Johnston Press Share Discussion Threads

[dazzaa] 09/8/2016 20:52

So eddy AH and the board are smarter than we, I, give them credit for, like the highly intelligent errant child who really in in complete control of events giving a persona of nihilism to gain long term advantage on the same lines pursued by the Deep Blue algorithm yes it's becoming clearer now.

If that is the truth and I believe it and because I said it to myself , we just have to wait, our masters know better.

I doubt if JP will default on any of its obligations it never has even though it has been tortuous, helped along by rights issues, but I believe as you eddy alluded that something will give, not that soon though.

What do the chartists amongst us predict, never believed in them myself but willing to.

[extrader] 09/8/2016 18:11

Hi mrx9000,

What would stop a company such as NewsquestGannett buying up as many JP bonds that it can get its hands on? And then make an offer for the company?

Bonds are no different from shares : if there's a buyer, the price will tend to move up. More so, in fact : share buyers can more easily stomach volatility, bond holders, by definition, are more wedded to sanctity of capital, hence the willingness to accept a lower but supposedly 'safer' 'fixed' return.

Even supposing N/G could snaffle up a chunk of bonds without moving the price too much agst them, that doesn't really help them so long as JPR are meeting their coupon obligations, until 2019, when they have to repay (or refinance) the principal.

However, you're right : Their hand would be greatly strengthened in any default of bond Ts and Cs.

ATB

[mrx9000] 09/8/2016 17:15

Just a few thoughts on the bonds...

What would stop a company such as Newsquest\Gannett buying up as many JP bonds that it can get its hands on? And then make an offer for the company?

I cannot see them buying the bonds in the view to potentiallyly later on down the line trying to see if it can pick up JP assets on the cheap, as they would be sold to the highest bidder and then they may end up paying more and involved in a bidding war, whilst at the sametime delays in buying would mean that they would lose out on the increased revenue and synergies that would happen.

An acquisition by Trinity I would doubt whether it would go through monopolies and mergers, but Newsquest\Gannett would.

Is it possible to see if the bonds are being bought up at present?

[stdyeddy] 09/8/2016 17:06

So what's going on then? Anyone know anything?

[simonparker5] 09/8/2016 15:30

We are blue! First blue day for ages and ages, is this the start of the recovery?
I notice someone picked up 188K at 10.55, must have confidence.

[stdyeddy] 09/8/2016 12:12

It seems incredible doesn't it daz? But, look at the bonds - the spread has narrowed and the bonds now stand at HALF the face value. jpr's bond debt is currently valued at half of the original £200m; right now that's just over £100m without them doing anything! They've wiped £100m off their debt just by telling the market that the business is in bad shape.

The value of the company comprises the debt (total liabilities)and the assets together (recently devalued) and this is expressed in terms of the share price. The worse the businesses prospects, the more the bond debt value goes down and paradoxically, jpr's financial situation becomes better (on paper).

As the business prospects go down and the bonds go down, the current value of the business actually goes UP but the share price currently doesn't reflect it, because the potential for exploiting the debt reduction has not materialised plus the share price should reflect the long-term earnings potential for the business.

This divergence between asset value and share price can't continue. Something is going to give.

[dazzaa] 09/8/2016 08:42

Well I'm just lost, in my mind, how can the company see its price fall and we're talking a PLC, the board read the negative press and still no reaction and yet they were so quick to tell us of the increase in the i readership !

Were we thinking Viagra perhaps? an overdose can be dangerous it can make you stand out from the crowd.

[nick rubens] 09/8/2016 08:37

I was suffering a similar type of fall in the share price back in 2009-2011 until a remarkable recovery came and I broke even from prior huge paper losses.

I couldn't understand why it rose so much at the time except perhaps the debt reduction placing giving renewed optimism, of which I didn't share and haven't since.

This looks doomed to me. However it also did back in 2011 and a miracle came in the form of a huge placing (with strong support). It needs another one, but I'm not sure investors will support it again.

There hasn't been much of dead cat bounces either. The market seems very assertive in the share price decline.

