Card Factory Share Discussion Threads

[srpactive] 01/3/2021 09:03

A close above 54.5p and should re-rate much higher.

The budget will certainly make this clear I feel on Wednesday.

dyor

active

[srpactive] 01/3/2021 08:17

M

My thoughts exactly.

B

Yes quite agree.

[bountyhunter] 28/2/2021 17:04

"Under the budget plans non-essential retail businesses will be eligible for direct cash grants of up to £6,000 a site to help them start trading again when allowed to do so."



With over 1000 stores ~£6m will be a welcome addition to CardFactory's finances.

[34adsaddsa] 28/2/2021 17:03

Covid numbers certainly supporting CF's negotiating position.

[bountyhunter] 28/2/2021 13:47

but not MoonPig 😉

Card do already partner with retailers e.g. Aldi, but there is clearly a huge opportunity online both by publicising their existing online site (which is considerably cheaper than MoonPig) and in partnership with other retailers.

from the interims in September...

"Partnership sales performance better than expected, with GBP1.9m in sales as a result of strong Aldi footfall and The Reject Shop's positive performance since reopening following national lockdown"

[makinbuks] 28/2/2021 08:30

CARD and the banks can all see when the shops are going to open again. What they don't know is how well trade will recover. The key question is how quickly can they get back inside the covenants. A rights issue will be a part of that model. Obviously the bigger the rights issue the less risk there is in the assessment of the trading prospects.

Moonpig is a double edged sword. On the one hand it is a threat to the high street model and on the other it shows the potential online market that CARD could access. Remember CARD is a card producer too so there is scope to partner with other online retailers too

[overeager] 28/2/2021 08:18

I would expect a combination of a small rights issue (which is likely to be strongly supported) and a small interest rate increase. If the banks were going to pull the plug they would have done so some time ago.

The fact is, the business has managed to make a cash profit all through the pandemic, even with the stores closed. It has also transformed the online offering. In fact, it is poised to make a strong recovery.

I have to thank Moonpig for putting me on to this. I looked at the float prospectus and could not believe that what is basically an online printing business making very modest profits was being valued at £1.25 Billion. (My most optimistic valuation as to what I personally would pay was £250m.) However, that prompted me to look at CARD.

If CARD were to use some money on slick online marketing, I honestly don't think there is much to choose between Moonpig and CARD apart from the fact that CARD has a good high street presence - and in my opinion, most people can't wait to switch off their laptops and get out into the real world.

I also see in the Sunday papers that this week's budget is likely to include multi billion pound support for the high street.

Time will tell if I'm right.

[bountyhunter] 27/2/2021 16:56

Well the covenants would have been breached if it were not for the agreed extensions with the latest being to the 31 March which is only 12 days before the shops are due to reopen. Agreed the banks will want something to extend further and agreed that will most likely be a renegotiated interest rate, but it's not in the interests of the banks to see the business fail so I would expect that to be reasonable albeit higher than originally. I don't think it will involve equity either as the future is now looking brighter than when extensions to the financing were previously arranged.
Apparently the CFO is still holding which is a positive sign.

[joepublic1] 27/2/2021 16:36

I think you would expect the lenders to want something for their forbearance. If covernants have been breached they are entitled to call them in, it is simply a question of their self interest. Presumably they could get their loan capital back through a fire sale of the stores. So if they are to continue to support the business wouldn’t they want something extra for doing so - I would have thought an increased interest rate. Do lenders really want equity - that is not their game - that is the domain of the mezzanine lenders ?

[34adsaddsa] 27/2/2021 13:55

I think they may try to leave it as late as possible because:

1. They don't currently need the money (and probably won't at all given april 12th date)
2. They were hoping that as reopening got closer and closer the shares would increase in price so any potential equity issue would be less dilutive.
3. They want to be able to say to lenders: Are you really going to make us issue a huge number of shares to raise money we don't need when shops are less than two weeks away from reopening for good?

[bountyhunter] 27/2/2021 13:30

It hasn't happened due to the uncertainty as to when shops could reopen. Now we have a date which provides far more certainty to lenders it will. I'll go with the best case scenario given the date is now known for shops to reopen.

"the Board is confident the business is well placed to deliver for the benefit of all stakeholders."

If the case I would expect the price to rise on any refinancing news which is "for the benefit of all stakeholders."

We will just have to wait and see but maybe only until Monday?

[34adsaddsa] 27/2/2021 13:17

It could do, but if that's the case, why hasn't it already happened? Best case scenario: the lenders want to see what happens with covid/april 12th reopening and won't oblige card to raise much/any cash as long as things look good for that on the 31st of march.

Worst case: The lenders - for their own comfort - oblige card to raise cash by issuing lots more shares at what would obviously be a very low price. That would reduce debt but dilute existing shareholders and substantially neutering the shares from achieving the very significant returns which I believe would otherwise occur.

[joepublic1] 27/2/2021 11:18

Why couldn’t ‘refinanceR17;, simply mean negotiating new terms with lenders, such as an increase in interest rate.
To me, that is the simplest meaning of the word.

[bountyhunter] 27/2/2021 11:13

Listed retailer again staves off imminent covenant breach risk

[bountyhunter] 27/2/2021 11:11

Listed retailer again staves off imminent covenant breach risk

[bountyhunter] 27/2/2021 11:03

but it says "all stakeholders" so that would include shareholders

"the Board is confident the business is well placed to deliver for the benefit of all stakeholders."

[dagsteeth] 26/2/2021 15:40

yup.

Stakeholders means BANKS are in the box seat.


I've done enough of these deals in my past to know a debt for equity RNS when I see one

[tonysss13] 26/2/2021 15:40

last liquidity RNS didn't

[spectoacc] 26/2/2021 15:37

Agree re "stakeholders", and if they've been talking to major shareholders about the rescue rights, taking them "over the wall" might be why it's spiked higher recently. ie they're not allowed to sell.

Wonder if there's a press rumour for this weekend, hence the late Friday RNS today. Monday morning RI announcement?

And is that the first time they've used "stakeholders"?

[tonysss13] 26/2/2021 15:34

yes amazed it's holding up here

[dagsteeth] 26/2/2021 15:33

The last line is code for banks win, shareholders will be allowed to keep a sliver in a very deeply discounted rights issue after a debt for equity swap with warrants.

The smart seller ran for the hills at 30p for a reason. 50p bid up this week. Madness!

[bountyhunter] 26/2/2021 13:04

A CardFactory app comes up for me also, rated 4.9* out of 5 but only 10k downloads to date. My point is that with CardFactory valued at peanuts compared to MoonPig at £1b+ CardFactory has huge online growth potential, especially as their cards are less than half the price of MoonPig's (those which I've looked at). The MoonPig app has only 4.7* out of 5 but 1m+ downloads. Based on price and ratings "Should have gone to CardFactory!" ☺️