Digital 9 Infrastructure Share Discussion Threads

[cc2014] 09/9/2024 10:09

Fisternator,

I agree it's not normal at all but the 2023 annual accounts put the red flags up over the valuation.

The accounts were prepared on an on-going concern basis, included no costs for wind-up and there were a bunch of comments over material uncertainty.

It's a mess, but the biggest red flag was when Miller and Boleat walked away. That said something was fundamentally wrong.

[fisternator] 09/9/2024 09:57

Fair comment Tiger, That said.

It would be a strange tactic to announce a 47% cut in NAV after being approached.

That idea of reduced Nav due to a takeover being floated looks like a desperate forlorn hope from those hunkering for some respite in the share price, or a quick 45p return to me. As always, happy to stand corrected.


Edit. The RCF still needs clearing/refinancing before March 2025 and the material uncertainty warning looks set to remain in the accounts.

I'm starting to believe that administration would provide a better return for holders here, no listing costs, no bod wages, no massive fees,(save the set out admin costs) and also hard-nosed professionals selling assets in a timely fashion.

AIMHO.

[tigerbythetail] 09/9/2024 09:50

It seems the baby is getting thrown out with the bathwater here.
Just because Triple Point have proven they unfortunately combine greed with incompetence does not mean that the fund's individual assets are run by idiots and are worthless!
Yes, it was beyond stupid of Triple Point to buy Arqiva "in order to fund dividends". But Arqiva is valuable infrastructure and it has a future beyond linear TV (which in any event still has years left). And the other assets (bar the war interrupted EMIC) are also valuable, including the Verne earn out.
Also, the board has been changed completely now (and Triple Point are on their way out, and possibly getting sued). So blaming the new BOD for the actions of the old BOD is a bit unfair. Give them a chance. This was the kitchen sinking - in a little while (we hope) comes the redemption.
I don't think it will be Cordiant, but I can easily see private equity / a sovereign fund taking the whole fund out with a bid of c. 45p. And no, we don't know that the board have not been approached with an offer. And anybody making such an offer would naturally want to keep it quiet for as long as possible.

[fisternator] 09/9/2024 09:46

cc2014, You may be correct, (but) who is to say a 'different' method used in 4 months will not value it at 20p?

IMHO This is not normal at all, any pretense that the goings on at DGI9 are normal will be set aside by me, others can choose to do as they see fit.

[roddyb] 09/9/2024 09:40

HOME Reit and DGI9 - investors being fleeced on "safe income producing investments" - me thinks that London Stock Exchange (LSEG) has an honesty and policing problem.

[cc2014] 09/9/2024 09:37

The 79p NAV figure was for Dec 31st the year end.

i.e. before the wind-up vote.

So, the NAV would have been calculated on a different basis.

[fisternator] 09/9/2024 09:17

Well, with the greatest of respect, would that have been any worse than spending money on a report that ventilates a NAV of 79p, and then a few months later saying the same said assets are worth 45p or even lower?

I'm not suggesting the bod recommended anything, simply the total lack of interest from anyone is more the point.

Imho there are also enough unknowns, especially after the 47% revaluation that wave enough of the red flag to keep the price well below 18p/

So you pay your money and you take your chance or you sell until the financial position becomes clear.
To be frank, i can not justify holding something I can't remotely value, and close my eyes and hope.. Trust is lost, nothing would surprise me going forward regarding shareholder loans overpayment for assets. Nothing!

[craigso] 09/9/2024 09:05

Fisternator, there may or may not be a "lack of private/vulture fund interest in taking this out at 45p and then doubling their money over the next few years."

But what is definitely impossible is a Board of Directors signing off on an 79p NAV and then subsequently recommending a bid at 45p. (or even allowing somebody hinting at paying 45p to do full due diligence) And a hostile bid for all of DGI9 without due diligence isn't very likely.

I know that there are many of us who've cost-averaged down enough such that a bid at 45p is a dream scenario. But there is also enough publicly-available financial information about Arqiva and Aqua to show that they have the EBITDA to support equity values well above 18p.

[mark5man] 09/9/2024 08:42

I have a small piece of this unsavoury pie. I was happy to wait for a longer term resolution given the previous NAV. TBH a buy back at 30 something would be a good profit personally so long as it wasn't over too long a period.

The cost of fees etc was always a given but this kitchen sinking and grandstanding confirms that as a PI we are always at risk of being shafted. I'm grateful for the pressure from others that might at least try to keep things (a bit more) honest.

I'm not minded to try and catch this knife by adding any more

[fisternator] 09/9/2024 08:42

Indeed Specto, it was obvious, and I banged on about it, that the lack of private/vulture fund interest in taking this out at 45p and then doubling their money over the next few years made it clear to me that the assets were worth no more than circa 40p.

I am open-minded about the end value. If anything ever comes from the carrot in front of the donkey delayed consideration, Etc. It's all a bit dubious, imho should be valued at Zero on the NAV.

