Interserve Share Discussion Threads

[windrushg] 05/6/2018 11:24

What utter nonsense! This already 90% below a crazy low price!

[eodfire] 05/6/2018 11:14

Ok, good luck with your decisions.

[cc2014] 05/6/2018 11:07

No, I'm not buying in Eodfire. Not with a rights issue on the horizon if things go well for IRV.

I'm looking to short it but waiting for the price to rise nearer a quid or 120p. I am still of a mindset that IRV has any number of problems to overcome.


Or put another way. I've found the only way to make money out of recovery stories is to find shares that are absolutely crazily undervalued and then buy at 25% lower than what I think is a crazy low price. Even 25% usually proves to be too high. IRV definitely doesn't fit this criteria for me.

There's also the time lapse affect of no dividend income. If I can get a 5% return on LLOY, or even 6-8% on other FTSE 250 stocks, then there's the opportunity cost of buying IRV.

[fenners66] 05/6/2018 11:02

cerrito - even that does not mean they make a profit on the deal.
Cash though is a must

[cerrito] 05/6/2018 10:49

One assumes given the buyer a cash sale and I hope my assumption that gross refers just to legals and estate agent commissions is correct.

[aendjo] 05/6/2018 10:20

Interserve’s initial investment was circa 10m in 2013 and there were considerable costs related to construction of underground structures. Tiger was the landowner so I would imagine a slice of the 49m gross figure is going to go their way. Either way, another breath of oxygen for the company - cash in the coffers to help reduce that debt pile. A good day today.

[eodfire] 05/6/2018 10:12

You buying in cc?

[cc2014] 05/6/2018 10:08

They were talking £30m for it 6 months ago so this is a great deal for IRV.

Gives them a bit more time and breathing space of the rest of the disposal programme.

[fenners66] 05/6/2018 09:54

Is that at a profit ?
It says gross sale.

[unclejr] 05/6/2018 09:09

Appears Haymarket ended up selling for 49.1M (hxxps://www.insider.co.uk/news/haymarket-edinburgh-mg-real-estate-12648060). This is well above the 40M guidance given at the AGM which is a fantastic result if confirmed to be accurate. I was concerned the final price could come in below 40M given some of the press reports in late April signalling a price tag of between 30-35 (hxxp://news.costar.co.uk/en/assets/news/2018/April/Four-shortlisted-for-200m-Edinburgh-Haymarket/).

[aendjo] 04/6/2018 10:22

Agree the Simply article is bonkers. The low beta bit in particular made me giggle. I’m relieved about Haymarket, although the details are lacking Toger’s press release seems positive “The successful and highly competitive sales process is testament to EHDL’s vision to develop a challenging site and the completion of the significant and technically advanced groundworks”.

[unclejr] 04/6/2018 09:48

Terms agreed on Haymarket sale
hxxps://sbnn.co.uk/2018/06/04/major-edinburgh-development-site-sold-to-uk-institutional-fund/

[cc2014] 04/6/2018 09:45

Simply Wall St. are barking mad.

"Another thing to keep in mind is that Interserve’s share price is quite stable relative to the rest of the market, as indicated by its low beta." - well if a stock that regularly halves or doubles in a few days is low beta find me a high beta one. !!!

"a more compelling investment thesis would be high growth potential at a cheap price. In the upcoming year, Interserve’s earnings are expected to increase by 94.52%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value."

A doubling of earnings! wow. Would those be earnings or underlying earnings? Doubling of underlying is impossible. Doubling of earnings would be a doubling of those huge losses!

[gregpeck7] 04/6/2018 07:19

195p value

[losses] 04/6/2018 00:12

Is It The Right Time To Buy Interserve Plc (LON:IRV)?https://finance.yahoo.com/news/time-buy-interserve-plc-lon-093417640.html

[da vinci1] 01/6/2018 09:33

@9331 Point well noted. Thanks Jeffian for drawing attention to that issue.

