Eros Media 26 Discussion Threads

[spectoacc] 04/9/2019 13:34

Got to be an assumption - based on current bond prices - that the capital markets are largely closed to BUR. In which case, future (& ongoing?) cases need to be funded by returns from current ones. Yet when you look at eg the Argentina case win, and several besides, you wonder where on earth the recoveries will come from. And that's with them having booked large amounts of it as profit already!

Hence even when BUR win, they don't necessarily see the cash - but still book the profit.

Does that make the bonds unsafe? Not necessarily, but probably doesn't need much to go wrong. May end up more like the Eros short attack where nothing actually gets resolved, and the co continues, and hence the bonds are fine.

But:

"3. In the event that either Burford or any of its direct or indirect subsidiaries defaults, becomes insolvent or goes out of business, investors may lose some or all of their investment. "

Don't think I know enough to form a judgement on that.

[pyueck] 04/9/2019 13:25

Yeah no idea about Burford, they seem to like to sue people so I will be careful what I say. All therefore I will say is I have not invested!

[spectoacc] 04/9/2019 13:18

@tightfist - I wouldn't touch anything BUR with a long stick, even if I am an ERO1 holder :))

The bonds should be on the safer side mind, but nothing BUR has responded with has impressed me one little bit.

[tightfist] 04/9/2019 12:13

Hi; yes, I did the same a couple of weeks ago and put the cash into BUR2 bonds. IMO a far safer/transparent bet and 9+% pa redemption yield spanning 5 years. The Muddy Waters BUR shorting saga has not yet been shrugged-off with its ricochet impact on the bonds.

[spectoacc] 04/9/2019 09:37

Taken profit on a few, lost nerve really - holding the rest for much higher (I hope).

[spectoacc] 28/8/2019 09:37

Eros trundles on, ERO1 trundles on - not sure at what point to sell again, will likely get greedy.

[spectoacc] 21/8/2019 17:05

Still no idea :)

[spectoacc] 20/8/2019 09:55

All fair points, but:

1. This has been the case for years
2. The ratings downgrade (or collapse) means many funds will have had to bail out - those that had any ERO1 in the first place
3. We're senior debt - but I agree it's not clear what entity we're in, and whether that includes the back catalogue, surely the only potential value if Eros goes under
4. The amount to redeem ERO1 is relatively small
5. Eros has always been able to raise money
6. Largely agree re 50:50, tho the downside may (possibly) be limited, and the upside is pretty large - 6.5% pa and 100p in the £.

Not sure how Eros has managed to survive all the allegations over the years, and can't believe there's no smoke without fire, but - it's still going.

[pyueck] 20/8/2019 09:46

I think a lot of people here are missing the elephant in the room. the share price fell as the company had its credit rating cut as apparently it could not pay its bills. The company has long been accused of having a complex corporate structure, very very high accounts receivables balance that never seems to budge, a questionable depreciation model for its film catalogues and not very transparent related party transactions. Add to this that the company clearly has some nepotism in the way it recruits. The question therefore is a simple one, is the company solvent and if not can it raise enough cash, or sell off enough assets to be so. I would say that the companies credibility with debt investors is currently destroyed as the yields on their debt are so high.

From a retail bond perspective its very unclear what, if anything, actually secures our bonds.

To pay back our bonds the company will have to either, sell off assets, raise more debt or try to get us to agree to extending the bond terms. I think the raising debt option is not currently on the table, the selling assets piece may happen but it’s really hard to know what the value of their assets are or even what they own. Just because Eros somewhere owns an asset it doesn’t mean it’s in the company that has our bond!

I personally think as the bond price suggests this is a total 50/50. Nothing would surprise me as quite frankly I don’t understand most of what the company says. Maybe it’s all fine, but it might well not be.

[spectoacc] 20/8/2019 08:58

Ticking back up again. Not the first clue what moves ERO1 half the time - isn't reported trades, isn't always EROS s/p. All I know is - we get our 100p back in 2021.

Or not. :)

[spectoacc] 15/8/2019 06:45

Thanks @lonrho. I've never been able to confirm that we became secured (was after a later fundraising), nor what we're "unsecured" on - ie where do the rights to the back catalogue reside?

[lonrho] 15/8/2019 00:11

Form 20f is on the company web site for March year end.Auditors say accounts show a true and fair view on a going concern basis but then say there is substantial uncertainty whether the company can continue as a going concern {page134}.Management disagree with this assessment {page144}.The borrowing notes again show the retail bonds as unsecured which is contrary to previous assertions that they had been secured on something.They are spending 100 million dollars less on film content in current financial year but have content commitments for 300 million mainly in next few years.This seems a large amount considering the 339 million they have in current content advances on the balance sheet for a company with an annual turnover of 270 million.