[mrx9000] 09/8/2016 08:30

No RNSs just yet, however a director of a fully listed company is obliged to notify their company of any dealing in its shares within four business days, and the company must pass that information to the market by the end of the following business day.

In the closed period he couldn't buy, so one would assume director buys by the end of this week, particularly when I read between the lines of previous communications.I was looking at the impact that local world had on trinity mirrors results and it was huge and that is something that a company would be aware of. Trinity bought local world for £220m and they were no where near as big as JP, they had about 100 titles.

[stdyeddy] 08/8/2016 22:21

Who is selling? Who is buying? And why oh why didn't I take the blue pill?

Down another penny today. Well by my reckoning, this can only go on for another 10 ten days.

Bets on an RNS tomorrow anyone?

[mrx9000] 07/8/2016 12:54

Interesting thoughts on a deal with the bonds and the same angle as myself that someone may buy it for peanuts. I doubt whether there will be debt for equity swap though. But certainly more positive is old Paul Scott at present... he doesnt see a lot of the synergies that would happen and the increased digital revenue that would happen and the freeing up of the debt interest of £20m, also ebitda and op margins are also starting to flatten out etc, these would be big positives for a company taking it on which is the value that Gannett and Buffett see as well, another point is that local newspapers websites are massively popular and the likes of newsquest and cityam etc are now making good inroads into making a lot more money from, the fact is a local newspaper whether or not it is completely digital or not is the only good source of local news and sport etc, there is nowhere else to read what goes on in your local areas, hence this is attractive to advertisers, readers, promotions, other services etc, which is precisely what Gannett\Newsquest and now Trinity Mirror see going forward, the brands are there and they will always make money, not as much as they did but alas consolidation is happening, what with Trinity and Local World and Gannett acquiring here and there, I like "for what is still a substantial business, generating some cash". It would be generating a lot more cash when took over imo. anyway his article...


interim results for this local newspaper group show some alarming trends in profit & cashflow. As I've been saying for years, the equity here is probably worth nothing.

That said, there is an interesting potential angle on this, which I'm going to do some more work on. With the shares now only 10.5p, the market cap is down to just £11.1m. The interesting thing is that the bonds are dropping value, so buying them back at market price is a good way for JPR to shrink its debt mountain.

It seems to have somehow drastically reduced its pension deficit too.

So whilst it looks moribund, there might be a special situation angle on this, where someone might buy it for peanuts, do a deal with the bondholders (for them to take a deeper haircut), and restructure its operations in some way to create value from some of the newspapers, possibly?

I'm tempted to have a little dabble at this level, as the equity is really just option value now, for control. It might be possible to keep some local papers alive, if they're given away free. After all, that model seems to have worked for London's Evening Standard. People will still read newspapers, if the content is interesting, and if they're given away free. The higher circulation then attracts more ad revenue.

That said, I think most local papers are probably too far gone. The property & jobs advertising is moving online, and classified ads seem to be drying up now. EBITDA might still look quite good for JPR, but give it another 2-3 years with the current declining trends on ads & circulation, and it's probably going to be largely finished.

Still, an £11.1m market cap, for what is still a substantial business, generating some cash (although that reduced a lot in H1 2016), does have a glimmer of interest as a special situation perhaps? It looks to me the type of share that could suddenly do a big, speculative spike up, before then continuing to drift back downwards. I'm tempted to have a little punt on that at 10.5p per share. Dangerous though, hence why only for a smallish amount of money.

With the shares now this low, the chances of doing an equity fundraising are virtually nil. More likely is a debt for equity swap, which would be hugely dilutive for existing shareholders of course. It will be fascinating to see how this one pans out.

[dazzaa] 07/8/2016 12:36

Thanks mrx,

In the Sunday Times business section page 9 is a critique on JPR not a good read.

[mrx9000] 07/8/2016 12:00

Dazzaa: Not sure, but I'm sure it would be worded along the lines of x amount of percent premium to the present share price. If I was to have a stab in the dark a 180% premium to the present 10.5p making 29p.

