Hangar 8 Share Discussion Threads

[goliard] 19/2/2014 13:30

gorilla36, indeed, an old AFF holder, but I guess I was one of the few happy ones as I made quite a lot of money through the takeover. The big difference here is that our CEO's stake is so large that nothing it has to be his biggest concern. Let's wait and see and keep our fingers crossed.

[adamb1978] 19/2/2014 13:16

Not a problem Henry - was expecting an argumentative response given thats usually how bulletin board posters react when someone challenges their views, so hats off to you....!

[hvs] 19/2/2014 13:03

iT WILL SOON BE TIME TO dump.

[gorilla36] 19/2/2014 13:01

The problem with suspensions is that you lose the ability to buy or sell your shares, that is never going to make me happy. I once had a holding that was suspended for a year only to come back worthless. A deal will be constructed that will hopefully be in our favour, but who knows. Goliard, I would argue that just because the CEO has a large holding does not necessarily align his interests with the common or garden shareholder. Often in these cases, directors/owners are looked after via the new entity not always the case for us! Are you an old AFF holder (I recall your name). If so you will recall what happened there. We wait......but not for too long I hope.

[igoe104] 19/2/2014 12:54

I do like this company and its ambition, especially when its talking about a 200 million cap. This is certainly one share to keep hold off.


The Aim-listed company boasts a market capitalisation of £24m, but within five years Mr Dryden predicts this could hit £200m. A new base in Nice, alongside planned expansion across Africa – Hangar 8 already has 11 bases in Nigeria alone – will ensure a steady stream of business

[igoe104] 19/2/2014 12:38

Telegraph write up.

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[goliard] 18/2/2014 18:09

I think some are missing the point here. ACS is certainly a different beast, with high turnover and low margins, so what matters is ( as Adam has said) whether we HGR8 shareholders get a good deal as part of the enlarged company. If the split is worked out on turnover then we are in a terrible position. If it is based on profit (which should always be the main driver in my opinion) then we will do incredibly well.

What the advisors will be arguing about now is what the relative valuations of the two companies are and who should benefit most from any uplift due to cost savings etc.

The reason I feel comfortable here is that our CEO owns over 40% of the business. No salary or perk will be bigger to him than that. He therefore will only recommend a deal that he can see improving the value of his shares.

I suspect (like someone else posted) that the ACS accounts look poor because the tax liability is minimised by way of agreements that wouldn't be allowed to continue when they are listed. Just as an example that might include a % of turnover being paid to the major shareholder via a separate consulting company (which is what I do and is perfectly legal as the other company pays tax). HGR8 would insist on that type of agreement being removed as part of any deal, so the ACS profit may well be much higher than it looks.

We can't say if this is a good deal or not until we see the relative valuations and the projected profit for the Newco versus the two individual companies prior to the 'merger'. It will also require approval of the shareholders of both companies.

[gorilla36] 18/2/2014 18:00

Henry/Adam - Excellent analysis from you both, thank you. We await further details.

[henryatkin] 18/2/2014 16:51

Adam...I stand corrected as I was not aware of the AIM rule definition of it simply being applied as of a larger company. I still hope it is rejected on the basis that I don't like ACS lack of earnings visibility. Rather like AIP which is one I would not usually entertain.

[adamb1978] 18/2/2014 15:47

Henry

It is a reverse takeover of ACS by HGR8. Rules 14 of the AIM rules:

"A reverse takeover is any acquisition or acquisitions in a twelve month period which for an AIM company would:
♦ exceed 100% in any of the class tests; or
♦ result in a fundamental change in its business, board or voting control; or
♦ in the case of an investing company, depart materially from its investing policy (as
stated in its admission document or approved by shareholders in accordance with
these rules)."

We are buying a company which is larger than us. Its a reverse takeover of ACS by HGR8. What you're confusing it with is that these are often reported as '[ACS] reversing in to [HGR8]....]' but it is still the smaller, listed company launching a reverse takeover of the larger company

Adam

[henryatkin] 18/2/2014 12:25

Adam...if HGR8 are buying ACS then its not a reverse takeover. If we wanted to buy ACS it would be an acquisition subject to a cash offer being made to ACS shareholders or a cash & shares deal with or without a placing for the listing of additional HGR8 shares. A reverse takeover by definition would be ACS buying HGR8 and rolling the ACS business into HGR8 and continuing to trade as HGR8 PLC. You end up with a merger of a PLC & a private company which is what the RNS talks of. The usual reason for a reverse is for a non listed company buying a cash shell as a means of obtaining a listing in a cheaper and quicker method than a new LSE listing but in our case ACS get both a listing and the acquisition (or merger) of HGR8. The reverse takeover process requires a prospectus so that existing shareholders of the PLC company know what the new companies plans are and how its intending to finance it. As I read the RNS we are merging both companies as a reverse takeover which can't possibly mean we are buying ACS. I do agree though, there will probably be no shareholder premium involved but we will be sold the story of a bigger company with greater prospects.

