Hayward Tyl Share Discussion Threads

[pavey ark] 03/4/2017 14:49

RR good point but without going back over AVG's figures the difference is that HAYT already has a high margin business already set up and the earnings to go with it.
AVG on the other hand needs a big deal like this.
I held AVG for a short while but it was a bit of a short term no brainier, buy at 184p and sell the lot back to the company for 200p.
I was not tempted to hold AVG as it looked that they were a company searching for the next deal but obviously all AVG shareholders are wetting their pants at the prospects of getting an excellent company like HAYT especially as they dream of getting it as cheap as 50p a share.
Interesting that these same people were rubbishing HAYT when the price was under 40p.

I return again to my (unanswered/ignored?) point that the company has set an internal level of 2 times EBITDA as the maximum level of debt that they are comfortable with.
With an EBITDA of £8m realistically achievable next year and their proven ability to turn EBITDA into cash it is obvious that within a year the £2.4m short term debt would be paid off and the remaining debt would fall below their own self imposed 2 times EBITDA limit.
I would suggest that this is the reason that their bank is willing to continually roll back the repayment date and why the company are looking well beyond simply dealing with this short term cash flow shortfall.
I don't believe that HAYT is in a fundamentally weak position regarding AVG and I suspect that the only reason the talks have gone beyond the initial contact is that something akin to a merger rather than a takeover is on the cards.

[grahamwales] 03/4/2017 13:25

Well private investors selling has allowed some larger investors in, will they be adding I wonder.

[rogerrail] 03/4/2017 10:03

coincidental synchronisity in the numbers?

HAYT
Mkt Cap £27m,
Debt £18m
EV £45m

AVG
Mkt Cap £45m
Cash £27m
EV £18m

All share merger would seem like a marriage made in heaven for HAYT shareholders

1. Debt written off, no need for placing or rights issue, or costly credit facilities so two fingers at the banks, .
2. HAYT by far the largest operational unit will essentially be the core of the new company
3. New CEO&CFO with a lot more credibility with the city than ELB though on past history of AVG he will no doubt stay on as MD of HAYT
4. Company stays British owned and will have capital to grow.
5. Some synergy with Metalcraft business units which may result in increased revenue for both sides of the business.

[dangersimpson2] 03/4/2017 09:50

I doubt there is any significant short interest here. It doesn't appear in any FCA filings and is unborrowable on IG which is the biggest spreadbet platform. That's not to say that it is impossible for people to be short just that it is unlikely to be significant given the size and liquidity constraints of the company. After all this is not the type of share that people usually short = liquid, high rating, red flags like highly adjusted accounts & promotional management.

[Also closing a short involves buying the equity but doesn't make someone long just neutral.]

Applying Occam's razor means that by far the most likely explanation is that holders of the equity have been sufficiently worried by the recent announcements of the company to sell at ever decreasing prices. They may well have been wrong to sell but I can also see why a company breaching banking covenants would cause people to sell the equity at any price, particularly since bank negotiations have taken some time. Some people just won't take that risk at any price.

Regardless of how the company has built up the debt it is a major mistake of the management to put itself in the position of breaching banking covenants. Rightly or wrongly it calls into question their competence at running the rest of the business.

On balance of probabilities it would seem that those willing to take the risk of holding the equity will do well. Particularly now the company is in play since that gives the banks another route to security which is fundamentally what they want not for the comapny to succeed. But it is clear that those returns (if they materialise) are for bearing a risk that others are not willing to bear.

[pavey ark] 03/4/2017 08:00

"I'll look forward to sharing some witty banter with you at the next HAYT/AVG AGM."
Judging by the caliber of your last post I thing you would certainly get more from this meeting than I ever would.

[grahamwales] 02/4/2017 21:53

Shorting happens on most shares, majority of posters don't admit to it as they will be long once they close. All to do with credibility of their posts.

