Carillion Share Discussion Threads

[wad collector] 01/2/2017 13:03

hxxp://westbridgfordwire.com/nottingham-hospitals-end-contract-carillion
Let us hope this is not a trend.

[w1ndjammer] 01/2/2017 12:55

well with access to 1.4 bullion of funding i would have thought someone must have confidence.



The loans have an average maturity of approximately five years and a blended interest rate of sub-three per cent, including fees. This further diversifies the Group's sources of funding, provides long-term debt on attractive terms and maintains the Group's strong liquidity position with access to over GBP1.4 billion of funding to support its strategic objectives and development.

[redartbmud] 01/2/2017 12:30

kiwi

It is your duty to certify, on those specified dates, that you are not in breach of the Covenant.
If you think that you are in danger of breaching a Covenant at any time, you have a duty to inform the lender, as soon as you become aware of that fact.
It works the other way too. The lender may write to you if, in their opinion, you may have breached the Covenant.

All in, it is slightly more complicated than the simple statement on the specified test dates. The rap on the knuckles can be unpleasant if the lender gets upset.

I would bet my bottom dollar that any credible business would have a damned good idea when they got close to the limit, even using relatively crude measurements.

[rcturner2] 01/2/2017 12:19

windjammer, 3 month momentum is one signal, the other would be a cross above the 200 (or 100) day moving average.

[spoole5] 01/2/2017 12:07

Added 2.16.

[kiwihope] 01/2/2017 11:30

Hi red...

I don't think it's that simple. The test dates depend upon the loan agreements. Carillion wouldn't have the information every day to know exactly if the covenants were broken or not. The loan agreements will specify the test dates, usually 1, 2 or 4 times per year. The lenders probably have a material event clause in the agreement so that if something really bad happens, they can insist on information being provided outside of the normal test dates.

Anyway, I obtained the £540M figure from a Carillion statement, so it is correct.

[redartbmud] 01/2/2017 11:09

kiwi

Loan Covenants are for the life of the loan, not just specific days.
ie. Covenants may not be breached at any time, otherwise the penalty terms kick in, whatever they may be.

[kiwihope] 01/2/2017 11:00

The £290M figure is net debt at year end. The £540M is AVERAGE debt over the whole year. The average debt determines the cost of finance (i.e the £50-60M pa interest). The company manipulates their cash flow (as do most I guess) so that the snapshot figure is as low as possible at year end (and half-year end). They do this so their loan covenants are met (these are tested at half-year and full-year I think), and it looks better in the published accounts.

[w1ndjammer] 01/2/2017 10:54

so we have debt 540 mill verses 290 mill quite a discrepancy

the above is an extract from HL

[kiwihope] 01/2/2017 10:43

I am trying to decide whether to buy more here or not. At present I have a modest holding bought around 250p some years ago. My thoughts are,

Regarding the shorting operation: this started just after the failed Balfour bid and the £170m convertible issue (being about 6% then vs. 22% or so now). There is a valid process for buying convertibles and shorting common stock that magnifies the return. I didn't go into all the details but IMO there may be something in this, but I don't think it is the biggest factor.

I think the biggest factor is the amount of debt. This seems to be slowing increasing year-on-year. For 2016 average debt is expected to increase above the £540M recorded in 2015. This is quite high for a company that has profits from operations of about £200M. Indeed the cost of finance is £50-60M pa, about 1/4 of profits. They do need to reduce this, particularly as we look to be heading into a period of slowly rising interest rates.

My conclusion is that CLLN is a hold at the moment and I won't be buying any more. This is not a company in which I would like to have a large holding. If they do reduce the debt over the next couple of years, asnd the price is still attractive, I may reconsider then.

[w1ndjammer] 01/2/2017 10:27

So looking at the chart,would you wait for a confirmed breakout above 300p before buying ?

[kcsham] 01/2/2017 10:26

'Buying, selling and investing in shares is never without risk. The market itself can go down as well as up, and the companies you pick can perform badly. If you are going to invest in shares it is important to research potential investments to see if they are suitable for you. Make sure you do not invest more than you can afford to lose.'I copied and pasted the above.

[w1ndjammer] 01/2/2017 10:13

warranty

at what point do you decide a share price has risen sufficient enough
to decide to buy, surly that is as difficult has buying the bottom.

WJ.

[rcturner2] 01/2/2017 10:03

I prefer the question "is the share price going to go up?", which sometimes means I will invest in bad companies and avoid good companies.

[kcsham] 01/2/2017 09:47

......a good company, invest in it. Otherwise sell out and help the shorters get their profit and leave.

[kcsham] 01/2/2017 09:45

If you believe Carillion is a good

[kcsham] 01/2/2017 09:43

Why the shorting has such an effect on the share price of Carillion? There must be many reasons. One of those is people can't resist to be affected and keep on talking and worry about it. Herd mentality.

[warranty] 01/2/2017 09:32

There's obviously a reason why this is being shorted so much and it's not clear exactly what that is. Trying to second guess the bottom and jumping in when a share's plunging is pointless so just be patient, wait for the shorting to stop and get in when the share price is rising and things are moving positive. You won't make as much that's true but you won't have the worry of seeing your investments go down either. No advice intended just a comment from one who's suffered the same many times and learned!! ;-)

[rcturner2] 01/2/2017 09:24

The share price has been dropping like a stone for 3 years and has virtually halved in that time.

[wad collector] 01/2/2017 09:21

Saudi sovereign wealth fund £5?

[spoole5] 31/1/2017 23:41

Balfour beatty £3.25

[blackbear] 31/1/2017 22:30

We need takeover rumours.

[redartbmud] 31/1/2017 21:33

cw

Sorry you appear unable to read and understand English.

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