European Real E Share Discussion Threads

[janvrot] 26/6/2016 22:39

zzzz.....zzzzz.....what did somebody say something. What happens next? This is hard earned money.

[flyfisher] 26/6/2016 09:46

The bimbo / panrico deal has now received Spanish competition commission approval.

[janvrot] 08/5/2016 20:39

Thanks, why was this video taken? Is it part of a marketing campaign?

[flyfisher] 07/5/2016 07:06

French asset manager for schroders, annelaure dury, has recently posted a video of the la gaude site, shot from a drone, on youtube.

[flyfisher] 26/4/2016 16:20

''Spanish food maker Adam Foods has reached an agreement to acquire certain Panrico assets in Spain, Portugal and Andorra from Mexican baker bimbo.''

This would seem to satisfy the competition commissions requirements, perhaps the deal can now move forwards.

[redhill9] 25/4/2016 18:44

Euro has appreciated against Sterling by close to 5% since 31/12/15, say 8p per share. More important may be re-evaluation of the Panrico properties, when/if it happens.

[sleepy] 25/4/2016 18:18

179p at 31 December. Presumably has risen since then with weakness of sterling

[ifthecapfits] 25/4/2016 10:32

NAV of 179p

[flyfisher] 17/4/2016 09:24

Almost 10 months after the Mexican Bimbo announced the purchase of the Spanish Panrico, the transaction remains closed. On the contrary, the Latin American group, said that the acquisition maker Donuts is still pending Supreme Court decision on the future of the 745 dismissed in File Employment Regulation (ERE) that the venture capital fund Oaktree executed in late 2013 to make viable the company.

Bimbo agreed with Oaktree two conditions precedent to close the sale of Panrico by 190 million, officially announced on July 9 last year. One was obtaining the approval of the National Commission of Market Competition (CNMC), which authorized operation in late October. Although he did not officially public, the other was related to the appeal to the Supreme Court by the Workers' Commissions and CGT against the judgment of the High Court May 2014, an organization that partially upheld the arguments of the company.

According to public accounts Panrico, filed March 16, the future of the company is pending that appeal, as exposed KPMG, the auditor of the company. The firm says that there is uncertainty about the Supreme Court decision that, if negative, would seriously risk the viability of the group. In the event that it declared null and demanded the reinstatement, the owner of Bollycao should expand its workforce by about 55%, an increase in labor costs that would condemn the company to unsurpassable losses. The labor adjustment not only involved the application of an ERE to 745 workers, but also cut payroll by 18% and changing the conditions of carriers autonomous, which involved reducing the routes and the extinction of 300 jobs.

Bimbo sources close to fear the worst, because the High Court has declared unjustified 155 additional layoffs, agreed for 2015 and 2016, considering that not fit right. The company has not made any provision because its legal counsel expects a favorable resolution. But the Mexican buyer not have it all and does not provide a final judgment until at least the summer. Therefore, so far, the acquisition will not close, with the loss of opportunity cost that entails. The case of the ERE of Coca Cola increases fear.

In fact, it is possible that the price of the transaction have to be revised based on updated numbers Panrico, which in 2015 progressed substantially from the operational point of view. Donettes maker lost 2.43 billion euros at the consolidated level, compared with 5.51 million red numbers 2014, which further eroded its negative equity, to 3.80 million. But both sales and operating profit EBITDA or gave signs of improvement.

good results

The turnover reached 260.7 million compared to 258.4 million the previous year, which for the company was "a turnaround", mainly due to growth in consumption and "the brake sales transfer own brand products regarding brand products distributors. " A year earlier, turnover had fallen by 13%, to 38 million. Meanwhile, EBITDA amounted in 2015 to 9,390,000, compared with 1.97 in 2014, a result of "successful implementation of business plans" based mainly on labor and wage adjustments.

"The achievement and consolidation of those cost reductions have been the basis for improving the productivity and profitability of the company, which has allowed the revaluation of business projections for the coming years by the management and the board management, "says Panrico in its recent annual report. Layoffs have allowed eight million decrease in current management expenses.

Bimbo are also very aware of developments in the food market in Spain, closely linked to the breath of the economy, and shows that in 2015 the market for food, beverage and hygiene products and household cleaning grow by about 1 %, while the GDP did by about 3%. Bakery sector increased by 2%, while the bread rose 1.5%. If, as the Government itself acknowledges macroeconomic data are cooled, the results of the group could suffer the consequences. Well knows Bimbo Mexico, which in 2014 had to inject more than 100 million in its Spanish subsidiary by the impact of the crisis.

[redhill9] 17/4/2016 09:02

flyfisher, the link to that article seems to have expired - can you give a summary of its contents please?

[flyfisher] 14/4/2016 18:41

Spanish press article on status of bimbo panrico deal.


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[flyfisher] 07/4/2016 17:06

redhill, note 15 to the accounts gives the valuation method and gives a blended average of 11% yield for the assets under level 3, this may give some idea of book value.

janvrot, Last year the panrico unions took action in the Spanish court to challenge the legality of the restructuring, presumably the bimbo completion is still awaiting the outcome.

Personally i don't see any need to rush into selling spain as the cashflow from the rentals will be allowing eret to cover its costs at the moment and as soon as it is sold we will be lossmaking.
If the bimbo deal goes through I think the Spanish assets will then become highly marketable and command a good premium to current value.

What is needed is some progress on la gaude and some progress on closing down the german subsids, which is where the majority of the tax issues seem to be.

Unfortunately progress is reported as slow on both these issues.