[cc2014] 31/5/2018 19:57

Aendjo - email sent

[jeffian] 31/5/2018 16:46

The banks are exposed. They had to agree to a form of refinancing for fear of upsetting the whole applecart but, as banks do, they've tied IRV to a harsh repayment plan and will be grabbing all available cash back and more to reduce their exposure as soon as possible. For the next few years, IRV are working for the banks, not you. On top of everything else, IRV have committed to reducing the loan by £70m in 2019 and £60m in 2020 and this can only come from disposals. Look at the assumptions behind the Board's plan which are set out in the AR -

"10. Significant de-leveraging event or equity raise achieved within the timeframe of this review."

N.B. "equity raise", da vinci.

[aendjo] 31/5/2018 15:27

@cc, what is your explanation for the covenant of reduction of debt from the current 650m to below 450m GBP in the next two years?

The implication is that the Company, lenders and auditors are forecasting a NET cash generation of at least 100m GBP per year - after interest and costs - which is a lot of money.

Disposals may account for perhaps 50m to 80m (although it might be less than that, leaving 120m to 150m to be covered by NET profits from operations in the next 24 hours.

That works out as NET yearly earnings (after interest and costs) of 60m to 75m GBP... EBITDA would be around twice those figures.

Has everyone gone crazy or do you think those are achievable targets?

[aendjo] 31/5/2018 14:33

excellent analysis cc, thanks.

[eodfire] 31/5/2018 13:28

In the red corner we have Debbie and in the blue corner CC2014. The bell sounds.... Debbie takes the first blow with the weight of her share purchase behind her. But will CC2014 fight back?

[cc2014] 31/5/2018 12:34

The challenge with IRV is understanding three things:

1. How fast can they generate cash to get the bondholders and banks off their back.

2. How much EBITDA can they generate going forward

3. How is the supply chain reacting to to the situation


1. Is relatively easy. Either the company can sell some assets in the not too distant future or the bondholders will force them to. I am not too excited about IRV's progress on this so far. The cash generated by releasing the dollar hedge was an easy win and selling some plant won't be much in the scheme of things and is likely to only serve to increase revenue costs. I see the price they are going to get for Haymarket when this happens appears to be decent in the circumstances but at say £35m leaves them with some way to go to keep the bondholders happy this year. They will have to do something else they will breach the terms of the loan agreements so they need to get a wiggle on.

2. Who knows. We can all make some estimates but IRV don't seem to be announcing winning much work and what they are announcing is not large on an annual basis. They need work to feed the beast else they are going to run into trouble with too much fixed costs.

3. The challenge for me here is that I'm not well connected to a large number of suppliers. I do know the following for sure. There are some companies that will no longer work for them except for cash up front. The basis of this is that IRV's finances aren't robust and by any usual measure they would have breached normal covenant arrangements. In addition credit insurance isn't available.
Further I am told companies will no longer quote work if IRV are on the tender list as IRV are low-balling prices and it's not worth their time and effort putting the quote together.


I would be short but Debbie's bought a few too many shares for my liking. I've seen directors buy shares before to try and inspire confidence in the market but she's bought a few too many imho for that. I'm not so bothered about Coltrane. If they were so brilliant they wouldn't have been buying at 240p. 30% of IRV is going to be worth £34m so it's a rounding to Coltrane.

[aendjo] 31/5/2018 10:15

Perhaps Jeffian. Net debt has peaked at 650-680m in the first half of 2018 (i.e. now) and we are told it will be reduced at the tune of 100m per year over the next two years. Now, I don’t know how they will achieve this, but if they can manage it (all relevant stakeholders seem to believe they will) I think investors will want to jump on the wagon with some urgency. Shorters will want to close with even more urgency. Guys at Coltrane will be laughing. I am not in a rush here. I liked Buffet’s quote on LSE recently: “the stock market is a machine for transferring money from the impatient to the patient”.

[windrushg] 31/5/2018 09:50

My feeling is we are several weeks ahead of the curve. Roll on the AGM!

[jeffian] 31/5/2018 09:12

I'm sure it can be achieved, aendjo, but in what timescale and what happens to the share price/investors in the meantime? You wrote previously of the benefits of being "ahead of the curve". My own feeling is that you may be several years ahead of the curve!