[cerrito] 02/4/2017 20:45

Alot of talk on shorters.
Where do people get information on shares borrowed in such a small company?
Do people have hard evidence of shorters or just speculation?.
Almost 60% of the shares are held by people with 3%+;the total marcap is even after Friday's rise £27m odd;not sure who in this environment would want to lend out their shares.

[pavey ark] 02/4/2017 15:34

Certainly not for the first time I will say, as has the company, that it is not a matter of rearranging the small short term debt but rather getting funding organised for the future, at least three years out.

I have repeated this but some seem unable to understand it.
There is also the rather bizzare notion that anyone here should be thinking on such a vast , almost unimaginable, timescale as three whole years.

I will make a sizeable sum of cash from this company either way thanks mainly to the so called investors selling it down but I've taken the view that I want this company to prosper independently and to continue to do what it has been doing for over 200 years.
Rather strange that the only reason HAYT is is a slight bit of cash flow trouble is because it has invested heavily in the FUTURE.
Hasn't lack of investment been the charge set against British companies in the past ?

[cockerhoop] 02/4/2017 11:36

Grahamwales,

As Rhomboid has suggested an all share deal would allow current HAYT holders to benefit from the improved company prospects under AVG control with AVG cash being used to bolster the balance sheet.

In that scenario the price Harwood or any other shareholder paid is not so relevant.

I also hold AVG so perhaps somewhat biased.

[grahamwales] 02/4/2017 11:09

That's why I asked what price they paid for their shares, would they accept 50p per share.

Current price doesn't reflect the company's worth which had been shorted.

Will take a week to settle then they will have to base their valuation on market value plus what additional benefits they see in taking HAYT on.

[rhomboid] 02/4/2017 09:41

Harwood would likely take AVG paper in a deal, or maybe a convertible will be part of the transaction. Either way they'd keep exposure to the upside and are very probably Inside in terms of the Takeover code

[rhomboid] 02/4/2017 09:16

Good Morning Pavey
If the debt issue is so trivial why has it dragged on so long to such damaging effect on shareholders wealth?
My guess is either AVG will prevail at say 50p a share or another buyer will emerge and pay a premium to acquire what is a very attractive business in need of cash and competence at the helm.
I'm holding a lot of AVG stock so I'm hoping they prevail, this great business & its employees deserve a more certain future than staggering from month to month with no firm financial footing.
I'm pretty sure HAYT shareholders will do ok but not sure enough to be one myself.

[grahamwales] 02/4/2017 09:09

Harwood Capital.

I notice they paid 90p in the last placing, holding 16% of the shares I guess they will have quite a big influence in the vote if a takeover offer comes in. Anyone have an idea on what their average price might be.

[pavey ark] 02/4/2017 08:15

Having researched this company in more detail than some I am aware of the fact that the company have internal aims/ guidance whereby they can cope with (tolerate?) A debt level of two times EBITDA and they aim to have an EBITDA to cash conversion rate of over 85%.

Over the past two years the EBITDA to debt ratio has been c.1.2 and cash converting has been over 85%

I'll type the next bit slowly, with an EBITDA returning to even historical levels ,which is surely reasonable, with cash being generated it is easy to see ratios and debt levels returning to levels that the company are comfortable with.
Given the very recent and large investments made by this company how many people consider a 15% (temporary ?)increase in short term debt to be anything other than a blip ?

Regarding the recent approach from AVG: my gut feeling is that this will end in fairly short order with a substantial gulf between what the company is worth and the amount AVG is prepared to pay.
I suspect this will be the best longterm outcome for HAYT shareholders.

[grahamwales] 01/4/2017 21:19

Another thing to consider is further orders could be delivered during April any additional contracts would add to the already high order book.

[grahamwales] 01/4/2017 20:47

What do you think of a possible merger?

I'm sure AVG are fully aware of HAYT customer base and the potential to tap into contacts and working relationships they have with Siemens via Peter Brotherhood and FMC who contributed to the new extension.

There is more than just the value of the business at stake here.

