London Scottish Bank Share Discussion Threads

[ablack] 19/6/2008 19:11

Thanks Captain Cash (1377)
Bond is safe but how long will the FSA scheme take to function if called upon ?
I'm 81 so would prefer the cash back prior to any flight to Heaven !!

[davius] 19/6/2008 19:09

Well it's interesting you should comment on the rights not being taken up by all PIs. I have a significant problem in this respect, since I have 30000 shares bought in an ISA. Clearly I can't just chuck more money at the ISA to take up the rights, so I'm left with three options. Sell part of the stake now (or after the details are announced) and take a loss, sell something else to provide the funds for the rights, or ignore the rights issue. None of these particularly appeal but I suspect I might end up going for a little of each of the first two and take as many as I can wangle the funds for.

Given the previous announcement that they intended to raise funds via equity one might wonder why the share price is still at the current level. I think that the reason for this is that the markets see value in the business once the financial position has been sorted out. The recent profit figures from Robinson Way show very strong growth and I would expect this to accelerate as the credit crunch continues to bite.

Short term ups and downs aside, this could still turn out to be a highly profitable investment.

[davius] 19/6/2008 13:16

I've just had a long chat with a guy from their PR firm. Unfortunately there's little to add, LSB is considering it's options regarding the regulatory shortfall and will raise money by the appropriate means.

I could obtain no clarification on how the position may have changed following the sale of the invoicing business. I find this frustrating as the £28.5m raised (sale to be completed by the end of July) will surely affect the need for additional funds, at least to the level suggested by the FT. I suspect that we'll get an update at the beginning of August once this sale is completed.

[cyclingnut] 19/6/2008 13:01

Davius,

Just the pessimist in me. If the FT rumour which wiped value off the company is false then LSB need to issue an RNS denying it!

[captain cash] 19/6/2008 12:39

your fixed rate bond is covered by the fsa scheme up to 35k.

I've got one too.

Ps - I think the FT has the figures wrong.

from memory LSB has 12.5 million short on its statutory capital requirement.

the sale when it goes through will raise 8.5m plus the 0.5m it got the other day from CES.

That leaves LSB overall 3.5m short on it regulatory capital requiremnt.

So, I think the figure the FT should have printed is 3 to 4 million not 30 to 40 million.


It is feasible they could get a rights issue away for 3million and thus remove the regulatory capital requirement. Once they've resolved the regulatory capital requirement they'll be able to borrow funds at a lower rate and so on, so they would survive.

[ablack] 19/6/2008 12:06

P.S. I'm only concerned about my fixed rate bond with this outfit which I had unfortunately failed to research thoroughly enough before investing in it

[ablack] 19/6/2008 12:02

Why no trades ?

[lawson27] 19/6/2008 11:54

Davius

Thanks for taking the time to post your views, which seem to be both considered and knowledgable and for those of us not so well versed with the markets, find most helpful, thank you

regards Lawson

[davius] 19/6/2008 09:16

I've left a message with the company and have been told that the secretary should call me back (not holding my breath though).

cn, you're well known for blowing hot and cold, just need to look back at the JRVS thread to see that. But why do you now feel things are MUCH worse? Is this just the worried pessimist in you (and most of us have one of those lurking) or something else?

The reality is that until we get some clarification everything is just speculation. I had thought that the sale of the invoicing business for such a tidy sum had solved most of the immediate short term needs, but if what the FT is saying is true then I'm wrong. Ultimately it all hangs on what kind of a business comes out the other end of the restructuring.

[davius] 18/6/2008 17:38

My oh my, there seems to be a complete failure to grasp the fact that the rights issue price has little relevance IF they have to raise a significant multiple of the current market cap.

What IS relevant is how much the company is worth once recapitalised.

So lets chuck my example in with another at a much lower level...

I suggested buying 100K shares at 7p, outlay £7K.

Then a 7 for 1 rights issue at 4p would mean another £28K invested (700K extra shares), total shares 1142m and if the recapitalised company were worth £70m the shares would be 6.1p and your £35K outlay worth £48.8K. We all clear so far?

So the board decide no way will they get it away for 4p, so 1p it is.

This means issuing 4000m new shares to raise the £40m, which would be a 28 for 1 rights offer. So I'd now need to buy 2800K new shares at 1p each, totalling, um, £28K. Er, isn't that the same as before? Are we making sense yet?

So the company now has 4142m shares, if it were worth £70m then the share price equates to 1.69p per share, and my 2900K shares are therefore worth £49K.

Where I completely agree with grlz, they will consolidate, as to issue new shares at 1p each would be ridiculous.

But the point of my post is that if they raised £40m (or something similar) via a rights issue, then if the company that emerged was worth more than that sum there is money to be made even at the current share price level, because the cash call on shareholders would be far higher than the current market cap. Holding the shares now will offer the rights to buy new shares at a discount, hence why the share price has not bombed to 1p.

Of course, this is all complete speculation as we don't even know if they need to raise anything like £40m which is a figure pulled from the ether by the FT as far as I can fathom.

[lawson27] 18/6/2008 16:37

what a day, hope we don't see many more like that again!

[lawson27] 18/6/2008 14:44

Cheers grlz

what we need is rns denying the rumour, which i would have thought they would have if its not true!, or would they not bother?

[grlz] 18/6/2008 14:28

I posted a couple of weeks back the problem shareholders would have if LSB decided to raise significant funds to recapitalise the business. Now the FT runs a rumour......

Dav is being very ambitious in his calc imho - the discount I suspect will be deeper. imho I can't see a £45m FR getting traction with the current sp@7p - LSB would be issuing @2/3p to get it away.

Speculating and guesswork I can see management consolidating the issue 20/1 then issuing @60p a 50/60% discount .... otherwise imho the issue will be enormous leaving the grim prospect of RW (which one day this company will surely be renamed) doomed as a penny share - recapitalised and profitable the EPS would be laughable if the LSB undertakes a £45M FR @3p

There is also a legacy issue LSB probably has a number of small holders locked in at 120p. Today their stock is worth nothing, consolidating rounds them out and it's possible with a FR@£45m the company may offer to a cancel them directly, usually with a consolidated rounding its self-financing and ultimately saves funds via lower admin costs going forward

All hunches and guesswork

DYOR

[lawson27] 18/6/2008 13:59

grlz

would you care to elaborate, don't quite understand that one!
is it because it would increase the value of shares in issue as Davius mentioned earlier?

[grlz] 18/6/2008 13:53

£40/45m fundraising....ouch - No chance it will fly unless they consolidate the issue.... imho

[lawson27] 18/6/2008 13:41

where's this going to finish today, any guesses?
added over 100k today @7.4 average, back to 8 would make me feel a little more secure!

[cyclingnut] 18/6/2008 10:37

glue,

I have nuts but they are a little crushed due to years of riding in the saddle!!

[gluefactory] 18/6/2008 10:25

IHNC.Confused with your response.........guess you are being a tad rude to poor lil ole me...

[meanm] 18/6/2008 10:16

This is fun!

[ihavenoclue] 18/6/2008 10:15

glue ... LMFAO

[gluefactory] 18/6/2008 10:13

You dont have any....if I recall from a previous post!

[cyclingnut] 18/6/2008 10:12

right...I'm back in with my nuts on the table so to speak!