[janvrot] 07/4/2016 15:10

Has anybody been to Spain or know anything about the place? I thought panrico would close in December and here we are in april without a beep. Could this process go any slower?

[redhill9] 03/4/2016 11:21

Interesting speculations Colonel A.

Regarding: I have stated previously that I thought it logical for Panrico to buy the leased properties while the valuation was low. I think you can still make this case for Bimbo. I think there is a slight Catch 22 implicit there - the valuation of the Panrico properties has been low because Panrico was in trouble; if Panrico could afford to buy the lease (either itself or via Bimbo)it would imply they were no longer in financial difficulties, which logically should mean the valuation increases? However, a improving financial situation for Panrico is without doubt good news for ERET in marketing the properties, whoever may be interested whether Panrico/Bimbo or a third party.

I fully agree about La Gaude, the thought of selling Panrico assets in 2016 and sorting out the tax position only to be left with the prospect of several years of negotiation on La Gaude is not a prospect either shareholders or ERET management would want. In that situation, selling at whatever value available may be the best result rather than ERET just hanging on.

I'm unclear to me what the respective proportions of invested assets are between Panrico and La Gaude. I can't deduce any separation of value between them from the current accounts and don't recall seeing anything in the past. I'd guessed at 30p NAV for La Gaude in my spreadsheet last year but can't see that I based that on any real info, I think it was just a guess for my own "what if?" estimates.

[colonel a] 03/4/2016 10:41

I feel that Schroders have been professional and effective with ERET and they would not hold the results until the last possible minute without good reason.
I could not see any good reason published so am guessing that something has not quite made the deadline.

Speculating is for fun.
I have stated previously that I thought it logical for Panrico to buy the leased properties while the valuation was low. I think you can still make this case for Bimbo. Especially if QE means they have access to cheap money.

It may be that ERET will give up on La Gaude, I suspect that they could almost give it away without impacting the NAV.
Potentially it may be a valuable site, but not short/med term.

More fanciful, although not ridiculous, perhaps ERET itself will be bought.
As the market cap drops the remaining big holders will be keen to wrap things up.
There's room between the share price & NAV for a bid leaving plenty of room for significant profit for the buyer longer term.

However, I won't be holding my breath and there's a degree of wishful thinking as I would like to have cash in the run up to the June Ref.

[redhill9] 03/4/2016 09:52

From the timing and tone of the results I'm going to predict that something will be announced in the next two weeks.

Interesting thought Colonel A, my own conclusions were almost the opposite, that we won't hear anything for some time.

From the Chairman's statement:

we believe there is the potential to market the Panrico factories for sale in 2016

Meaning they haven't yet started marketing the Panrico properties, however the improving situation at Panrico may mean a satisfactory sale is no longer dependent on the Bimbo takeover, as I'd previously assumed, so that may speed things a little.

La Gaude............however changes of zoning and permitting will not be possible before 2018. As previously advised progress will likely be slow with this asset.

La Gaude isn't mentioned in the priorities for 2016, so I doubt anything will move regarding this asset in the short term.

The only other issue is the tax dispute, and I would expect that to take a long time to resolve, as tax issues are rarely sorted quickly.

I'm interested in why you feel we may here something soon as I can't see which of these three issues could progress so quickly, or are you thinking they may distribute some of the cash balance held?

[colonel a] 02/4/2016 22:21

Afterthought.
From the timing and tone of the results I'm going to predict that something will be announced in the next two weeks.
But my tract record is not so impressive, I think the best I've managed on ERET is coming reasonably close to the sale price of their German assets.

[colonel a] 31/3/2016 18:36

Well, there it is.
Bad news being that La Gaude is pretty much in Limbo.
Good news that at current exchange rate the NAV is now £1.93 and that most of this is Panrico + cash.
They also think that they may be some money {10p ish} to be recovered from the French tax authorities but no certainty.
Other provided for tax might also provide a slight boost but ...

The comment on Panrico's results improving is good and means that Bimbo is a potential buyer, not a white knight.

Can't see the share price doing much unless a bigger player looking long term comes in.

[colonel a] 12/3/2016 12:29

Some buying ahead of the annual rep {due this week on previous form}.
Should be an interesting read.

[flyfisher] 03/3/2016 11:05

Thanks for the reply.

[redhill9] 03/3/2016 10:55

I see la gaude as taking a very long time to progress, with unclear value.

[flyfisher] 03/3/2016 10:42

Redhill, Without that I see little attraction now............

Why is that, are you negative for la gaude.

[colonel a] 03/3/2016 10:00

Obviously the sale to Bimbo is very important and if it were blocked by regulations that would be bad news.
But, Panrico is no longer losing money and the sale has passed due diligence, it is only waiting for bureaucratic clearance - so a failure would not reflect badly on Panrico per se.
And the rent from Panrico is 10.7p per share per annum at current exchange rates.

[redhill9] 03/3/2016 09:51

The completion of the bimbo transaction would seem to be critical to achieving a good sale price.......

Agreed, but before that sale happens we can expect a rise in NAV. It is only the prospect of a resulting uplift to value after the Bimbo deal completes that is keeping me invested in ERET. Without that I see little attraction now.

[flyfisher] 03/3/2016 09:46

I was looking into the potential sale values for the Spanish properties and came across this pdf from 'optimus'. It has a chart of yields by asset class within spain and a list of recently completed deals at the end.



It gives prime industrial rents at 7%, however it would seem that few industrial deals have been executed.

The completion of the bimbo transaction would seem to be critical to achieving a good sale price for the Spanish industrial units, but at what level can we expect?