[collectivefriction] 18/2/2014 12:05

Are there any ACS shareholders? I thought it was a private company.

[adamb1978] 18/2/2014 11:40

Henry - thats the wrong way around. This is a reverse - HGR8 will be buying ACS NOT ACS buying HGR8. The deal will therefore go through, unless ACS' shareholder block it or unless something goes wrong with the propsectus/listing process.

As I have said before, HGR8's shares arent being bought - we will be issuing HGR8 shares to ACS shareholders in return for their ACS shares. The only we get a premium is via a special dividend (to reflect the fact that in essence this a takeover of HGR8) or if we get a greater share of the enlarger co than we 'deserve' (ie say we should get 10% of the enlarged co, then we actually get 13% say by issuing slightly fewer shares to ACS shareholders)

[henryatkin] 18/2/2014 09:12

Geoff...why do it? For money. Dryden could be given a senior position in the new company, share options, performance bonus linked to the HGR8 part of the new company plus cash/shares package for the deal to go through. Once ACS have done that they only need to satisfy 8% of existing HGR8 shareholders. For Dryden it could be a way to liquidate his HGR8 capital (around £10m) and maintain his high salary & perks.

[henryatkin] 18/2/2014 09:02

As investors, the important thing here is that we have everything to gain and nothing to lose. Its not as if the share price has shot up on a takeover offer that could fail. For the reverse takeover to succeed the predator company has to buy a majority of HGR8 shares so much depends on the major shareholders. As the CEO Dustin Dryden holds over 42% of total stock it will be he who decides the outcome. ACS directors have to find the cheapest way to get him on board with personal inducements rather than an overkill offer to all shareholders. If they get Dryden on board they only have to find another 8% of shareholder to agree so for that reason I can't see us getting much of a premium. Under the circumstances I think they would get away with 10-15% on the share price but more likely an offer of a less transparent cash & shares deal in the new company.

[geoff21] 18/2/2014 09:00

Pasty, I myself privately own a small company and I am always amazed at how well my accountant is able to reduce the tax liability by using the financial tools at their disposal thereby the margins look terrible to the outside world, but being privately owned it doesn't matter as there are no shareholders to keep happy, just the tax man to avoid.

But, if the margins are terrible HGR8 management must be planning to implement their template for success on ACS, which is where the business case for reverse takeover and significant returns will be generated, otherwise why do it?

[pastybap] 17/2/2014 23:28

Agree that the ACS margin is terrible. Either there are significant differences in their respective business models, ACS management is incompetent, or being a prvate company there is some trick in the reporting to keep tax liabilities down. I too will probably sell if this takeover goes ahead as I don't like uncertainty.

[gary38] 17/2/2014 15:04

Thanks Adam

[adamb1978] 17/2/2014 10:07

Gary - I cant see this leading to a 100% jump in the share price! Best bet is that we get a special dividend out of it to compensate for not being bought or improved share of the cake

[pastybap] 16/2/2014 23:38

Oh dear Henryatkin, schoolboy error!

[rossco] 16/2/2014 22:54

Hello henryathin

Regarding your comment about the Auditors Report you have ignored the critical sentence at the bottom of page 5 i.e. The auditors 'have nothing to report......,

Since ACS is a private company it is not required to provide any more information about Directors Remuneration than is the annual report.

rossco

[gary38] 16/2/2014 17:46

I hope this will lead to over a 100 % jump in the share price.

[henryatkin] 15/2/2014 08:23

The Auditors Report:... adequate accounts records have not been kept by the parent company or return adequate for our audit. The parent company financial statements are not in agreement with the accounting records and returns; or certain disclosures remuneration specified by law; or we have not received all the information and explanations we required for our audit.

Not one Directors remuneration is reported - just the highest individual payment.

[henryatkin] 14/2/2014 16:05

Sorry for being cynical but I see this reverse takeover as ACS getting a cheap listing unless they buy us at a decent premium to the current share price and I'm not holding my breath on that one. Their business model is not one I'd want to invest in as in their 2012 accounts they highlight the risks:
"Given the ad-hoc nature of the air charter market, forward visibility is limited as our clients book charter flights on relatively short notice. Working capital requirements can fluctuate significantly due to variations in client and supplier payment terms from one period to the next......."

So, I don't know about you but if I saw that in a company that was trying to float on the LSE I would give it a wide birth. Their problem could well be a starvation of cash in lean periods which is why I can see why they would like to have HGR8 to help smooth cash flow and give access to future stock placings if required. As they rely on global "events" for most of their business from governments, charities and the UN I see as a bit of an iffy business. They charter for things like relocation flights from Japanese tsumani, war torn countries like Egypt, Tunisia and Libya. They charter for carrying aid into famine area and relocation in emergency situations. None of these events can be predicted, which makes it a very unattractive business to invest in for me but DYOR here - 2012 annual report:
hxxp://www.aircharterservice.com/themes/frontend/uploads/files/ACS%20Group%20plc%20Jan%202012.pdf