Hartstone Share Discussion Threads

[day_dreamer] 18/2/2004 10:45

Morning :

What a rapid fall but then when the momentum runs out after
such a sharp price caused by a few pumpers then the fall can
equally be sharp.
Price needs to settle, cannot see it going back to 1.2p however.
Nothing changes for me...all or nothing.

Gravy

[nissi beach] 18/2/2004 10:19

i have no removed the reference to OPS in that was in this post because i do not want to be know as a ramper. I apologise to anyone who thought it was

[dell314] 18/2/2004 10:08

tanners - some interesting points, however I think your assessment of the pref situation is very wide of the mark.

A debt for equity swap to repay the HSTA shares of £10 mil would not affect the balance sheet as it would merely transfer the loan equity into a long term creditor and the ord cap equity (which is a trifle slim!) would remain the same.
No dilution for ord share holders at all in other words.

Exchanging debt for equity means just that. New shares would have to be issued in exchange for the debt. Creating £10mln of new equity would dilute existing holders very significantly.

Your alternative of issuing a new convertible is possible but seems unlikely, as the company is now in a much worse financial situation than when the original was issued. Terms would have to be very favourable to encourage anyone to take the risk.
I can't see a bank loan as a likely alternative, as the US facilities have been a major problem for this company and I can't see UK banks being any less risk adverse.

If I was buying HST, I would choose the prefs, as they are likely to get the divi and repayment, or a significant portion of equity(if the company can't repay), unless the company folds, in which case they are higher in the pecking order than equity holders anyhow, to share what's left.

Rgds
dell
all IMO & DYOR

[nod] 18/2/2004 08:58

tanners - agree, I bought in to hsta in October when Dowling bought as this was a statement that he thought hst would, more likely than not, survive.

Dell - I stand corrected, prefs are £10m on redemption and 800k pa. I cut-and-pasted from another source - which appears to have been wrong.

[day_dreamer] 17/2/2004 20:03

What a top quality and honest post there tanners.

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[tanners] 17/2/2004 19:37

Dell314.....some interesting points.

I had a long look at the fundamentals on several occasions and would say this:

A debt for equity swap to repay the HSTA shares of £10 mil would not affect the balance sheet as it would merely transfer the loan equity into a long term creditor and the ord cap equity (which is a trifle slim!) would remain the same.

No dilution for ord share holders at all in other words.

A fair point as to how they intend to repay it.......It could be that they re issue more of the same, or take out a loan (if they can get one)- I did consider this long and hard but was ultimately persuaded by Dowlings significant purchase.

The renewed banking facilities caught my eye as well, particularly the fact that $10 mil became repayable in 6 months.

Now given that the net debt was only £6.2 mill (say $10.5mill) in Sept, it is inconceivable that the whole amount was req'd for this purpose.......I also could not see why they would agree to repay $10 mill 6 months later if their cash flow forecasts, and remember they had signed the Bennett deal the same day, would not support it.

I'm only guessing here, but I can only imagine they req'd a hefty boost to working capital for stock for the Bennett deal......there is mention in the interims of debtors being increased for this very purpose and Bennett would be reducing this liability by stage payments.

As with any retailer (esp a small one), the balance sheet can be misleading because the stock figure a) has to be taken on trust and b) wouldn't nec. fetch anywhere near its cost if a firesale thru liquidation forced their hand.

Given this point I can't see any ulterior motive to Dowlings pref share purchase as a way of ripping off the ord. cap holders as you imply.

The possibility that Henk Van Heyst is a 'friendly' stakebuilder should not be ruled out, and could possibly lead to an MBO .........but I would think unlikely in a detrimental way given Hambro's exposure and seat on the Board.

All I can say is , yes v high risk, still plenty of unknowns, but I've taken a gamble that Dowling, who is in pole position to evaluate the situation, would not have invested another £100,000 in the pref. shares a few weeks after the Bennett deal if:

a) He thought this deal was forced on the Co and had sold it short
b) the Co would be unable to meet its Mar 04 $10 mill repayment
c) the Co. would be unable to repay/negotiate the pref shares due in 2005.

Apologies for the long post, but there is alot to consider!

[day_dreamer] 17/2/2004 18:33

Another one for the filter..."david beckhame"

What am i supposed to see that is not already available
on advfn info wise ?

What a day, silence from so many different posters that plagued
this thread yesterday.....as i've warned on the far3 thread you
have to be very wary of the posters sue helen and optimist, in
fact i urge you to filter them for your own benefit.
Even ct did not post much today, did you sell out then ct.

First Evo and now Merrills taking a lot of stock, not that much in it
compared with yesterday but a tiny drop in price is a result looking
at the sells today or the 1 day pumpers getting out, so the mm's although
they dropped their quotes slightly were happy to buy a lot of stock
and not move the price.

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[david beckhame] 17/2/2004 15:12

27th January - The Hartstone Group - 1.05p - Say no mooore!

