Debtmatters Share Discussion Threads

[pork belly] 05/10/2007 13:52

21/11

i think the current share price says it all.

[twentyoneeleven] 05/10/2007 13:51

"Debtmatters said it may no longer be able to deliver its IVA business profitably if these fee modifications become the norm."

Not "will"!!!

[pork belly] 05/10/2007 13:49

the 100p figure has been out since early this week,when the share price was in the mid 60's.

There is no chance of that now, with an share price of just 18p ish and an almost dead IVA market due to the continued uncertainty of the outcome of the IVA talks. He was talking f around a 50% premium to the mid 60's share price If the same premium was applied now then you may get an equivalent buy out price of around 27p.

The only time to get back in is when the IVA talks have been completed and the uncertainty has been removed, and even then, only if its a good outcome.

[topinfo] 05/10/2007 13:46

100p bid more like £1.00 for the whole sorry company.

[pork belly] 05/10/2007 13:44

Here is yesterdaysarticle that suggests a 100p buy-out and a buy recommendation. This is what drew me here to begin with but, after reading the story, i think there is more chance of DEBT going bust than getting a 100p bid.

Good luck to those that take the huge gamble, you deserve 100p for sticking with this.


SHARES MAGAZINE, 04 OCT 07

IVA downgrades

Investors are being warned to brace themselves for earnings downgrades from Individual Voluntary Arrangement (IVA) providers Debts.co.uk (DETS:AIM) and Debt Free Direct (DFD:AIM). This follows Monday's dire trading update from Debtmatters (DEBT:AIM).

Debtmatters warned it 'may no longer be able to deliver IVAs profitably.' A strategic review is underway and management admits a sale is being considered. This follows a continued tightening in terms from borrowers who object to fee levels taken by IVA providers.

Roger Tejwani, analyst at Debt Free Direct's house broker Numis, says: 'We flag the downgrade potential at November's interims.' Meanwhile, Gerald Farr of Debts.co.uk's broker Seymour Pierce warns 'revenue numbers are probably a little high' for the £16 million cap.

Debtmatters plunged 70% on the day of its profit warning and has since fallen further to an all-time low of 16.75p. Tejwani, who fingers Debt Free Direct as a potential consolidator, earlier this week put a 100p take-out value on Debtmatters.

Shares says: Debt Free Direct and Debts.co.uk will eventually recover. Debtmatters offers a take out opportunity. SK

HOLD Debt Free Direct, Debts.co.uk

BUY Debtmatters

[pork belly] 05/10/2007 13:42

By the way, one analyst also said that DEBT would be taken out at 100p yesterday in Shares Magazine.

This comment was out yesterday morning and it did absolutely NOTHING for the share price Not even a dead cat bounce today.

It shows the belief that this company is expected to go bust.

[pork belly] 05/10/2007 13:36

again, this is the death knell statement that will crucify this company:

"Debtmatters said it may no longer be able to deliver its IVA business
profitably if these fee modifications become the norm."

The whole point of a business is to make a profit. If they can no longer operateprofitably then they will either go bust or be bought out. As the iva industry is still in danger of total collapse due to the new fee system being considered then any other companies considering a bid will also go bust leaving nobody to buy them. period.

[pork belly] 05/10/2007 13:33

welshwiz,

the reason for posting that 3 month old article was solely to point out that one of the dent companies has already gone bust this year. other than that, the article was petty irrelevant.

my point is this:

"Debtmatters said it may no longer be able to deliver its IVA business
profitably if these fee modifications become the norm."

It is this very admission that will very likely see DEBT go bust as well. I simply don't see much interest in buying this company anymore after saying this. It can only survive if "these fee modifications DO NOT become the norm".

Yes, somebody might buy this company just to get access to their customer list in the hope of converting them to a more profitable model, but with the outcome of iva talks still unknown , then many more iva companies may still go bust. In addition to this, why would anyone pay above 18p for thios company when they know they can just let this company go into administration and get the bits they want for absolute peanuts. I have seen this happen many times before and suspect it will happen again here.

It seems pretty obvious to me that DEBT are more likely to go bust than be bought out and will probably announce suspension of trading soon, similar to what happened at the other iva company earlier this year.

There will undoubtedly be talk of a buy-out at a substantial premium to todays priceby a few who need to bale-out, but this will be short lived and i still expect suspension to be the next news prior to going bust.

[welshwiz] 05/10/2007 12:33

Debt can modify its business in any way or form it likes.
They could shut up shop altogether i.e run-off the iva business and sell Loanmakers pay off their debt and return the balance to the shareholders.
30 mil minus 20% costs=24 mil minus 8 mil debt=16 mil(approx 70p per share)
Now that wouldnt be a bad result for recent buyers.

[diogenesj] 05/10/2007 11:58

Well, welsh, I was pointing out politely that the article was drivel and DEBT will not survive (at least in its present form) because it has said so itself.

