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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Digital 9 Infrastructure Plc | LSE:DGI9 | London | Ordinary Share | JE00BMDKH437 | ORD NPV |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.40 | 2.29% | 17.90 | 17.50 | 17.64 | 17.64 | 17.34 | 17.42 | 2,513,320 | 16:35:24 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Trust,ex Ed,religious,charty | -220.57M | -237.33M | -0.2743 | -0.64 | 151.41M |
Date | Subject | Author | Discuss |
---|---|---|---|
02/10/2024 12:04 | Arqiva was planning a £6 billion IPO a few years ago and so there certainly seems to be value here for DGI9 shareholders Profits of over £200 million a year and a fast growing smart meter business should be worth a valuation of at least £2 billion That is over £1 a share for DGI9 shareholders in addition to all of the other assets hxxps://theoakbloke. | popit | |
02/10/2024 09:12 | "The interests being acquired include a shareholder loan which results in a 51.76% economic stake at the current valuation levels." - as hpcg notes | dog239 | |
02/10/2024 09:10 | Popit - it is explicit in the purchase RNS, though in the notes in the small print. It actually has a greater share in the loan notes than the equity, hence the difference between the greater economic interest and the lesser equity interest. | hpcg | |
02/10/2024 09:03 | craigso “One thing has occurred to me - and it would be staggering levels of incompetence / fraud if true - but can anybody confirm that DGI9 actually bought/owns its proportional share of the Arqiva shareholder loan notes? If not, then DGI's Arqiva shares would indeed be worthless, if they were ranked beneath a £6+ billion tranche of what effectively would be junior debt held by Macquarie.” Has this question about the shareholder loan notes been answered? I assume that this is not a problem? Can anyone confirm that DGI9 own their correct proportion of the Arqiva shareholder loan notes? | popit | |
02/10/2024 08:37 | I have topped up my initial purchase at 22p to bring average down to under 20p. I may regret it but I believe in the underlying assets. Also even with the increase its <5% of my "risk on" Pot. I enjoy a hail mary and so far most have paid off. | mark5man | |
02/10/2024 07:25 | Breaking down through 17p! Mercifully ditched this one higher up; but surprised to see them sinking this low. Totally friendless it would seem. | skyship | |
02/10/2024 06:52 | Arqiva History (failed to sell it directly so tried for an IPO) (Couldn't IPO it either) (note the intention to convert the shareholder loan notes to equity!) (can't sell it, can't IPO it, now they are thinking about breaking it up which I think did happen with Cellnex IIRC) Then along comes DGI9. | cc2014 | |
02/10/2024 06:04 | Arqiva may or may not be able to IPO. But if one of the Aussie super funds wants to sell, then maybe there's a deal to be done that involves a control premium. Or alternatively, the Aussies take advantage of a distressed seller to gain control themselves. Depends on what, if anything, is in the sharedholders agreement with Macquarie... CORD? My impression of CORD is that it's "Arqiva, but in Poland and Czechia". Gearing aside, I'd stick with the UK if we're talking about 14% discount rates on a boring infrastructure asset in mild decline... | craigso | |
01/10/2024 23:15 | Arqiva doing an IPO? Wishful thinking unfortunately. I think you will find that DGI9 will be the listed entity for Arqiva in perpetuity, if they can sell the other assets of course. The other shareholders of Arqiva e.g. IFM, Macquarie, have been trying to exit Arqiva for many years. If there was a chance to do an IPO, they would have done it a long time ago. Doing an IPO in this market for this kind of business showing declining revenue/EBITDA? Good luck. Not sure why everyone is so interested in in DGI9 here, it's a dog's breakfast. The company is in default on its RCF, its businesses are showing revenue / EBTIDA decline and there is no investment manager. The whole market knows they are desperate to sell assets, so they will probably not get a good price for any of them. | retail_rights_research | |
01/10/2024 22:08 | My thoughts on the results: I read that it is implied that SeaEdge is under active offer. The rent waiver is mentioned as part of a sale process and in the IFRS fair value hierarchy they note that 3% of the NAV is valued under the proposed sale price. So 1.4p aka £12.1m. Versus initial investment of £16m, not terrible and back in January JPM had a research note which valued it at 2.2p. Not losing sleep over Triple Point valuations here. But not exactly material to the overall process. Verne earn out is now higher by £2m and receipt from the sale a further £2m higher than previously accounted for. Lovely stuff. Again, speaks to me that valuation process here 6 months ago was fine. Arqiva... Whisper it but I think an IPO is in the plan. My only suspicion for this is a sly reference to working with the other shareholders for a disposal plan and we note it is not under active sale plans. The UK Government is begging for a good news story for the London Stock Exchange and this would be a nice big listing. The main culprit in the NAV revaluation must be Arqiva. My initial concern was the capitalisation of the VLN interest could mean the VLN becomes a larger value than the plain equity in Arqiva. Fortunately, this doesn't seem to be likely. Assets minus external liabilities (i.e. shareholder funds being the residue) are c.