Digital 9 Infrastructure Share Discussion Threads

[riverman77] 27/11/2023 20:39

I too would completely discount the deferred consideration as impossible to tell if it will actually be paid - on that basis £329m doesn't seem a great price for something previously valued at £480m (i.e a 30% discount}, given this was meant to be a highly in demand asset with a large number of parties bidding for it.

In terms of what it's worth now, 75p NAV sounds about right - put this on a 30% discount and you're looking at low 50s, which is actually what it was trading at a couple of week ago. Will be interesting to see the reaction tomorrow.

[williamcooper104] 27/11/2023 20:31

Ontop of the $329m there's $20m that appears to be deferred consideration into 2024 so probably to count it as $349m hard cash

[bagpuss67] 27/11/2023 20:29

Makes sense Marlint

[marlint111] 27/11/2023 20:25

Reading again Bagpuss - I agree that normally the sale of an entire company would be conduducted on a cash free / debt free basis.

However- (and I may be wrong). I believe that DGI don't own all of Verne (wording in the RNS is "the sale of its entire stake in the Verne Global group of companies" . So when they talk about the proceeds- we can completely ignore the Verne level debt imo.

When it comes to the earn out- I am completely discounting this in my valuation - we have no idea what the EBITDA target is, and it is at least 2 and a half years from being paid.

By my calculations- including the upfront payments at £329m, ignoring the earn-out, the sale is worth 39p per share.

We aren't sure exactly how much of the RCF is currently drawn - but prudently I'm assuming £375m, and I'll assume deal costs of £30m . This means post sale we'd have £76m, or 9p per share on the RCF.

Leaving the following NAV:
AquaComms 31p
SeaEdge 2p
Elio 7p
Arquiva 42p

Gross Asset Value - 82p
Minus RCF (9p)

NAV - 73p

Then up to you to decide what sort of discount to NAV you reckon it should trade at. At 25% it'd be around 55p for example.

Of course this is highly sensitive to assumptions around the likelihood of the earn out being achieved, how much of RCF currently drawn , deal fees etc

[marlint111] 27/11/2023 20:03

It really should have been clarified in the RNS.

[bagpuss67] 27/11/2023 19:50

although they say the following is a condition

consent of the lenders under the debt facility in respect of the Icelandic branch of Verne Global to the change of control which will arise following completion of the Verne Transaction.

Does that imply that the facilities in this co tale place and there is no adjustment to the headline consideration for Verne debt?

[bagpuss67] 27/11/2023 19:47

Are such sales often on a debt free/ cash free basis?

[williamcooper104] 27/11/2023 19:45

Though we really not to be having the debate - it's bad communications

[speedsgh] 27/11/2023 19:33

Acknowledgement by the board that Triple Point may not have been doing the best of jobs. Shame it's taken them so long.

"As part of the Strategic Review, the Board will review the management arrangements (including performance and the fee structure) of the Company's investment manager, Triple Point Investment Management LLP."

[williamcooper104] 27/11/2023 19:19

Indeed, the value Acquiva net of its non-recourse/asset level debt so would have thought they'd do the same for Verne - will have a look again later

[cc2014] 27/11/2023 19:08

Well what we do know is for once the Board has stepped up and done something about a very uncomfortable situation. The price seems reflective of the quick timeline.

[alan pt] 27/11/2023 18:38

Yep, so many moving parts, price movement on this seemingly mostly sentiment based anyway, hard to tell whether relief or disappointment wins!

[cc2014] 27/11/2023 18:34

I have no idea where the share price will open tomorrow.

[alan pt] 27/11/2023 18:29

The $100M/£80M had already been drawn in June, so should already be included in the end-June valuation figures, as far as I can understand (but who knows...)

[williamcooper104] 27/11/2023 18:17

Yes - however we are talking about Tripple Point There's talk of a funding plan for Verne to cover the pre-close period and to remove the material uncertainty which I take as then trying to refi onto a much reduced RCF Doesn't seem to be any indication as to how easy or challenging it is to hit the earn out which is frustrating

[marlint111] 27/11/2023 18:11

@williamcooper104 - that makes sense as they say they're going to use the proceeds to pay off 300m of the RCF .

[williamcooper104] 27/11/2023 18:07

Sorry max cash $450m implying max EV of $550m

[williamcooper104] 27/11/2023 18:05

There's the $100m fully drawn debt facility on Verne that's being transferred with the sale I read it as max cash c$450m on a max EV of $480m Re-reading the RNS I think that's right - but wouldn't exactly be shocked to find out it isn't

[alan pt] 27/11/2023 17:53

Not a great price either

Subject to a bunch of conditions, but assuming it completes then £350M +possibly maybe £107M in 3+ years time for assets which were valued at £480M in June

Just about pays off the RCF now, remaining assets are
Aqua comms £227M
Seaedge £18M
Elio networks £58M
Arqiva £345M

[williamcooper104] 27/11/2023 17:41

So looks like (depending on the conditions of the earn out) a not terrible price But the earn out (which doesn't necessarily preclude a wind down but of course complicates it) and the tone of the strategic review suggests it's all about keeling the show on the road With Verne gone hope they just sell the rest and if there's a listed shell for a few years with nothing but the earn out then so be it

[wskill] 27/11/2023 17:09

Looks like a decent price considering it had its back against the wall pity is was the jewel in the crown that had to be sold .
Why waste time and money on another senseless review the trust is now too small to continue get on with it and sell the rest .

[boystown] 27/11/2023 16:56

Is this now a REALLY silly price based on the sale (presuming Iceland conditions etc., are met)?

[spectoacc] 27/11/2023 16:49

#1094.

Interesting earn-out, would likely preclude early wind-up. Let's hope they can put the proceeds to good use.

[loglorry1] 27/11/2023 16:45

RNS out Verne sold.

[cc2014] 27/11/2023 12:15

I am a little surprised that given the risk of eruption in a sensitive location in Iceland has dropped to nearly zero the share price is not picking up more. Or perhaps what we are seeing is that the whole Iceland thing was a complete red herring and nothing to do with the share price fall.


I've now been waiting for 5 days for a reply from DGI9 to my investor enquiry. If the institutions are finding as difficult as me to get a reply it's no wonder the share price is shagged.