Digital 9 Infrastructure Share Discussion Threads

[speedsgh] 04/12/2023 18:21

Brief comment on DGI9 in the latest Money Makers podcast (24m36s-29m48s)...

[cc2014] 03/12/2023 11:57

I am wondering whether Arqiva accounts are constructed in such a way as to put upward pressure on the BBC licence fee.

Anyways I did what Bagpuss suggested and came to the conclusion that when DGI9 bought Arqiva it is possible they did not fully appreciate the terms of the accretion payment. It certainly doesn't seem to be have been flagged up to the market at the time of purchase and no CFO in his right mind would have let DGI9 get into a position where there is a going concern issue.

It is not as bad as it looks if you just look at Arqiva's accounts but I still consider DGI9 overpaid and DGI9 uninvestable at the current share price

[bagpuss67] 02/12/2023 19:49

I think we should strip out the shareholder loans and associated P&L and cash costs to get a handle on the underlying business/ value...

[bagpuss67] 02/12/2023 16:17

CC2014..as ever with DG9 nothing is easy. You need to be careful with the losses and the finance costs for Arqiva as a big chunk of the P&L finance cost relates to shareholder loans which are part owned by DG9

[cc2014] 02/12/2023 15:05

#1229

His analysis does not cover the Arqiva profitability and balance sheet.
Plus I skimmed it but does he mention the qualified auditors situation.

DGI9 own 48% of the shares and have a 52% economic interest in Arqiva. What value a business losing £600m a year where the interest bill is more than the revenue?
DGI9 cannot extract cash from Arqiva until the VLN is paid off but imho profits are also helpful

These are the figures for Arqiva for the last 3 years

June 2023
Revenue £652m Loss £596m Net Liabilities £4,825m
For info Finance cost £821m

June 2022
Revenue £624m Loss £634m Net Liabilities £4,224m
For info Finance cost £733m

June 2021
Revenue £647m Loss £590m Net Liabilities £3,570m
For info Finance cost £663m


#1231
Because of the swap the accretion payment is capped at a maximum of £40m a year through to 2027 at which point the accretion payment ends (the accretion agreement was taken out about 15 years ago and ends in 2027).
Arqiva paid £157m for the accretion payment in 2023 because RPI was high. In order for DGI9 to wriggle this down so their half is capped at £40m, DGI9 have also put a collar in such that where inflation to fall below something around 2.5%, they have to carry on paying the accretion payment. Not as much as £40m but still a payment.

[bagpuss67] 02/12/2023 11:58

Not sure its correct in the Oak analysis to include the £107m as a debt in the proforma balance sheet. Also the article brings out the importance of removing the dividend lock up on Arquiva. However the articles scenario of paying off the VLN assumes that a big chunk of the money needed to pay off the VLN is the £107m earn out.

Would need go dig a bit more to understand how the VLN will be repaid if the £107m doesn't come in but perhaps that's the surplus cash from the initial Verne sale proceeds plus accumulated unpaid dividends..

Alao the there isn't much analysis on the swap. It's just stated that the accretion payment reduce and then fall away in 2027. Is that when the swap term ends?

[bagpuss67] 02/12/2023 09:59

I havent worked through the analysis on detail to try and pick holes in it but I did enjoy reading it. It's certainly helpful to signpost various points for peole looking to do their own research. Thnaks for drawing it to our attention

[gonsan] 02/12/2023 08:52

hxxps://open.substack.com/pub/theoakbloke/p/knives-to-digital-nine

Found in LSE forum.

Any thoughts on this analysis? Quite opposite to the sentiment here.

[bathcoup] 01/12/2023 18:04

I remember reading some old timer's words (to the effect): "the selling is done on the way down".

[spoole5] 01/12/2023 17:46

I think most would accept a low offer to get out of this now

[williamcooper104] 01/12/2023 15:19

Praise the Lord for stop losses

[spoole5] 01/12/2023 15:16

There goes 30p!

[cc2014] 01/12/2023 14:40

Wonder how hard they are going to defend 30p?

[cc2014] 01/12/2023 11:58

Sadly looks to me like someone is walking it down trying to find volume

[hindsight] 01/12/2023 08:56

(And can’t come soon enough too)

Agreed

[cc2014] 01/12/2023 08:13

Honestly, I bet there are investors on here buying more than 300k down here.

[spectoacc] 01/12/2023 07:31

300k more - tho you'd think they'd buy in larger size on the way down. Increases their smallish holding by 10%.

[williamcooper104] 30/11/2023 16:09

Insider trading isn't trading on insider information but trading on inside information that's going to help the position you takeSo if TP for instance knew they were going to be terminated and bought shares before that was announced then that would be inside trading (And can't come soon enough too)

[cc2014] 30/11/2023 15:37

yeah. Watch out for an unsecured retail bond paying 12% !

[williamcooper104] 30/11/2023 15:02

A sacrificial token amount relative to their management fee to look better while sounding out Again I'm only speculating; and I'd have thought some form of v expensive debt was more likely

[spectoacc] 30/11/2023 14:56

@wskill - I don't think SOHO is a HOME at all. Much of SOHO's stock is new/purpose built, and trouble with lessees has been very minor - MySpace the only one outstanding I think.

But there's got to be debate whether the business model works - ie long lease, to not necessarily long-lasting lessees.

At least you got to pocket the XD.