[grahamg8] 12/8/2019 18:43

Seemingly no trades for the past 6 days so a price drop of around 15% in that time by ADVFN doesn't have much substance. Everything in limbo until Eros come up with some sort of deal that secures cash backing.

[tightfist] 20/7/2019 07:31

I have encountered this vicious circle in a different environment where the company was trading at a silly discount to NAV so the BoD decided to close the gap by dramatically writing-down OUR assets! A symptom of being run by accountants rather than far-sighted managers......in this situation they are now open to intense scrutiny so they IMO have taken a pre-emptive strike rather than left themselves open to criticism. It also opens the door to a "respectable" deal if you have the benefit of voluntary amnesia.....

[grahamg8] 19/7/2019 21:32

It makes a good deal of sense Valhamos. No matter what Eros think their films and subscriber base are worth, the value is simply the amount a buyer is prepared to pay for them.

If you have just been transferred to Scotland, your wife has fallen out with the neighbours and your children are being bullied at school then your house is worth less than the identical one next door.

Still, raising a chunk of cash would kill off the shorters overnight.

With the very real threat of legal action we can but hope the Directors are being very careful only to give a balanced view of the current financial position. The full year preliminaries while not gushing certainly weren't full of gloom and doom. On balance I think the drop has been overdone, possibly because of forced institutional sellers.

[valhamos] 19/7/2019 17:26

There was a comment on the impairment in the Q&A at the end of the presentation (on the website). They seem to be saying that the impairment was solely driven by the company's share price fall. I can only think the logic here is that a fall in the market value of the company is in itself a de facto indication that the film catalogue is not considered to be worth what it was previously.

[grahamg8] 19/7/2019 16:56

My theory on the write downs is that the mystery "considering strategic alternatives" is the much vaunted (in the past) sale or JV on the film catalogue. If negotiations have reached as far as bouncing prices about, then reducing the book value to approximately the sell on or buy in price allows the Directors to announce that they have made a great deal at or slightly above book value, and aren't they a great bunch for doing so well for the shareholders. OK so I'm rather cynical on the true motivation of company directors who rather like politicians have as their highest priority to hang onto their jobs. From our point of view the write downs don't matter a fig IF it is linked to bringing a big chunk of cash into the business which ensures that we get paid our full 100p per bond in two years time.

[spectoacc] 19/7/2019 08:28

ERO1 such a curious beast - it's either worth nothing (least likely, ranking above shareholders and any subsequently-issued debt, and maybe or maybe not secured on something), or it's worth something, even if Eros went under, or it's worth £1 + interest payments 2 years in October.

My theory is that every d/g to Junk causes any fund in ERO1 to be forced out, hence the big falls followed by decent dcb's.

Remain a holder - hopefully one who's a realist.

[pyueck] 15/7/2019 14:34

Pretty huge write down, how come they didn’t know this before? Over a year of revenue!!!! Trade receivables still looks so high even after write down what is it made of? Still don’t understand this company at all.

[wyken] 15/7/2019 14:21

So why is this bond trading at half price as though it is a basket case?

[spectoacc] 15/7/2019 14:05

Thanks both. I'd rather be an ERO1 holder than an Eros holder I think.

[tightfist] 15/7/2019 13:30

Hi, I focussed on the first few paragraphs of narrative and have picked this out:"........ Eros' balance sheet remains conservative and the Company is well-capitalized, with net debt of $145 million, a decrease of $14.1 million compared to the third quarter of FY 2019, and $135.8 million of cash and cash equivalents (including restricted deposits of $46.7 million). The Company has no meaningful near-term debt maturities payable in cash over the next twelve months..As announced on June 19, 2019, Eros is currently assessing strategic alternatives for the Company with a view to maximizing shareholders' value and have engaged Citigroup to assist with that review. The process is ongoing and the Company will update the market accordingly, as and when there are any material developments.......".So net debt is reduced YoY by 23%. However, the quality of the Receivables? Next step is Bond security.....Cheers, tightfist

[lonrho] 15/7/2019 13:17

Results don't look bad until you see well down the earnings release that they have written off 423 million dollars in impaired content and receivables and an additional write off of 25 million of investments. Nearly 40 million of the write off relates to film content advances. It makes you wonder if any of this relates to related parties.

[spectoacc] 15/7/2019 08:06

Let me know if you find out what we're secured on, if we're secured at all, and if not, which co owns the back catalogue! :)