[welshwiz] 05/10/2007 11:55

Diogenes:
I suggest it is you and pork belly who cant read.
I was pointing out to pork belly that the article in fact was saying that Debt would be one of the few survivors and was contrary to what he was suggesting.
It wasnt me that placed any relevance on the quote and i personally do not subscribe to the magazine.
Also as i posted earlier ,as members of the management subscribed to the last placing my understanding is that they cannot affect an mbo for less than their purchase price for 12 months.
Now if they did want an mbo @£1.13 then i would have no objections to accepting their offer ;-)

[ihavenoclue] 05/10/2007 11:11

mike .. good point

[mikejah] 05/10/2007 10:18

Whilst I agree the fundamentals have changed radically it does seem worth making sense of what is left.I am also suspicious that the fundies have had the worst possible spin put on them for reasons set out above.I cannot see how the cos bankers cld advance £1m to pay off Loanmakers if the co is in imminent danger of going bust

[diogenesj] 05/10/2007 10:05

No, I'm just saying that when things go terribly wrong (as they have here), all the bad news doesn't usually come out at once. The shares look absurdly cheap whatever happens. I'm not buying because I am scared of what may still come to light. When the so-called fundamentals say one thing and the market says another, in my experience the market is often right. :-)

[mikejah] 05/10/2007 10:00

Diogenes,are you suggesting Loanmakers profits have been falsified?

[diogenesj] 05/10/2007 09:59

Yes, you may well be right there.

[mikejah] 05/10/2007 09:57

My reading of the situation is that the management are looking to take it private on the cheap,however with the £20m of IVA fees to come in it could be very attractive to a predator.The cessation of writing new IVAs will immediately benefit cash flow.As the co has already said,"Loanmakers has a positive cash flow in contrast to the IVA business high capital working reqiurements"

[mikejah] 05/10/2007 09:57

My reading of the situation is that the management are looking to take it private on the cheap,however with the £20m of IVA fees to come in it could be very attractive to a predator.The cessation of writing new IVAs will immediately benefit cash flow.As the co has already said,"Loanmakers has a positive cash flow in contrast to the IVA business high capital working reqiurements"

[diogenesj] 05/10/2007 09:54

Sounds great, doesn't it, mikejah? And on Dan Stewart's last forecast of 21.6p eps for 2008, the prospective PE is 0.83.

Trouble is, when something is so obviously too good to be true, you know that it really is.

[mikejah] 05/10/2007 09:44

Loanmakers profits were £2.1m for 9.5 mos,equivalent to £2.5m pa

[diogenesj] 05/10/2007 08:51

Welshwiz: I think it's you who can't (or won't) read. It's no good relying on Shares Rag for your information. DEBT is not going to survive. The management are hoping to find someone to buy it. There is no certainty that they will succeed. Here is the Thomson financial summary of the results on 1 October. See the statement in DEBT's results of the same date for the full story.

LONDON (Thomson Financial) - DebtMatters Group PLC said it is undertaking a
full strategic review to consider all options for the company, which include
seeking a possible offer, due to the potential impact of fee modifications on
its individual voluntary arrangement (IVA) business and continued disappointing
share price.
The financial services company said it is encouraged by the performance of
its loanmakers and debt management operations but the IVA sector remains
difficult.
It said the outcome for the year depends on continuing developments within
the IVA sector, which remain uncertain.
IVA case acquisition costs have risen sharply due to increasing competition
and IVA conversion rates have worsened due to hardening creditor attitudes,
which have affected margins.
Although talks have continued between the British Bankers Association and
the Insolvency Service, they did not provide any firm conclusions on the issue
of fees charged by insolvency practitioners, leading to concerns over the future
of the industry, Debtmatters said.
"These concerns have precipitated the continued share price weakness in the
sector from which Debtmatters has not been immune," it added.
The company said certain creditors sought modifications to IVA proposals in
September with regard to a reduction in its average nominee and supervisory
fees.
Debtmatters said it may no longer be able to deliver its IVA business
profitably if these fee modifications become the norm.
At 10:45 am, shares fell 64.4 pct or 43.50 pence to 23.15 pence.

[masurenguy] 05/10/2007 08:26

Pork belly - That Shares Magazine article is more than 3 months old !

Not sure why they highlight Debts.co.uk as 'likely to perish' since they subsequently issued a trading statement on August 1st where they stated that "trading for the period has been strong in all areas and despite the pressures of the IVA market the Groups broad range of products and services to clients has meant that our revenues and earnings have held up satisfactorily............trading for the year ended 31st July 2007 has been in line with both the Boards and analysts expectations..........and the Board view the current year with confidence"

Now, if the Share Magazine prognosis is correct, either the market has collapsed over the past 9 weeks or the trading update was grossly misleading ! There has been no further comment since then to indicate any change in expectations. Their full year results are due out next Tuesday so then there will be a clearer picture. They are expected to report pretax profits of circa £3.8m which would put them on an historical PE of just 5, at todays market cap, if this profit performance is confirmed !

[smashingguy] 05/10/2007 07:37

i am setting a 9p target for this company mainly because i expect a goodwill impairment

problem with DEBT's loan business is that it is targeted at subprime customers.....credit crunch

[welshwiz] 05/10/2007 05:34

Pork:Cant you read you moron.
Debt is predicting that it will be one of the survivors.
Ihnc:approx 2 mil profit from Loanmakers