Litcomp Share Discussion Threads

[abc125] 16/10/2009 10:59

mas

Fair point. Maybe they are considering a placing hence the change in nomad. We just don't know.

[troutisout] 16/10/2009 10:05

It would strike me that the circling predator and the Company would not consider a bid at this price unless they knew there was a chance of it going ahead, so does that mean that Wray is onboard? or part of the predatory group?
This was from the results,

"As announced on 24 September 2009 the Company is in advanced discussions with a potential offeror regarding a possible offer for the Company at a price of 33p per share in cash which includes arrangements for potential funding of the
redemption of the Loan Notes. If these discussions do not conclude successfully
Directors will ask Loan Note Holders to extend or convert their holdings; the
results of such a request are uncertain and if the Company is forced to use
internal cash resources to redeem the Loan Notes that will significantly reduce
its trading capacity."

Now is this a stick to the loan note holders to convert rather than redeem? convert and keep hold of the Company or we sell out and you make 10% on the 30p loan notes?

Something is rather suspect here, I am sure it is gamesmanship rather than something more sinister, we will find out shortly as loan note deadline approaches. At this price it could be worth a punt, as you can buy below the offer price, worst case scenario is wait for the offer and take the 33p, best case laon notes are converted and the predator told to go away and share price should re-rate. The profit warning earlier this year and the apparent lack of need for it from the results make me wary though, still watching (as I have been since abc123 set this thread up).

Trout.

[stegrego] 16/10/2009 10:00

Mas,

The offer is being considered because if the bond holders dont convert then they will have to pay out most of their cash and that will leave very little to underwrite new business.


The banks wont finance them so its effectively either convert, bondholders extend for another year or sell for 33p.

I still think theyd be better off with a placing though.

If bondholders do convert, or at least one of them, then a quick double from here is on the cards.

[masurenguy] 16/10/2009 09:50

johndee/abc125 - then WHY are they even prepared to CONSIDER an offer of 33p ?
Why don't they just laugh and show the circling predator the door ?

[abc125] 16/10/2009 09:41

Nigel Wray would have to come on board for a takeover to happen.

Why would be accept 33p when he knows the share price could be £2 in 12 months time? Litcomp have three sets of solid results behind them now - so they're no one hit wonder in my view.

[masurenguy] 16/10/2009 07:41

How do you know that there will be 'no takeover' ?

[johndee] 16/10/2009 07:38

Great buy now and no takeover..............looks 100% no brainer really.

[bozzy_s] 15/10/2009 19:33

With the share price being 30-33p it might be an opportunity to invest now, and vote against the daft takeover proposal.

[lgpixels] 14/10/2009 21:59

Directors should not recommend a takeover bid at 33p!

This would be similar to their asset position (mostly cash) and on a current PE of 3, which is way to cheap.

The directors said they "are pleased with the performance of the company across all sectors of the business and are able to look forward with confidence." Six months have passed since the year-end, so the business could of generated another million pounds in profit.

Given valuations for similar businesses the shares could be easily worth more than £1.00 each. This is back up by independent research that was commissioned by the directors of the business.

I would vote against any takeover at these levels, as it is not in shareholders best interest. Speaking with other investors I believe a takeover would not get shareholders approval.

We may need to setup a shareholders group if directors do not take decisive action and reject this takeover, which is in the best interest of shareholders.

[abc125] 14/10/2009 15:06

Litcomp website up and running again. They have put up the most recent GE&CR note from december 08. It looks like they are maintaining their march 2010 forecasts of £3.35m PTP and 16.5p fully diluted EPS.

[masurenguy] 14/10/2009 12:17

This seems to have fallen into a state of limbo over the last couple of weeks with very few shares traded. It seems very strange that they have not sought to refinance the outstanding £2.55m loan notes that are due for redemption via a placing.

Last years profit puts them on an EV of circa 3.25 which is extremely cheap even for a small cap niche insurance operator. If they are seriously considering a 33p offer at the moment (which appears to be the case) then it suggests that must be a missing piece of the jigsaw somewhere in the overall equation !

[glasshalfull] 05/10/2009 17:19

ABC - No estimates passed to me nor have I asked for any.

Regards,
GHF

[lgpixels] 04/10/2009 12:47

Looks like fully diluted forward PE is about 2!

We also have another 6 months profitable earnings in the bank!

[abc125] 04/10/2009 07:30

GHF

Re Paul lavender, yes he seems like a decent chap.I at first thought this mooted offer was an 'inside job' by Wray and directors. But i think i was wide off the mark.

Did Paul give you any estimates for this year? GE&CR had 16p diluted EPS and £3.3m PTP for march 2010. That may have changed though.

edit: I have raised a query with the company, but i don't think any estimates will be availabale until the loan note/offer is sorted out.

bozzy_s

Thats a fair point. have you raised it with Paul?

