Interserve Share Discussion Threads

[dandanactionman] 23/3/2018 20:22

Does anybody know if it is in the paper edition or just online that investors chronicle have article?

[da vinci1] 23/3/2018 19:48

"appears that Investors chronicle are negative". Investors Chronicle screwed up big time on Carillion TIP OF THE YEAR so it is not surprising they are Non-Committal on IRV. Their stance will evolve in time IMV at least to a HOLD tip initially. There are now FOUR big Brokers Houses advocating a STRONG BUY on INTERSERVE. I anticipate that number to increase shortly. With a damaged reputation on Outsourcers Tips its more a case of damage limitation now with IC. That,s my take on it for what it,s worth! What do other Holders of IRV think?

[eodfire] 23/3/2018 19:19

Agree. Well written post.

[southernman] 23/3/2018 19:07

aendjo ..

Thanks. Another thoughtful and balanced post.

[aendjo] 23/3/2018 18:50

I think DaVinci’s prospect is not unrealistic, although even the most positive of investors will have to admit that there remains a degree of uncertainty, primarily regarding margins and cost of debt going forward. My assessment is that if the targets stated in January’s update are even partially met, and if assets disposal can reduce debt by 100-150m (i.e below 500m net debt) - figures I consider very reasonable, than the company is massively undervalued. My assessment is near the top end of brokers target prices. Interserve seems to be on its way to survive a sector wide crises, with its main competitors having succumbed or sold slices of their market for a pittance (Carillion and Mitie). The crisis at Interserve was precipitated by the crisis in Qatar (which has largely resolved, in fact there’s going to be a big uptick in work for British-Saudis collaborations), the EfW crisis (which should come to a close imminently and within provisions, or so we are being told), the cost of contract mobilization for the apprenticeship schemes (we were being told this was the reason why profit would be weighed towards the second half, although we are not expecting that any longer). All I’m saying is, we seem to be coming to the end of a very long storm for this massive company. We have feared he boat could sink, or that it could be hijacked by vultures. It hasn’t sunk, it wasn’t hijacked. Of course - of course - of course, all of the above aren’t certainties - if they were, the company would not be trading at a PE of 2, it would trade at 15. I’m not ramping, I’m sharing my opinion that having looked at the sector in some detail this might be an opportunity to jump on Bubba Gump’s boat at a steep discount. It’s still raining, but I sense the storm is almost over. It’s giing to be hard work but I think Debbie and her crew will be retrieving heavy nets. Disclaimer: I have a long position here.

[dandanactionman] 23/3/2018 18:41

All the following imho dyorAppears that investors chronicle are negative.

[da vinci1] 23/3/2018 17:56

Really encouraged that share price has risen and maintained a c50% increase this week on the strength of a very positive refinancing deal (agreed in principle). Most holders I think are delighted that it is far less punitive than some of the alternative outcomes that was posited by divers scaremongers! Once ratification of the deal is secured, allowing institutional investors to pile in, the share price will rapidly advance to a realistic level of approx. £2.50-£3.

[southernman] 23/3/2018 16:04

dex ..
"It makes no difference what the share price is at the point where the warrants are exercised. They will pay 10p each for them regardless"
Well presumably not if market share price is, say, 5p each!

"And they then only benefit from that IF THE COMPANY SURVIVES"
That is irrelevant as regards them selling on the warrant shares

"Maybe it would help if we all declared our positions so we can see if the bias of the comments is skewed"
Declared mine weeks ago. On sidelines, but family members in IS and elsewhere in this industry. May buy at some stage

[ih_127877] 23/3/2018 15:55

Want to make some easy money??? SHORT DBX at 30.87, easy one!

[cc2014] 23/3/2018 15:38

They can of course short right now to close their warrants against. Although borrowing all those shares won't be possible and there's the risk they get force closed.

Goldman's was it appeared to be lending 5% of the share capital. One wonders who to.

And of course the short could have been placed over a month ago whilst the negotiations over debt were taking place.

All imho - I have no expertise at the coal face in these matters and don't know if this sort of stuff really happens.

[fenners66] 23/3/2018 15:12

Will there be a lock in for the warrants?
Imagine they agree the financing and sell the warrants the next day making say £29m ....
Market gets wind they have already bailed on the shares....