All I know, is that there are more questions than answers, and shall I say certain accusations about financial governance that fair-minded individuals could make, doesn't equate to good a recipe for strong share performance?

Logic and reason suggest that if it traded at 20 p when the stated NAV was 76 p then this could easily go down to 10p with a Nav of 45p

Disclaimer. I sold it at 19p on Friday

[cc2014] 09/9/2024 08:36

I see from the share price reaction this morning that investors aren't piling in to scoop up the bargain price of 18.3p.

I'm with Specto over further reductions in NAV being likely. This is what the RNS says:
"The Board currently anticipates the reduction in the unaudited portfolio valuation identified from the valuation process so far would result in a provisional unaudited NAV as at 30 June 2024 of approximately 45p per share."

Er.. to quote "from the valuation process so far"
The RNS also says the process is still on-going and the valuation process is yet to be completed.


I currently have no position in DGI9 but view is rather like playing with fire and that I can easily get burnt. I am not adverse to being persuaded that at 18p it's all in the price, but 18p isn't low enough to tempt me in. I really don't like Arqiva (debt situation and long term income stream from the BBC) and that makes me very cautious indeed.

[spectoacc] 09/9/2024 05:47

As a large DGI9 holder, I suspect you're all in fantasy land, and doubt this will be the last NAV reduction.

They'll offload a few assets around the revalued NAV figure, then take a hit in a year or two on the remainder.

Is it worth more than 18p? Certainly hope so, but the market was right before, & current share price reflects a discounted return over an extended timescale..

[popit] 09/9/2024 02:14

It obviously makes no sense

Only gross negligence / incompetence or fraud can explain the situation where 80p of assets can suddenly only be worth 45p because of some implausible or fictitious reason

45p is certainly far too cheap for these DGI9 assets and so you have to assume that they are planning to sell out to their friends in PE for about 45p or 50p and keep a few tens of millions in fees for their various advisers

And after the sell out of DGI9 for pennies in the pound it would not be a surprise to see Arqiva come back to the market in the next year or two in an IPO worth at least £1 a share for former DGI9 shareholders

Shareholders certainly have every reason to be angry and to seek remedies for any gross negligence / incompetence or fraud

Having said that, they have obviously now kitchen sinked everything to the maximum extent possible, and NAV will only rise from here

An offer of about 45p or 50p will probably happen soon

[duncansawalker] 08/9/2024 20:46

Well it's going to be an interesting few weeks when we get some texture and more analysis. I might not tell thew wife and sell some other stuff and lever this up.
How on earth the MM gets to 18.5 px I have no idea. Even 45 looks cheap as anything vs other digital infrastructure assets suich as Cordiant, unless theres been some major issues in Aqua / Arqiva (and we basically know there hasnt in Arqiva, even if it's slightly steady as she goes...).
If this is getting trashed, why on earth aren't the rest? If anything Aquacomms, with it's 'new' subsea cables and technology looks to be a 'premium' asset(even if cash consumptive and 'growth' oreintated)...
I mean, the portfolio made 180M ebidta last year. The total MV is now 160M. All debt is easily manageable, all assets are edbitda positive. Explain to me how this makes sense!

[popit] 08/9/2024 19:04

There should be a lot of interest from PE in Arqiva even if Cordiant had no interest for some reason

Arqiva also has a fast growing water meter business that could eventually dominate the UK market

[williamcooper104] 08/9/2024 11:55

Indeed Post end of closed period will be very telling if they don't stump up

[williamcooper104] 08/9/2024 11:54

Will try to get to that Good to speak It's so important for wider market

[llef] 08/9/2024 10:35

TigerByTheTail, thanks for the info, it will be interesting to see!

[tigerbythetail] 08/9/2024 10:25

They'll be in a closed period until after the results later this month now.
And then, well, we'll see!

[llef] 08/9/2024 10:17

If the new management have really kitchen-sinked the NAV, wouldn't they show a bit of faith in that assessment and buy a few shares at a more than 50% discount?

[foetus in your brain] 08/9/2024 09:30

Good news. I've been invited to talk about DGI9 at Mello Monday on 23rd. That can create more noise. This is a case study for how to destroy faith in the market.

[williamcooper104] 08/9/2024 08:10

I'm keen to kick up stink on this as much as possible Not only because I'm a bag holder here But after HOME REIT, we are at risk of UK investment trusts getting the reputation of AIM Lessons need go be leant and changes made to prevent frauds It's fine losing money because of the market and even because of honest but bad management; but fraud really hurts and hurts all UK investment trusts by association

[pugugly] 08/9/2024 08:05

Link to Gavin Lumsden article - A nice hatchet job - Sorry for all holders.
Governance row engulfs Digital 9 as new board slashes valuation by 43%


Question - Any other funds hiding similar piles of poo? If so which ones?

[joe say] 08/9/2024 07:49

That's fine thanks CC - I'm only making a generic point that you cannot necessarily trust what directors/advisors/experts say.

We've all seen many subsequent U turns