Crawshaw Share Discussion Threads

[davidosh] 07/7/2014 15:28

I understand the placing was significantly oversubscribed so one assumes the institutions may look to add once they think a level has been reached or they may have orders in and brokers are hoping to fill as low as possible.

I am a long term investor so this price movement is not important in the long haul.

[shrout] 07/7/2014 15:24

Taking quite a pounding. I guess one's attitude to this price action depends on whether or not your in for the long haul. I've done all my selling, and probably all my buying too, and am just going to watch now with interest as the story unfolds.

[thekida] 07/7/2014 10:49

It will be interesting to see if the share price drops to the placing offer of 42p I think it will. If it does then Drmessguide played a blinder by flogging his holding before the announcement (or good fortune)....Doshie thinks the share price could multi bag once the £9 million is invested in new shops if so then maybe its time to jump on the train once the share price drops to 42p or below

TK

[battlebus2] 07/7/2014 07:03

Thankyou for sharing your thoughts davidosh.

[davidosh] 07/7/2014 02:01

I think there are quite a few comments and issues that need addressing....

1. The price of the placing at 42p is a large discount to the current price ?

When the placing was first put together and a roadshow undertaken with selected institutions I suspect the share price was around 40p so the placing price is not at a discount to where it was sensibly priced at that point.

2. The placing price should have been adjusted ?

You cannot move a price upwards significantly unless there is new material information and all the information given in the Agm statement will already have been presented to the institutions as the reason for the fundraise.

3. Is 42p a good price to raise funds ?

When you consider that the share price had already multiplied by 20 times in the last 18 months and that it is on an historic multiple of over 30 at 42p and even in my best forecast it would still be on 16 for this year I think that is hot a bad rating for new money in significant size.

I admit the growth is outstanding and the roll out potential as good as anything on the market but to have this chance of a rapid roll out we needed that funding in place.

4. What happened to current investors having the opportunity to invest ?

I am not party to who was included or not but I suspect a number of institutions who have been buying the stock over the last few months will be on the list of placees. Private investors were very heavily buying the shares last year and in the early part of this year but I suspect institutions have been the big buyers recently and not necessarily individuals.

5. Why will they have favoured institutional backing ?

General markets since mid April have been weaker and most small caps have seen drift and prices going lower by 10 to 15%. If the Crawshaw share price had drifted over the last few weeks can PIs honestly say they would have been forming a queue at 42p especially if the share price had dropped to say 35p ? Institutional demand is more certain and the need for them to get reasonable sized positions would allow a longer term view of any short term drift.

6. Why not have an open offer to allow PIs the chance to take part ?

If any of you had attended the Agm you would have heard me raise exactly this point as I am in favour of at least 10% of any placing being available to current shareholders in this way. Most PIs do not have the firepower nor inclination to go into fundraisings but those who like to should be given that opportunity and I am well known to fight for such rights.

To be clear...I was not inside on this placing and did not know anything about it at the time of the Agm but my questions at the meeting and the scale of the intended roll out suggested one would be needed in the next six months. I therefore made it very clear at the Agm that I wanted to be included in any such plans and that the wider shareholder base should also be included if it was financially viable dependent on the amount being raised and practicality of it.

7. How important is the near £9 million that is being raised ?

Well the company was doing very nicely having opened just two new stores in the last few months and doing it from cash generated within the business but the plans are now for a doubling of new stores almost every year ie five this year ten next then 20 and so one. You have seen the numbers quoted for six years time and if Crawshaw get there and are still independent then the share price will be a huge (yes huge !) multiple of the 42p placing.

Each new store is likely to turnover £1.25m as a minimum at today prices and probably £1.75m when you see the like for likes being achieved within just three years so revenues for the group could be £100m within that time and profits almost ten times where they are now and that is still with just the one distribution centre (60 stores) and national roll out still to come.

I really believe this is a great roll out story and food is very defensive and resilient even if the economy slows and the cheaper bulk meat deals are proving very popular with growth considerably higher than anything the supermarkets are capable of. That is probably the greatest risk to shareholders and seeing the roll out to full potential.....I think a Tesco or Morrison under intense pressure will be looking for new ideas to capture market share and win back customers and revenues....Crawshaw will come on the radar and that of others with good high street store locations to help speed a national roll out too.

So raising money gives us a chance to get there first. I am making some assumptions here and will be doing some more detailed figures in the next few weeks but with regards the placing I know little more than that.

I think Crawshaws is still a great company with excellent potential and now has the fuel to get there. It will have many challenges and rapid growth throws up management, HR, IT and property acquisition issues but finding a new CEO with roll out experience is the best place to start. I know numerous fund managers are very excited by the potential and if it just gets half way there I will be very happy indeed....100 stores by 2020 sounds absolutely fine to me !