[day_dreamer] 17/2/2004 14:58

dell :

I do have knowledge of the "fundies" as i have spoken several times
to a friend who is in similar expertise of the accounts.
Had the price not rocketed then all would have been calm and no debate
created, i think there's a good chance of survival and have bought in
and by the looks of things everybody else has bailed on the first signs
of strength....that is their choice but i wont be flushed out of this.
Price has doubled now but i stick by the headline..10 bagger or nothing.

MM's taking a lot of stock back with very little movement, a similar
amount of buying yesterday caused a very big rise.

Gravy

[muzzy49] 17/2/2004 13:27

cheap as chips.....just take a luk@buck......(BUC)
Nice little co. decent turnover, small profit to keep it going.
worth a dabble surely. up a tad today. can't really see it falling past 0.5p which could mean it has a fair way to climb. in 6 months the penny shares will be gone imho. jump on board while there is still time. check buck and dyor.

[dell314] 17/2/2004 13:05

day_dreamer - I appreciate that your angle is level2/trade based, possibly with TA, but for a stock like HST, I think you need an appreciation of the fundies.

Without the Bennet deal, it looked like there would be no further US bank facilities.
The new US loan facility halves next month and prefs are due to be redeemed next year.

Large stakeholders aren't necessarily any brighter than the rest of us, although presumably money buys better advisors(I imagine SWO stakeholders aren't feeling very clever right now).

I don't know the exact details of the HST cumulative prefs but prefs are usually non-voting but get the right to vote, when divis aren't paid.
Those with large holdings of HSTA may well have very different plans to those accumulating the equity and there could be a struggle here between equity holders and debt holders..

My comments are simply to balance out the bluesky rampers.

If someone cares to post a thorough analysis of the impact of the Bennet deal on the next results, then I might have more faith that people here know what they are talking about...

Rgds
dell
All IMHO etc.

[jimibt] 17/2/2004 12:38

sitting it out now for a while!!, not sure if there's a wee retracement starting...

[day_dreamer] 17/2/2004 12:32

dell :

I have made no secret that accounts is not my strong suit.
However i do believe Hst does have a future and as i learn
more and more about the company i believe there is more chance
of survival the more i find out, you make it sound like it's
done and dusted...caput...game over....far from it.
I'm sure with a regular royalty income, debt reduction and
more cost cutting they can resolve the issue with the preference
shares this year.
Ask yourself as well why 2 different people have been stakebuilding
hst ords recently as well....

Looks like the pump and dump merchants have all bailed out looking at
the trades, got to be happy with today, a lot of selling/profit taking
and the price is not down.
I have not sold any and do not intend to...

As my title says dell it's a high risk punt, you are either in it or not :-))

Gravy

[dell314] 17/2/2004 10:59

day dreamer - what do you call medium term?
IMO, there is no medium term, unless preference debt can be resolved.

nod - where is your figure for pref debt from, as I understood that they were 8% coupon, so 800k p.a. suggest £10mln debt and also there is c. £10mln non-equity shown on the balance sheet?

Rgds
dell

[day_dreamer] 17/2/2004 10:04

The Bennett deal is in dollars Dell, has to be a bonus for
Hst and give them every chance to make a recovery in the medium term.

I see there's been a little bit of profit taking, walking the dog not
so productive this time but i do not intend to sell this soon.

2 bid 2 offer 1.7-1.9p

Gravy

[dell314] 17/2/2004 09:22

nod - I found it strange that CEO bought prefs, as pref holder's interests could be opposed to shareholders in any negotiations to try and resolve the preference debt problem.

Surely, the Barret deal was mainly to reduce debt enough to allow bank facilities to be renegotiated after regular covenant breaches. Was it really a good deal for HST otherwise?

Rgds
dell

[nod] 17/2/2004 09:14

Dell - I believe it's £7.2m to redeem pref shares. They will probably look to negotiate - perhaps offer ords as part payment.
Accrued divis are £560k p.a. They may look to pay the arrears sooner - which may be why CEO bought more a few months ago.
EA shoe licence deal brought in £8m for inventory/fittings and got rid of a loss making business. Annual minimum income for licence is £2.5m p.a. for 7 years.
The next results will reveal how sound the company is.

[the jaber man] 17/2/2004 09:10

lol well done day dreamer

shes is scum , very despised on all the threads

[day_dreamer] 17/2/2004 09:07

I dont remember no goldigger on ME and that's bolox that
you were never in Hst, why would you go all out with all
these wild price predictions on Hst if you A : didnt know
much about the company and B: didnt buy any shares !!!

Your filtered for good this time.

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[sue helen] 17/2/2004 09:03

dreamer i was goldigger on ME
re hst i was never in? i stated that yesterday? cant you read ?

[the jaber man] 17/2/2004 09:01

day dreamer

Sue never stays in a stock more than a day, she is now in NES

i NEVER NEVER buy anything she is in

[the jaber man] 17/2/2004 09:00

Sue is a rampant liar day dreamer, she will change id now and come on as optimist23

[day_dreamer] 17/2/2004 08:48

Why are you refusing to answer my question Sue Helen !!!

You have stressing on several threads that you know me ?

I have that good feeling that you have already sold out
of Hst :-))

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[sue helen] 17/2/2004 08:46

1 bid 3 offer