Hss Hire Share Discussion Threads

[deanroberthunt] 29/8/2015 15:52

Losses & Covenants

Losses per share are lower year on year, but savvy investors surely have noticed that its net debt was £197.2m at the end of June, down £109.2m from £306.4m one year earlier.

“The financial covenant in place on the group’s revolving credit facility at 27 June 2015 is a minimum Ebitda of £35m on a rolling twelve month basis,” HSS says.

Bank covenants set how much debt a borrower can keep on its books depending on certain financial metrics — Ebitda, in this instance. So, assuming annualised 2015 Ebitda of £60m — which could be lower — its implied net leverage would be above 3x.

HSS should be safe on this basis, but I really need to check its next quarter’s performance before committing to it. I also need more clarity about the exit strategy of its owner, Exponent.

Of course, this is a blow for the arrangers of its IPO. HSS was listed on the stock market in early 2015, when its shares were priced at the low end of the 210p-262p guidance. Then, its implied market cap was £325m. Now, its equity value is £123m.

[karmastuartra] 29/8/2015 13:14

Sorry in that case I wasn't listening.

[deanroberthunt] 29/8/2015 13:12

in.

seems to be doing a debenhams

[karmastuartra] 29/8/2015 13:09

Are you in or just trolling?

[deanroberthunt] 29/8/2015 12:56

you obviously haven't been listening.........

[karmastuartra] 29/8/2015 12:33

Wtf,deanhunt constantly posting but no position?

[deanroberthunt] 29/8/2015 12:11

CEO needs to go imho, unless they're just all in this together as a scam., which wouldn't come as surprise as it's pretty much common place now.

[my retirement fund] 29/8/2015 11:40

As I say, I've looked into the covenants and they are due in less than 4 years from now, that and appears to be £136M to find and refinance!

EBITDA is a problem as despite the last 2 years housing boom its barley grown from 2012-13 when the company reported its then EBITDA right after the purchase of UK platforms and some other small portable power generation outfit.

I dont think I would want to be holding the shares, but the senior 6.75% bonds look like they are turning and could offer a bargain at some stage in the next few years. Exponent still own 50% of HSS and will certainly ensure along with the bondholders that everyone gets paid imo.

As for the shares, looks total madness to be wanting them but all imo

[my retirement fund] 29/8/2015 11:10

At some point they are going to have to write down the goodwill to a sensible level. Since the change in amortization rules in accounting some years ago which enabled companies to bury poor acquisition over time, the usual divide and amortize tricks have long gone.

Goodwill has to be tested annually to see if its value is still accurate. I think it is patently clear that simply is not the case here. Sooner or later a goodwill impairment charge now looks inevitable here.

When that happens the covenants will be broken. The company lives in hope before that happens but does have options, find more generous loans before this happens, produce enough profit before this happens, or seek further capital from shareholders.

The later option would seem the most likely option however given the size of the impairments that may not be a possible option, which will leave creditors in control.

What normally happens in that scenario is creditors seek to recover their entire loans or sometimes reduce and rearrange their loans by selling the what they can of the business to the highest bidder.

As I said earlier, I suspect when that happens that will be the management who do that and shareholders will be left with nothing as the company would have simultaneously entered administration then been re-registered as a private company to continue seamlessly as a going concern.

[dlku] 29/8/2015 09:23

debt for equity swap

[deanroberthunt] 29/8/2015 09:05

ONJohn

No, covenants require £35m of ebitda on a 12 month basis, they did £28m in H1....

[karmastuartra] 29/8/2015 05:59

Grabbing some more Tuesday ,easy ten percent markup to be made here.

[hybrasil] 29/8/2015 05:27

145000 shares at 79.5. What's that trade about

[onjohn] 29/8/2015 00:31

is there a real risk of breaching bank covenants?

[paulypilot] 28/8/2015 22:50

I bought some Lavendon (LVD) today - its results were good, and the PER of 9 looks far cheaper than HSS, considering it has a strong Bal Sheet, and decent divi yield. HSS looks cheap if you ignore the debt, but adjust for that, and it's not cheap at all.

Why buy into basket cases like HSS & SDY, when there is a better & cheaper alternative in companies like LVD or VP.? They seem much better managed businesses too.

Trouble is, people "anchor" to the old share price, and think that just because something like HSS has dropped two thirds, that it must be cheap. Actually, it was just far too expensive originally, and now that its performance has tanked, everyone can see that it was dressed up for the float, in order to maximise the price that new shareholders paid to allow the PE guys to realise some of their gains.

Regards, Paul. (no position in HSS, VP., or SDY, long of LVD)

[tsmith2] 28/8/2015 14:13

May well be opportune time to buy, seems to have stabilised

[seball] 28/8/2015 13:04

I have also bought in here over last couple of days. Market had priced this to go bust. Which clearly is not going to happen IMO. Improved trading along with cost savings will see this come good. Patient holders buying in at this price will be well rewarded imo. Good luck.

[hybrasil] 28/8/2015 12:55

Bought today. Five year view

[deanroberthunt] 28/8/2015 11:20

412069

If there are no Director or PDMR buys of significance, considering it's fallen from 210p IP to 68p, then post 179 is very near the truth, if not bob on...

fwiw I don't expect any.....

[412069] 28/8/2015 11:00

Look back to my posts two months since, shorts will have a grip on this now that will take an age to throw off if at all.
One of the bigger players will take these out at under 50p
Or a certain big French hire company.

[deanroberthunt] 28/8/2015 10:48

they are now...cesspits

[jazza] 28/8/2015 10:45

Grow to 500 branches, trash the share price and get taken private (for a song) again?

This isn't what capital markets are for..