Not great for long standing shareholders but alas it may make more than one party bid for them.

[dazzaa] 07/8/2016 11:05

Mrx ok your correct, it is possible but just to keep me happy tell me again what could, would be an acceptable first offer?

[mrx9000] 07/8/2016 10:21

I suppose writing down the asset value, will give them a tax break? Also I assume £10m going into pension fund in 2016 as per what the results said would mean going forward they will not need to make such a large payment again.

It would be interesting to know how many shares are available out there for purchase at this level. It presents a level where around £3m would buy 30% of the company and hence be in the automatic position to do a buyout, alas picking up 30% would not be achievable.

So a few snippets from reading between the lines of the report that I can glean are...

- Pension fund payment next year will be a lot less
- Large redundancy payouts maybe be a lot less
- Income received from sales of certain titles will be banked and also going forward the costs associated would be eliminated
- They have not said yet, but I should imagine they will adopt the ad blocking technology across the titles, which will increase revenue.

I should imagine that they will do more massive cost cutting exercise.

Certainly a show of support by directors buying would be very encouraging indeed and with what looks like a definite treeshake on friday to get shares, it may be happening by an order being filled?

I know I have said it time and time again, but any company looking at JP will see that at present they are being strangled somewhat by the near £20m a year in interest payments etc. Integrating JPs business with anothers would to me make perfect sense, it would be immediately earnings enhancing, provide massive synergies and increase its ebitda substantially.

[mattab] 07/8/2016 07:13

Two Brokers on the 4th. Keeping targets prices at 180 and 200 pence.

After the pension news these were at 47 pence. Compared to where we are today.

More news on divestment sales, Directors buys perhaps even A.H. In fact him in particular would send a message to the market. More buying crossing thresholds from Institutions. Numis Broker stating JPR is a buy with a large multiple target price. Something to prove to the market that A.H.'s strategy is working.

A takeover of course with a bid at many multiples of the share price, very common on a bombed out share by PI shareholders lol. Possibly a reality but suspect it would have to be short term and strike soon or on the backburner again. In any event the Institutions seem to be holding firm.

Lowest ever share valuation - about to get lower - surely not. Board do have to display confidence to the market as for a statement de-crying the low share price - it certainly would get attention.

[stdyeddy] 06/8/2016 13:57

It's in the annual report and the interims Extratrader. They bought back £5m last year. The bonds are tradeable - anyone can buy them if they've got enough cash.

[extrader] 06/8/2016 13:50

Hi stdyeddy,

Thanks for your thoughts.

I'm aware of countries that have sneekily bought back their own debt at a discount on the secondary market, but wasn't aware that companies could do - and apparently have done - the same.

I'm surprised that JPR's accountants seem willing to sign off on the 'mark to market' concept, it's awfully close to moral hazard : I'd love to be able to persuade my bank that my financial prospects have deteriorated and so feel I should only pay back 65% of what I owe them....!

Do you know if JPR's auditors have signed off on this ?

ATB

[stdyeddy] 06/8/2016 13:39

Repeating yourself could be a sign of Alzheimers, so yes, you might be mad Matt. It's tempting though, to average down. I'd like to follow your example but unfortunately jpr tends to have a unique bounceless quality, more like a sack of cement than a rubber ball.

Regarding the bonds Extratrader - you are right and I've made this point several times here. The mark-to-market value of the debt gives a false impression of the liabilities. However, the reason why buyers might not prefer the bonds is the obvious risk of default. When the bonds mature, jpr could reach an insurmountable crisis, fold and pay pennies to the bondholders.

Project the earnings decline forward just three years and where will the business be? Will jpr be able to issue a new bond if the revenue prospects are far worse than what we are seeing today? Will a rights issue then be the only avenue for raising cash to pay off the bonds?

Will the major shareholders finally give up at this point and reject a rights issue? Did Tindle take up his rights in the last rights issue? (I've forgotten but I think the answer might be 'no'. Someone please correct me and reference the evidence if this is wrong.) 2019 could be the point where the 'orderly default' described a long time ago by one visionary commentator on jpr, finally turns disorderly and as mali suggests, they switch off the lights.