£855m. This leaves £425m for DGI9. VLN balance is £180m and if it continues to be capitalised for the next 5 years it gets to £264m. No concerns here. They state the valuation assumption is a 14%(!) discount rate and a 0.2%(!) growth rate. I mean this is just the most pessimistic possible. If an IPO is on the cards, I'm not too worried about whatever Arqiva is valued at. The valuation I think has a big haircut because it would involve getting the other shareholders to agree, rather than a comment on the asset value itself. One of the new directors owns c.2.6m shares which I view as quite a good alignment of interests. | dog239 | |
01/10/2024 19:57 | CORD showing that the sector wasn't the problem. | foetus in your brain | |
01/10/2024 18:41 | If I was Mr Burrow I’d value DGI9 at the 46p based on selling the entirety since a piecemeal sale means ending up with just the Arquiva stake for a couple of years. Plan A must be to try to sell the entirety in one go so I’d calculate the 46p based on this assumption. If a piecemeal sale achieves significantly more, I look like a hero. | ghhghh | |
01/10/2024 18:02 | In the end, it appears that the HY results have made more investors throw in the towel than brought in new ones. I wouldn't expect to see too much share price reaction when/if the Elio and SeaEdge deals are announced - they're too small in the grand scheme of things. But hopefully those aren't too far off as they clear the RCF and completely remove the risk of bankruptcy. I predict that the next big impetus to the share price will be a major announcement re. Aqua/EMIC. If we get a good price, it will be 15p+ per share and DGI9 will bounce back to the high 20s at least. If the auction is terrible, we might get a "couldn't sell at a rational price" and we'll lose another 5p per share or so. Or naturally we're still dreaming of a bid for the whole company anywhere north of 40p. I'd be happy with some credible-sounding rumours even... ;) | craigso | |
01/10/2024 15:18 | Recently appointed Senior NED Mr Burrow has a broad range of executive experience, primarily in the M&A space, both as a practising solicitor and former investment banker. Mr Burrow held a senior corporate partner role in an international law firm for over 20 years, where he specialised in M&A and investment funds. Most recently, Mr Burrow has held a number of senior positions in international real estate companies. He was Chief Executive of Chelsfield Group, an international real estate business focussed on asset management, development and investment in Europe, North America and Asia. Mr Burrow is also a Non-Executive Director of Caxton Global Investments Limited, a global macro hedge fund, and sits on the advisory board of True Capital, a consumer specialist investment and innovation advisory firm. He holds a Master of Arts in History and Law from Cambridge University. Mr Burrow does not hold shares in the Company. I tend to agree with OB that DG9 could be flogged to another fund who will take a view on extracting value from Arquiva and hopefully the 46p valuation reflects this outcome. | ghhghh | |
01/10/2024 13:57 | Give yourself a secured charge, then if you get into trouble you can manage your own admin | williamcooper104 | |
01/10/2024 13:47 | I have my own pre-revenue company funded by shareholder loans from me. They are all written with no end of life but with a call option on change of control. So Arquiva is a trading company for which the shareholder loans can be ignored when it comes to the economic value but which provide a mechanism for getting cash out subject to more senior debt. The value to DGI9 is either 0 or something over and above the VLN + all accrued interest, with a hard decision date of 2029. After that date, or any date before where the VLN is paid off, it can be worth less than zero if subsequent to payment the over and above turns out to be under and below. With the mysterious crystalisation event meaning something, RNS 2022-10-19: "£300m cash consideration with an additional £163m acquisition financing (Canadian Pension Plan Investment Board vendor loan note; non-recourse to DGI9; adjusted based on future crystallisation events)". | hpcg | |
01/10/2024 12:02 | Plus writing it off would expose Acquivia to a huge tax charge and give a tax loss to the shareholders that they probably (certainly in the case of DGi) can't use For Macquarie they'll likely to holding via Lux or Caymans and they won't be able to do much with a tax loss there Writing of shareholder loans are the sort of things that are all shareholder consent matters | williamcooper104 | |