[bozzy_s] 03/10/2009 21:05

I am not so sure Glasshalfull. If they were acting in shareholders best interests, they'd raise the necessary cash via a placing. Even if it had to be at 20p or 25p a share, it would mean current shareholders maintain an interest in the company.

A quick sell-off at 'below par' means shareholders get a poorer deal than they would via a placing.

[stegrego] 03/10/2009 17:34

I bought a few more here the other day on the basis of 33p probable worst case and a fair bit higher than that if things get resolved.

Stupid? Quite possibly!

[glasshalfull] 03/10/2009 17:13

I've been assured that the board are exploring ALL avenues open to them.
It would appear that their hands are tied re. bank finance & my own misconception that the freeing of credit markets could or would have assisted them, with the banks potentially throwing a number of obstructions in their way.

I've been extremely impressed by Paul Lavender and believe that they are acting in our best interests.

I would urge investors with missgivings make contact as I have.

Regards,
GHF

[lbo] 03/10/2009 14:40

Very possible but more likely the bidder is already known and been named!





Current competitors are the likes of Allianz Cornhill Legal Protection, Europ Assistance, Templeton, Brit Insurance, DAS Abbey Legal Protection and RSA Pursuit.

What about Brit Insurance also as a new bidder?

[masurenguy] 03/10/2009 13:02

Potential predator could be Abbey Protection (ABB) since Litcomp would be a very synergetic fit. Abbey have plenty of cash to cover the Loan Note Redemptions and can provide a much broader market umbrella for an ATE specialist particularly in view of the various uncertainties surrounding the ATE sub-sector which Litcomp alluded to in their recent results statement.

NB: This is just pure speculation on my part !

[zangdook] 02/10/2009 13:22

GHF
Thanks for posting emails.
Doesn't explain why they're trying to sell the company BEFORE asking the loan note holders to defer or convert. Unless they did that informally and were turned down.

[philjeans] 02/10/2009 13:03

lgpixels; I concur.

Provisioning for next year's bad debts in this year's accounts is an absolute NO NO as far as I'm concerned - bad accountancy practice and completely distorts the results.

This stinks and I'll be complaining if it goes through.

Thing is though it's too early to say which way the redemptions will go.

[lgpixels] 02/10/2009 08:04

It appears the directors have made the decision to take a "significant" charge in the accounts to 31 March 2009, thereby reducing the profit in the previous year instead of the current year (this could add weight to the theory they are trying to pick up the company on the cheap). Anythoughts?

"Elite has been notified of a number of significant ATE claims after the year
end, all of these are fully provided in the audited accounts to 31 March 2009."

I don't think a 33p bid is in the best interests of the company. If a typical PE of 12 is applied (reasonable for growth prospects and sector) you have a fair price of £1.20!

[lbo] 01/10/2009 22:59

Can Nigel Wray be involved in this 33p bid if Litcomp have now changed advisor from Daniel Stewart to Seymour Pierce? Perhaps all the conspiracy theories are just false unless anyone has any hard proof or facts of wrong doing! LOL



Nigel was appointed to the Board on 15 November 1999. He is the Chairman of Saracens Rugby Club and British Seafood Group Holdings Limited, Non-Executive Director of Prestbury Investment Holdings Limited, Play Holdings Limited, Networkers International Plc, English Wines Group Plc, Seymour Pierce Holdings Limited and several other private companies.

Some may also question the links between Mr Lavender and Rivington Street Holdings if a deal is now done at 33p as only in December GE&CR put a 165p Target and Mr Lavender it appears is a Director of Rivington and Litcomp. Not suggesting that they don't operate independently but others have questioned the close links before of Rivington and some related companies (with no evidence of any wrong doing)and an outcome of 33p may only lead to more questions by some. Now I am not suggesting for a moment anything untoward has occurred or that managment are not acting in shareholders best interests. But it would make you wonder if related companies should be allowed to cover companies that are so closely linked? I suppose it happens all the time with larger caps, and the bigger brokerage houses and chinese walls are in place and operating procedures are adhered to. And all the facts were openly disclosed all along.



Litcomp Plc is a corporate client of Bishopsgate Communications which is owned by Rivington Street holdings, the ultimate owner of GE&CR.





Paul Lavender, the finance director of Litcomp is also finance director of Rivington Street

[lbo] 01/10/2009 22:44

Bozzy why not put the question to Paul Lavender yourself? I am sure he will respond to your comment as he has to others

[e-mail]

[bozzy_s] 01/10/2009 22:02

Has anyone asked the bleedin' obvious question, why do they not raise the necessary money via a placing/open offer? That's the best solution for shareholders. A cheap sell-off at 33p per share, especially to a related party, would surely grab the attention of the authorities.

I suspect, via the news releases so far, the board is NOT acting in the best interests of shareholders. In fact, if this is sold off at 33p per share, with it's asset base and profitability, it will surely be subject to criminal investigation.