Dignity Share Discussion Threads

[nicholasblake] 08/3/2023 08:40

Surprisingly low acceptance so far.

[ceaserxzy] 14/2/2023 19:36

What are everyone's choice of the three options offered? 550 p cash, Castelanu shares or just no action in the hope of something better.

[vikeshm1] 13/2/2023 11:37

Does anyone think there will be another bid here?

[exfortisd] 31/1/2023 07:48

Tend to agree with all of the above. Just slightly weird no public support from jakes vs Artemis giving public support. But guess he has nothing to gain from public support so may as well wait to the final moment.
Interested to see how Artemis will spin this to their own shareholders - receiving no control premium above their entry price/ losing voting rights/ delayed exit. In return for the privilege of entering a fee carrying vehicle using blackbox NAVs calculated by the buyer. Which they could have bought on the open market in the first place but presumably chose not to. End up with less exposure to the same asset, worse shareholder rights, worse liquidity, and incurring transaction costs + ongoing fees. The joys of active management!

[tombomb] 30/1/2023 21:49

I reckon Jakes was invited to join the consortium. And either has done so, but silently or decided knowing that a bid was in the offing to therefore stock up for a quick profit. Perhaps at one point he thought he might take it for himself, but events have now put that out of the question.

Artemis are in bed with Channon - they were key backers to his ousting of Whiley. I think they also invest in Phoenix funds.

Hardly think any binding on the CEO would affect any counter bid. She was put in place by Channon and is there to execute his strategy. Any competing bid would surely put their own CEO in place anyway.

[exfortisd] 30/1/2023 16:25

anyone have any insight into jakes? I see the guy at artemis is backing the deal and rolling into castelnau. bit embarrassing IMO given his public comments. I had his cost basis around 5.65, but maybe it is nearer 5.50. Which would explain the small bump so that he can back the deal without being diluted at a loss by the fresh equity.

So looks like jakes would be only chance of a holdout shareholder. has never been clear to me which side of the tent he is sitting in.
is he the guy who will be providing the fresh equity? or was he building a hostile stake hence precipitating a defensive bid by phoenix?
On the one hand it's weird we haven't heard anything from jakes + tone of the release seemed confident.
But on the other is it weird that jakes didnt provide a letter of intent? or would that look worse as it might prompt qs around timing of purchases etc. I note they qualified that the CEO's support was binding even if a higher offer is made ie they blackmail any potential competition with losing the CEO. nice to know she takes her fiduciary duties seriously! the fact they felt the need to include seems to suggest some fear of a competing bid?

[maverick67] 30/1/2023 15:27

Liar!!!! You have never had shares in this company..

[blackhorse23] 23/1/2023 11:21

Took my profits & reinvested in CURY

[gargoyle2] 23/1/2023 07:31

550, up from 525 - done deal

[gargoyle2] 19/1/2023 09:05

1 Feb is deadline for a bid. I can't believe that 'confirmatory due diligence' will take long, given Channon's/Castlenau's recent closeness to the company, so I'm hoping that Jakes and others might be pushing for a higher bid here.

[mtioc] 14/1/2023 15:42

Thanks. Missed disposal crem EBITDA - trouble with looking at doc on tablet.

CEO was ex Dignity Ops and had a brief tenure at W.

I suspect you need to believe that Crem are worth c. 15x for valuation/margin of safety.

Agree re outcome.

[mtioc] 13/1/2023 19:44

exfortisd, Thanks. Good spot re other properties.

Kroll emailed me doc. The six crems were acquired in 2009 and 2011, are a mixture of long lease (4) and freehold (2) and appear to be outside securitisation security net (not sure why). Based on really historic data they seem have between half and three quarters the number of cremations of the estate average. Assuming mature average crem of £1m EBITDA*6*0.66 suggests EBITDA of c. £3.5m to £4m for the group. At £70m the range would be 17.5x to 20x. The document is pretty sloppy (e.g. "a Dignity Trust", which as a fundamental commercial point in the whole doc, is not defined in definitions section, even with reference to the clause where it may be defined and I can't search pdf on my device).

It will be interesting to see how much info the private investors get to make their decision between Valderrama, Castelnau and cash. We need better explanation of key balance sheet items including crem market value, other property value and lender position. There also needs to be an estimate of the capital required to fix the funeral business with associated time scales. I suspect there may be less transparency than we would hope for.

[exfortisd] 12/1/2023 11:18

Just a comment for interested shareholders to look at p92 of the bond doc (p153 of the pdf). Where they amend the permitted disposals on the real estate properties (footnote pasted below). I think they mentioned at one of the AGMs that the company owns c300 residential properties (often flats above ground floor shop). They had commissioned a valuation report to assess the property portfolio and had pledged to share the findings with shareholders in due course. To me this footnote suggests they have received the (at least preliminary) results of that analysis. Hopefully the Board will share this with shareholders before any deal is endorsed. We have no idea how many properties could be sold, presumably a subset of the total. But illustratively £300k x 300 is is £90m or £1.80/share


"[15 This is now too low and has prevented Dignity from disposing of properties where they are relyiny on a rollover.
Additionally, it also causes problems with sales at auction where the guide price is much higher than
this and as such consent pre-auction is required. The proposal is therefore to update this threshold to
£300,000 on the basis that: (a) this would align with what would typically be average auction prices; and (b)
for most of the properties within the Securitisation Group it is anticipated that this number would now be
around or below £300,000]."

