on that.

I should take another thorough look, it could be a 4 up to 1 down story now so I will. The triple whammy of bid failing, wipac imploding, and suspension means I am out of date.

[wigwammer] 19/11/2019 12:23

"although we don't know exactly what Consort ran screaming from, they really wanted CTP until they got close.." with respect, the consort bid was at 116p per carclo share. It may well be they still want CTP, and at the current price of 12p a deal becomes attractive even taking into account the debt and pension liabilities.

[baner] 18/11/2019 10:59

don´t blame the current chairman and CEO for the past fiascos!margins have indeed improved substantially - do your homework.

[queeny2] 18/11/2019 10:24

I see no evidence they are gaining market share. CDMO market growing faster than they are afaik.

[queeny2] 18/11/2019 10:23

A) they are sub scale, and although we don't know exactly what Consort ran screaming from, they really wanted CTP until they got close. B) in a consistently consolidating CDMO sector that's the only interest they've ever had. C) carclo management have an astonishing record D) repeated claims that margins will improve have never happened, and indeed the new chair revealed that tooling not production makes all the money. No new business ---> margin will collapse.

Since you asked.

[baner] 18/11/2019 09:26

ctp is making 9% ROS, is growing and gaining market share - what else are you asking for?

[queeny2] 18/11/2019 09:04

CTP is a better business.

I guess that's why Consort ran away screaming after getting a look at the books, and explicitly ruled out coming back.

CTP is fine, just very very sub scale.