Still £29m is not much compared to the £834m debt ....

[southernman] 23/3/2018 14:49

dex ..
"And let's not lose sight of the fact that they are warrants (options) and may not be taken up. Although that is unlikely - I mean, why wouldn't they buy £1 coins for 10p each - so we should assume that they will. And they then only benefit from that IF THE COMPANY SURVIVES"

Don't think it's as blindingly obvious as you say, even WITH your CAPITALS:
- agree £1 coins for 10p makes sense, but we don't know what the shares will stand at when warrants exercised. Maybe £1, maybe more, maybe less
- warrant holders' main risk is likely their debt, not their 10p shares. I assume they could resell their 10p shares immediately on the market to offset some of that debt exposure

[fenners66] 23/3/2018 14:43

Sure they exercise the warrants but apart from the measly cash paid, the debt is still there.

[eodfire] 23/3/2018 13:47

Some good points dex. Thanks for the post.

[dexdringle] 23/3/2018 13:33

"JakNife 23 Mar '18 - 08:01 - 8695 of 8707

Except dexdringle, your theoretical alternative transaction doesn't result in more shares in issue.

Example: There are 100 shares in issue. We want to give a new party 20%. So the company issues them with 25 new shares.

25% of the number of shares that you had. 20% of the enlarged share capital. Both numbers are right provided that the correct words are added after them."

Ehhhhh??? Well you COULD say that the new shares issued are equal to 25% of the previous number of shares. And that is true. But the net result is that those new shares represent 20% of the company post issue. The only percentage that matters is the percentage given away. Which is 20%.

Some on here are 'suggesting' that 25% has been given away which simply isn't true. They seem to be the same people who are bearish about the company. Funny that. Almost like they are trying to muddy the waters and make it LOOK like 25% of the company has been given away. Unless they really are special needs and genuinely don't understand the maths. Maybe there is a correlation there ? Are all bears thick ? Just asking....

RNS.........additionally, as part of the proposed deal terms, the company anticipates that it will issue warrants to the providers of the new cash and bonding facilities to buy shares at 10 pence per share (the nominal price of each share). If exercised, this would provide the warrant holders with an interest of up to 20% of the post-issue share capital.

It is quite clear. There is no ambiguity. No room for 'interpretation'.

And let's not lose sight of the fact that they are warrants (options) and may not be taken up. Although that is unlikely - I mean, why wouldn't they buy £1 coins for 10p each - so we should assume that they will. And they then only benefit from that IF THE COMPANY SURVIVES.

[aendjo] 23/3/2018 13:10

It’s not that complex, though. Looking forward to results.

[scantrader] 23/3/2018 12:03

I wish Waseem Shakoor was chipping in some thoughts here too - he's
top notch in these complex bond situations.

[eodfire] 23/3/2018 12:02

In your opinion. I'll make my own mind up thanks.

[scantrader] 23/3/2018 11:59

Good to see JakNife contributing on this board - for those not familiar with him he's very well informed and trustworthy.

[aendjo] 23/3/2018 10:41

I’m buying more at this price point.

[eodfire] 23/3/2018 09:07

Will remain volatile for a while. New buyers coming in / profit takers / fresh shorts opening / shorts being closed etc. No share goes up in a straight line. As long as we see higher highs and higher lows I will be happy. Imo this is what we will now see. Good luck holders.

[apfindley] 23/3/2018 08:58

Cfc1 getting angry with your 100 shares. Little man syndrome. Dont lose all your pocket money here whilst the price drops again.

[dexdringle] 23/3/2018 08:30

Yes. It will be a 20% dilution (ignoring the small amount the lenders will have to pay to exercise the OPTION)

We have had to 'give away' 20% in exchange for support (money). This is exactly what happens on the TV show Dragons Den...

Is very good news for existing holders. We live to fight another day and Debbie gets chance to be a hero if her turnaround succeeds.

[aendjo] 23/3/2018 08:15

Moot point, but surely that is a dilution of 20%. Clearly, post dilution the new equity holders will own 1 share for every 4 shares held by the old equity holders. So they own 20% of the company (which yes is 25% of what old equity holders hold, not that it means much). But I used to own 5/5 of my shares, post dilution I will own 4/5 of my shares (or % equivalent) so I’ve been diluted by 1/5, or 20% dilution.