01/10/2024 11:08 | The VLN matures in 2029 | cc2014 | |
01/10/2024 10:48 | Calling in the shareholder loans would bankrupt Arquiva and potentially leave it entirely in the hands of the external debt holders. No way would any shareholder do that. They'll roll it over. | hpcg | |
01/10/2024 10:26 | VLN is non-recourse to DGI9. Very simple structured finance concept. I'm sure anybody could dig through the various companies mentioned in DGI9 accounts and find that DGI9 Holdco owns some intermediate company that owes the VLN and owns the Arqiva shares and shareholder loans. That intermediate company will be in a jurisdiction where there are no tax implications to "receiving" shareholder loan interest. Nothing to worry about there. If at any point the shareholders of Arqiva wanted to make distributions to equity (instead of continuing to de-leverage), it could either pay dividends or repay shareholder loans. It doesn't really matter which. Under no circumstances would Macquarie be able to insist that its own shareholder loans are repaid before the other shareholders. That intermediate holding company would be unable to distribute any funds to DGI9 Holdco without first paying the VLN interest (until 2026 I believe) and then the principal as well (from 2027 and beyond). The only element I don't know is if the VLN has a firm and final repayment date, which would be the hard-and-fast deadline for selling or IPO-ing Arqiva. | craigso | |
01/10/2024 10:01 | This has an intersting timeline on it w/r to terrestrial tv etc. | duncansawalker | |
01/10/2024 09:48 | You have it right hpcg. But whilst effectively the shareholder loan notes net off between the DGI9 accounts and Arqiva and the previous Board have stated they can be ignored I'm not so sure. DGI9 do not own 100% of Arqiva and therefore the other owners including Macquarie can insist the shareholder loan notes are paid off. For sure they could all agree to write them off but why should all the parties especially the smaller holders do that? These are liabilities Arqiva has and I would also worry what the tax treatment is if they write them off. I'm not sure that's a nil sum. I can't prove it to myself though. I have asked on here before about this but been met with either silence or the usual barrage of (unsophisticated) PI's talking their own book telling me there's nothing to consider. Even ignoring all this Arqiva's debts are large and the balance sheet doesn't look so great if you take the goodwill out. The senior lenders have been happy to lend against a stream of BBC contracted income but that contract is up for renewal in 2027 I think (might be 2029). That contract for sure is not going to get renewed at the same price. Much lower. There is a very interesting video from CORD some time ago where they were asked by an analyst about buying Arqiva. The answer was a decisive no and something to do with BBC contract and government influence IIRC. I take the view DGI9 is a bit of a binary investment. Alot does depend on what Arqiva can be sold for but given Macquarie have been trying to sell it for over a decade and the only mug they found was DGI9 I'm not sure the market has much enthusiasm for it. Everything has a price but I suspect that price is much better understood by the analysts than PI's and the share price may be a fair one given the opportunity cost of investing elsewhere where one can get a 10% return reasonably easily with little risk and hassle. For a bit of risk you could buy CORD which I'm not going to ramp but is treating me very well. | cc2014 | |
01/10/2024 09:40 | Sorry thought you were asking about the VLN. Yes the debt within Arq is split by economic interest. Obviously its an asset heavy business with (apparently) stable cash flows hence the high gearing. | loglorry1 | |
01/10/2024 09:40 | In my opinion, you are correct hpcg bar debt was down £72m YoY | hindsight | |
01/10/2024 09:24 | loglorry - that is an explanation of the VLN, no? I'm ignoring that for now and just concentrating on Arquiva internals. There is no equity value in Arquiva, it is all debt. The senior has first call, BBB rated. It is at £949m, down £50m YoY, or circa 4-5 years cash flow. The junior bond is £450m, circa 2-3 years cash flow. Thereafter there are several billions in shareholder loan notes and accrued interest on those (@13-14%PA). These are realistically not repayable by cash flow, by design of course. So long as shareholders, but specifically us, have a share of the loan notes in proportion to our share of the equity then we can ignore those in any calculation, as several people have done above. I just wanted to be clear on this in case I had it wrong. A cursory look at the headline accounts might suggest the company if functionally insolvent when that is far from the case. | hpcg |
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