If the business carries on in its current form, that future scenario looks horrible, because we are not seeing any sign of a turnaround and everyone recognises this as a 'sunset industry' transforming to a fundamentally different low-value digital earnings model which will be unable to support £200m in debt.

So most people posting here are looking and hoping for a resolution which works today - the temporarily discounted value of the bond debt represents an opportunity to clear the debt while the earnings appear high enough to justify a £130m investment (2 or 3 years earnings). And that is the reason why I'm so unhappy that Ashley and his team have not taken even a small bite out of the debt pile when they're getting 3 for 2 (£10m paid for bonds with a face-value of £15m), to demonstrate their determination to work this down over the next two years to maybe £100m, creating a more manageable cash raising project for 2019. Debt reduction was a stated key aim in the last annual report and they've broken this promise.

IS THE i WORTH THE BROKEN PROMISE?
Why has debt reduction been abandoned? Presumably because the i represented an opportunity at £24m which jpr couldn't resist. Now this would make sense if they can demonstrate the earning potential of the i and its impact on the overall group earnings as greater than the comparable effect on the debt. £24m spent on the debt pile now could have wiped out £36m in bond debt plus 5 interest coupons (8.625% annual interest, paid in two installments annually - 2 and 1/2 years left on the bonds) which I make roughly £7.7m in interest by the end of the term (2019). Will the i make more than £20m for jpr in that period? (£20m being the £12m current discount on the bounds plus the interest saved.)

LACK OF COMMUNICATION
Ashley's blithe spin on the 'transformational' effect of the i seems typical of his attitude to communicating with the investment community. I'd like to see hard numbers on what the i is achieving for jpr. Either those numbers aren't good or AH doesn't see it as important to have the shareholder community onside. Presumably the larger shareholders are aware of the wider plan if there is one.

Understandably AH sees the share value as part of the debt pile in terms of the total enterprise value and consequently big moves on the shareprice don't register as a big move on the value of the whole business - the shareprice is unimportant; £12m market cap today (shareholder equity) against £205m in debt. And if the bonds move down, even that's good if there's a plan for buying back bonds in the near future.

We are in the dark and I think it will stay that way. The deals for jpr's future will be done by the major holders and us PIs will simply need to be lucky and in the right place at the right time to make any money here. In the meantime the share price is an irrelevance as said by daz and others. It could be 5p or 15p or 1p depending on whether there are any chumps willing to buy and sell. jpr's board probably couldn't care less.

[mattab] 06/8/2016 12:01

Picked up 10k 's worth late yesterday. So average around 12 pence now. Considering before tree shake the buy price for even a small amount was 11.8 I am happy with that. The top Broker targets are around 20 times current share price reinterated and almost beyond belief. With the assets writedown in the Interims and the divestments only IOM announced and others are at advanced stages it seems quite obvious that JPR would be open for a BID certainly - how overt do they have to be? Surprised there is not speculation in the financial press perhaps over the weekend. Obviously all shareholders here and guessing fairly deep exposure and large paper losses for most if not all of varying degrees but even at this record low I feel the upside could be massive here and a distinct possibility of an end game short term or am I dillusional - are we all mad lol?

[mattab] 06/8/2016 12:01

Duplicated post

[mrx9000] 06/8/2016 11:30

Extrader: Yep i assume purchasing the bonds would move the price, but am not sure. Say someone picked up the bonds for around £180m at a rough guess, offer 3 times current price, say £210m, wgich would orobably get rejected before a slightly higher bid is offered.

Present ebitda is £50m and a company acquiring it would make that into £70m ebitda easily.

A company would also look at it at present as why wait till later to buy when it could buy it now and add increased EPS and EBITDA to their figures. Waiting just under another 3 years a company looking to acquire JP would have effectively lost at least £70m a year in ebitda that it could of had, so £70m x 3, making £210m.