I bought a sliver this morning. I don't like it, and I am concerned about the opportunity cost, so perhaps this is just a trade on the RCF renewal. |
Re-reading the RNS and curious about the word 'optimisations' in the following:
'Incremental proceeds over and above the RCF balance will be returned to shareholders in due course, along with proceeds from other potential value realisations and optimisations the Company is progressing in tandem.'
what could they be ? |
Also some analysis of the final determination of Ofwat on water metering by Will Lewis
(Director at Baringa Partners (Management Consultancy)) on LinkedIn, for what it's worth. It does headline that ""Total Investment: £2.4 billion allocated for the installation of 10.3 million smart meters"" and that bodes well although the 'floor' for 'data connectivity' (in data points per day/week etc) is relatively low vs Arqiva's offering, which obviously increases competition. |
Apparently in yesterday's mayhem I missed the Arqiva announcement of a done deal for the installation and monitoring of 1m water meters for United Utilities...I suppose that's better than a kick in the nuts... |
I presume they also had what they think is a decent plan for the Arqiva stake when they signed up rather than signing and then thinking "blimey, this is a tricky one!" |
This is a really important element :
that it was when they signed up, at which time they will have known the AquaComms + EMIC1 reduced June NAV). |
Nigel
my (amateur) estimate gave 31p, so a similar range, (while hoping for more!), though inevitably Arqiva and Verne earn-out are just stabs in the dark given the uncertainties. (wish they would be more open about the Verne earn-out terms).
At 28p IRCP make £600k Performance fee. Nice, but relatively small vs the £3.75m pa management fee (1st 3yrs).
I suspect their internal objective is far higher than that (or at least, that it was when they signed up, at which time they will have known the AquaComms + EMIC1 reduced June NAV).
Ditto for the IRCP partner and IRCP senior adviser who bought £100+k each in mid-Oct (600k shares each, when the market price was about 18-19p)
Obv, they could be wrong, especially if gilt yields remain elevated, and timescale could be longer than we hope, but downside risk from the current share price does seem a stretch. |
For sure - I get to roughly 28p - which is a 35% reduction on latest NAV.
My sense is IRCP will just about manage to get the £225m of distributions. |
Given what's happened recently it's probably worth factoring in a 15%-35% discount to current NAV estimates for future asset sales. |
That is bonkers from jefferies. Utterly clueless. |
There must be a fairly good chance of a 200% return here over the next year or two
The loss on Aqua is only 3p and it still gives a current NAV of about 42p or over 3x the current share price |
The earn out alone could be up to 12.5p a share. Sea Edge and Elio were stated at 8p a share in the last year end accounts. Hard to see there won't also be a few p of net cash post sale of EMIC and Aqua. |
Yes I'd say the downside risk here is now pretty limited - at least in long term (anything can happen to share price in short term as we're seeing today).I just can't see how they won't ultimately return at least 15p once you factor in the sales recently made, plus Arqiva, plus the various smaller assets, plus the Verne earnout. Even if one of these has to be written off, this would still cover the 15p. |
Any idea where we can see this research. Not on Research Tree as far as I can see.. |
current price only about 1p above the maximum Verne earn out. |
One presumes the Arqiva net value is the holding value minus the loan directly attached to it. Possibly the loan and interest capitalised, but then one needs a view on the asset disposal timing so that becomes a best guess. |
I can't help wondering - and I imagine that there are rules preventing this - what the share price would be doing today if the Board had kitchen sinked the NAV down to 35-40p and was then able to announce the Aqua sale at a premium to NAV...
We all know that TP wouldn't have been happy, but they were already on their way out the door when the September NAV announcement was made. |
Failure to repay RCF cannot wipe out shareholders. It would result in an administrator being appointed to sell the assets - exactly as Infrared are doing.
The RCF lenders might grumble a bit, and certainly ask for some more money, but ultimately there would be no incentive for them to push DGI9 into administration. They'd get their money back faster from Infrared selling assets relatively freely, than getting an administrator and the courts involved. |
Other points of interest from the announcement – we can infer and estimate that DGI9’s 51.8% Arqiva equity stake was held at c.£450m |
Can't see any reason they wouldn't be able to refinance RCF - some far more dubious co's have, and DGI9 clearly have the money coming in, even if there's a wait. |
Thanks - sounds like it's anyone's guess where this is heading. How can we access these broker updates? |
I presume they mean Arquiva is held at £450m total value, not our share, as total investments at 30 June were £424m and we know that Aqua and EMIC amounted to ~£100m. My estimate of our share of Arquiva was £228m which seems to match. |
Given the size of the RCF in relation to the remaining asets, not to mention the cash coming their way (albeit restricted for time being) it sounds a bit hysterical to say the entire equity could be wiped out. |
Jefferies say that very real chance equity gets wiped out if they can't refinance RCF in March because Friday's write down undermines confidence in remaining portfolio. Sound's a bit hysterical?
Much more positive update from Panmure Gordon. They blame TP and say they believe that IR can potentially add significant value to Argiva which they believe is being held at £450m. They also refer to the 'potentially significant Verne Global reported in the Times and stress that they will want more detail re the earn out with results |
I know what restricted cash means but it can't be used to repay the RCF. |
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