[gargoyle2] 10/1/2023 20:48

Anyone managed to decipher today's holdings RNSs from Valderrama? Yellow (SPC) Bidco Limited is the potential bidder, acting in concert with Sir Peter Wood, Castelnau and Phoenix. I can't work out what their current percentages in DTY are though. Nor have I seen a holdings RNS from John Jakes -- is he buying more, is he happy to accept the 525 bid? Still hoping that other shareholders will at least angle for a higher bid price, seems unlikely imo that Jakes will counter-offer.

[mtioc] 09/1/2023 19:03

Thanks. I could not get to work either. I have asked, but doubt it will be produced. To be fair it is quite a technical debt document, but bond holder docs are on the website.

[exfortisd] 09/1/2023 13:34

EDIT: advfn seems to block my links
If you search "Dignity Finance" on the Euronext RIS publication database you will see all the announcements to the bondholders. There is one from 7 sep 2022 with the consent soliciation announcement. That announcement contains a link to the memo itself: hxxps://deals.is.kroll.com/dignity

However link appears to be broken (I accessed a couple of months ago). If you email the agent at Kroll they can probably provide. Always seemed a bit odd it wasnt easily accessible on the DTY website, tho perhaps that is customary with such docs

[mtioc] 09/1/2023 12:58

Agree. I have G. in at c. £5.30 and my "logic" was offer price got G out whole. Jakes purchases require some explanation. G wanted out and price of liquidity? Wonder where Artemis are.

Crematoria valuation depends on assumptions. Current EBITDA for whole estate late £40sm, but fully developed with a deduction for central costs c. £55m. 20x mentioned by both industry figures and, I believe, Channon used a similar number in past presentations. D bought FSL in a distressed sale in 2016 for c. 15x. However, 5% yield of FY21 may be be more now. I would say between 17 to 20x. There is some long term inflation protection.

Where do you find the consent solicitation memo?

[exfortisd] 09/1/2023 12:09

The bit I don't understand is why Granular Capital have sold their stake.
Seems likely that John Jakes will roll his holding into the private vehicle, essentially taking the "home team" holding to c50%.
But it looks like Jakes was buying from Granular. Granular were longstanding and large shareholders, who presumably had interactions with Phoenix/mgmt. From the outside it looks like Granular got totally screwed. But they are presumably smart guys so that seems unlikely. But the sales to Jakes after the debt consent had already been received seem odd from their perspective. Looks like Granular cost basis was around £5.80

[exfortisd] 09/1/2023 10:35

It is set out in the consent solicitation memorandum for the bondholders (see a bit pasted from p95 below). The consent gives them permission to either sell to a third-party or to the trust, but if you read the whole memo it is clear they will sell to the trust and the third party bit is just to maintain the appearance of impartiality.
I believe this is why they take private before doing the transfer. They will want to agree the highest possible valuation with the trustees (to release as much cash as possible to repay as much debt as possible). But obviously they want to set the lowest possible valuation for minority shareholders, so that the board can recommend the take private. In the memo they mention a minimum valuation of 10x EBITDA, but I expect the trustee will agree to nearer 20x, given that is where the most recent private transaction sits (the sale of Westerleigh by Antin). 20x is also the multiple Phoenix mentioned at the AGM (remember Phoenix will essentially control the trustee by this point)


"the Selected Crematoria Assets form part of a wider pool of sale assets,
with those which are in addition to the Selected Crematoria Assets being
the Non-Ringfenced Asssets, which sit outside of the Securitisation Group,
such assets together with the Selected Crematoria Assets, being referred
to as the “Beaumont Assets”, and the sale of the Beaumont Assets to a
third party unrelated to the Dignity Group or to a Dignity Trust,
collectively being referred to as the “Beaumont Transaction”)"

[mtioc] 09/1/2023 10:12

Exfortisd, thanks. I missed that. I saw the ability to repay £70m etc.. Where is the bit about the funerals trust set out? With all that is going on in the sector and the recent FCA registration the trustees will need to be very clear on the valuation.

[exfortisd] 09/1/2023 08:03

Additionally, it seems poorly understood that the bondholder consent granted DTY the ability to sell the 7 crematoria assets to its own prepaid funerals trust. Releasing some cash to repay some debt, but without losing any control of the crematoria. This also gives the board full visibility over the timeline of the paydown (rather than the uncertainty of trying to find a third party buyer). Instead of explaining this properly to the market it seems they have chosen this opportunistic take private

[topvest] 08/1/2023 10:36

For what it's worth I think Phoenix and Channon have sound integrity. This is a fair offer and you can always take Castelnau shares if you wish to stay on board. Castelnau is a bit of a Berkshire Hathaway without the following or premium! I have it on my watch list, but no real trigger to buy. I do own some Aurora Investment Trust shares.

Ovbiously, Phoenix have struggled with Dignity and this is probably a realisation that its a long-term turnaround story.

[tombomb] 07/1/2023 16:44

This is the article you want to read on Gary. This is why this isn't a surprise at all. hxxps://archive.globalpolicy.org/socecon/bwi-wto/normura.htm