[drsmessguide] 06/7/2014 22:05

TBH there was a similar discussion regarding synerty when they did a similar placing, the price then dropped back almost to the placing price. I am not sure a company can really fix a price that will please all when it moves 30% inside of 2 weeks. You could argue that they gave a bullish agm announcement but they really had to give a frank view of the situation. You could also argue that an open offer should have been made but had there been a fall in the general market that led to the price falling below the placing price, no PI would have been interested, after all you could have bought these at about 20p 3 months ago, I was buying at 15p, many were buying as low as 4p, admittedly the story has been developing rapidly. I sold out at 48p and felt it was fully valued given the available news, even with the latest update there is a significant potential to slip up with a rapid expansion. I suspect though they will pull it off.

[janeann] 06/7/2014 21:05

well I would vote against because 42p is just a gift to institutional investors. But where shares are held in nominee accounts how practical is it to vote - how easy is it to get the opportunity to vote, and how does one go about it?

Surprised also Davidosh hasn't commented (unless I missed it) - and like battlebus would welcome his thoughts.

[investali] 06/7/2014 14:06

Waste of your time and efforts Garblil.
Nothing will change, our only protest is to vote against at the AGM and voice your concerns by phone.

Ali.

[garbetklb] 06/7/2014 12:54

The site is excellent and, as Paul says, it's factual. Generally straightforward to judge if/how much private investors have been disadvantaged.

In the case of Crawshaw, are PIs going to try to do anything?

If we want to try to oppose the pre-emption motion, I think we need 25% - which would be difficult to achieve. However, gaining a majority of shareholders not included in the fund raising could provide a decent start, at least in terms of embarrassment.

If people on here feel it worthwhile, I'm happy to compile a totally confidential list of holders & holdings and see how we go.

Let me know your thoughts on here & I'll report back - any comments will be treated as confidential. I'll post a similar message on Fool - Paulypilot's Pub (my screen name there is InTheHighlands), and on - later - depending on reactions, would give contact details etc. I can be contacted by a pm here

I've not had a response to my message left for Lynda Sherratt yet - and will be chasing tomorrow.

Our family hold 0.5% of Crawshaw.

Andy

[the stigologist] 06/7/2014 12:14

Paul it's a good site. I don't think you should be shy about admitting it is your idea and your site. It's a much needed contribution to the field.

[battlebus2] 06/7/2014 11:59

Yes I think it's a good idea to have this site, anything that can further the cause for P.I's has got to be welcomed. How you stop this from happening in the future is another matter as I doubt we can shame boards into a more shareholder friendly stance.
I'm still reasoning why they took the decision to let it only apply to institutions, could it be that in the grand scheme of things dozens of small share holders are a lot more hastle and time consuming where as the Inst's just let them get on with the job.
I was always off the opinion tha CRAW was a very shareholder friendly company and at the heart of this debate the new store openings will be very share holder positive.
One part of me is disappointed but another part of me says let this one go and give them the benefit of the doubt in their reasoning.

[paulypilot] 06/7/2014 11:06

Martin,

The idea is to scrutinise every Placing from the perspective of a private investor in that company, irrespective of whether the people behind the website own shares in it or not.

It's fairly clear in every case whether PI interests have been looked after or not. The website shows factual information, and gives detailed reasons for the ratings on each element of each fundraising, so readers can make up their own minds whether praise or criticism is valid from their point of view.

In the case of CRAW would people here have liked the opportunity to buy more shares at 42p in an Open Offer? I would imagine very much so. So whatever you think of the company, the way the fundraising was done here was not fair to PIs, taking everything into account - such as the fact that the Placing price would have been around the market share price when the Placing was first decided upon (as these things take several weeks to put together).

It's a done deal now, so nothing will change, but it's good to have a website that tracks deals, so that a picture can be built up of which companies & brokers are looking after their PIs well, and which are not.

Regards, Paul.

[shanklin] 06/7/2014 08:20

Paul

I agree with everything they have written about the CRAW placing. I doubt this website will have any effect over this placing but it could exert influence over time.

More seriously, I do not believe the "group of professional investors" behind this website can reasonably expect to remain anonymous; they clearly have a vested interest in this issue and users of the web-site need to be able gauge its extent.

Cheers, Martin

[paulypilot] 06/7/2014 01:07

Hi,

A new website called Placing Watch is negative on the fundraising by Crawshaw, giving the opinion that it should have included an Open Offer for existing shareholders too, rather than being a 100% Institutional Placing.


Comments welcomed.

Regards, Paul.

[garbetklb] 04/7/2014 12:02

Gengulphus
Did you get the PM I sent you on another board?
Garbetklb / InTheHighlands

[supernumerary] 04/7/2014 10:05

Brian - as you will no doubt remember I protested about this to the FCA (or the SE regulator, I can't remember now) when Corac did the same thing a few years ago, and their response was the usual 'go away little man and don't bother us with your petty problems.'

It's a disgrace that these large shareholders are allowed to vote to fill their own pockets at the expense of small shareholders, but that's the way it is, and it's not going to change any time soon.