[steve3sandal] 01/4/2017 20:40

Enjoying the debate and having grabbed this particular falling knife on 24 Mar, post 1406, nicely ahead on the AVG approach. I didn't see that outcome as most likely, and holding AVG know they are not daft enough to overpay. Marriage value for sure...but 60p for the equity max.
Market sees HAYT as having a cashflow issue. EBITDA is not an immediately relevant currency if you can't meet bills as they fall due (they can't, hence the RBS deferrals). I see the bank as a secured bond holder and it is looking after its own position. The equity ranks last and was valued cheaply as RBS is calling the shots, perhaps reluctantly, but they have a big say here. The potential AVG solution is the first sign of a solution. I doubt HAYT have an independent future whatever they can project for 2017-18.
Please don't stop posting just because we disagree on aspects.

[grahamwales] 01/4/2017 20:25

From what I can see reading some of the negative posts here they are stuck with shorts open lol.

Well they better hurry up and close via I'll give it two weeks before an offer is on the table in excess of the current share price.

No matter how they try and taint what's happening here circumstances have changed for the better.

Good luck holders bad luck shorters.

Burn baby burn.

[pavey ark] 01/4/2017 18:15

Lignum, the situation in H1 was due to the bedding in of the acquisition and new manufacturing facility the H2 EBITDA will be c. £4.5m ( hardly "historic") .
"Cash to meet the payroll" give me a break.

So it goes on here !!

[pavey ark] 01/4/2017 17:51

I take it that you are not seriously suggesting that I've not gone over the results ?

Now at least we can look at the said results where the year on year debt has increased by under £8m in spite of the company spending £15m in their centre of excellence.

So the company has acquired a new company for £9.5m which extends its product range,has spent £15m extending it's manufacturing capacity and has enlarged it's order book but you and others on here can only see an increase in debt.

Given all these changes and the ambitions of company it is entirely sensible that they attempt to reorganise their finances but it doesn't help that people are prepared to mark them down.
What you appear to be saying is that you are concerned over £18.3m debt no matter how it has been arrived at, the benefits to the company nor the potential for increased profit and profitability.

Well there we have it , no support , no long term view and most importantly no idea of what is required for this and other companies to prosper.

[lignum] 01/4/2017 17:39

Pavey - as Pug says we don't know what the debt situation is. If we don't know then customers won't know. If they don't know they will defer orders and revenue projections given to the banks will not be met, undermining further the bank's confidence in management. It is not about 2.4m but about putting in place an appropriate debt / equity structure. Management have failed to do this and probably have nowhere to go other than accept a buyer. Historic ebitda is meaningless if you don't have the cash to meet the payroll. That's just the way it is.

[pugugly] 01/4/2017 16:57

PA: Net debt is much higher - The £2.3 odd million is only the tip of the iceberg (check my previous posts) Net debt at the end of 2016 was in the region of £18.3 million - A very different matter so EV is about £45 million at closing price on Friday. DEBT £18.3 MILLION -- So to answer your question NO.NO NO. Please read the last accounts.

[pavey ark] 01/4/2017 16:04

My question has not been answered.
Is this about £2.4m ? Yes/no ?

The £2.4m is not difficult to negotiate it is the long term funding for the next three years that they are negotiating not a paltry sum like £2.4m over a year or so.

foggy outlook ? what is that supposed to mean ??
floundering ?

Is this supposed to justify a market cap of £20m which is where this share was a few days ago with comments like "foggy" and "floundering".

AVG would be bad news but I certainly don't think they'll get away with a lowball bid.

Perhaps if UK PIs investors and the city of London looked further than the very short term then this country would be in better shape.

If anyone else would like to have a go perhaps they could read my previous post and answer this simple question "is this about a short term debt of £2.4m ?"

We have had the utterly ridiculous suggestion that there would be a massive rights issue and the poor PI's wouldn't be allowed to participate and you would all be diluted out of sight.(just like the shares issued at 90p when all those institutions got to fill their boots....lucky them !!)
All for £2.4m !!!
I have a word to describe this theory and it rhymes with sight !!