Gengulphus - I think the 75% is reasonable - 90% is too high a barrier, it's really hard to get that sort of response and there's no point in making it too hard for companies, they'll just find other and more expensive ways round it. If you seriously want to get 25% against, in my experience you need to get a copy of the shareholders register sharpish and write to everyone on it you can trace (most are hidden behind nominees of course).

[briangeeee] 04/7/2014 08:26

There's an interesting and important point here relating to voting at General Meetings that comes up time and again. AIM Rule 13 on Related Party Transactions specifies that holders with greater than 5% interest are to be considered related parties. As such, one would expect they would not be allowed to vote on matters in which they were conflicted. AIM currently appears lax in their interpretation of this protection for minority holders.

[gengulphus] 04/7/2014 08:26

I think as shareholders we will all do very well out of the new store openings, ...

Agreed - but I also think that as shareholders, we should be given the chance to contribute part of the financing and as a result own more shares and do even better...

Gengulphus

[battlebus2] 04/7/2014 07:57

I think as shareholders we will all do very well out of the new store openings,
what value can we place on the company when it has 200+ stores with the profits that will bring. Performance to date has been exceptional but surely there's much more to come.

[gengulphus] 04/7/2014 07:53

All probably true - voting against the resolution may well end up doing nothing more than sending a message of displeasure to the company's management and advisers. But as far as I'm concerned, it's worth it just to send that message - anything it might achieve on top of that will be a bonus if it happens...

The real problem IMHO is the 75% threshold for such resolutions set by company law. I know there's got to be some mechanism to force minority shareholders to go along with deals favoured by a sufficiently large majority - but where the deal involves them giving up property rights, the 90% threshold for compulsory purchase following a takeover bid seems more appropriate to me.

Not that I expect any of us to be able to do anything to alter the 75% threshold!

Gengulphus

[shanklin] 04/7/2014 07:28

TBH, I don't see how CRAW can fail to get 75% of the votes on resolution 2. A quick look on REFS indicates that institutional investors plus directors own at least 67.4% of the company and that is just including institutional investors over 3%.

If institutions like CRAW's strategy, as much as they appear to, I suspect they will also be adding in the market.

Whilst we can apply considerable moral pressure, the practicalities mean CRAW would probably just like to get the placing out of the way, so they can get on with growing the business. It is also worth remembering that the placing was probably initiated several weeks ago when 42p was a price we could all have been buying shares at... ...so while I am very annoyed private investors were not included in the placing, WH Ireland are probably quite pleased with themselves for doing a placing at an share price that at the time the price was agreed was at a minimal (if any) discount to the price in the market.

All IMHO, DYOR. Cheers, Martin

[briangeeee] 04/7/2014 01:49

Having a resolution such as the disapplication of pre-emption rights rejected isn't a big deal for the company. They're not in a distressed situation, so if Resolution 2 doesn't pass, they'll simply re-considered their options, and in all likelihood come back to shareholders with a more amenable proposal. It's up to all holders to vote in their own best interests - that's the reason for having a vote.

Crawshaws is a great company, and has performed well over the last year or so. However, since issuing shares at 42p to others and excluding me isn't in my best interests, I will be voting against resolution 2. It's not likely to make much difference, since the companies and brokers that don't respect shareholder rights generally try to ensure that they've brought sufficient large holders onside by including them in the offer. They therefore tend to vote in their own best interests.

[battlebus2] 03/7/2014 21:22

From the Yorkshire post....

10 new openings a year at first then accelerated to 20 or 30 a year!! That is some growth given we only have 21 stores now!! and will take a lot of organisation to pull it off imv


Butchers' chain Crawshaw is to raise £9m ​through a share placing to support its ambitious growth plans.

The Rotherham-based firm aims to open up to 200 stores over the next eight years, transforming it from a small regional player to a nationwide chain.

​The company ​has announced two conditional placings, through WH Ireland, to raise gross proceeds of £8.8m from the issue of 20,999,994 new ordinary shares at 5p each.

The group will hold a general meeting for shareholders in Rotherham on July 22 to pass the placing.

The firm, which was Yorkshire's biggest share price gainer last year,​ has enjoyed phenomenal growth recently as it taps into consumer demand for quality meat at low prices.​​;

Crawshaw's finance director Lynda Sherratt said the group will initially open 10 new stores a year and this will escalate to 20 or 30 a year. It currently has 21 stores.

The expansion will be made possible by the opening of a new factory and distribution centre in Rotherham.

"The new distribution centre will support 60 shops at the very least," said Ms Sherratt.

"If we go out in concentric circles to an hour's distance from Rotherham we can reach the East Midlands, North Yorkshire and Manchester."

The plan is to expand further across the country and reach the south.

"Eventually we will, of course, go south. We'll identify a new distribution centre," said Ms Sherratt.

Crawshaw has been working on a new cost-effective model for its new shops and is opting for single-storey sites.

"We have got a model that is much less expensive," said Ms Sherratt.

​​Last week Crawshaw announced strong trading with year to date like-for-like sales up 13.4 per cent.

The group is planning to recruit a chief executive officer to spearhead the growth.