London Scottish Bank Share Discussion Threads

[meanm] 02/7/2008 10:51

Buys way in excess of sells and yet the share price fails to budge! Are the MM's filling an order?

[meanm] 02/7/2008 09:33

I still truly believe that it is the MM's trying to scare investors into selling. However, I think it has got to the stage with LSB that there is almost no point to selling for most investors.

They can take me out kicking and screaming. It is due a bounce, just as Tanfield has reacted today. LSB seems to be losing value with very little trade. In fact, it buying was higher than sells today and they still dropped the price.

Again, though, I imagine the MM's would have believed that they would have triggered more stop losses than they have. I am frankly amazed that they have not triggered more sells.

[cyclingnut] 02/7/2008 09:17

what the hell is going on? they should suspend the shares.

[meanm] 02/7/2008 08:59

16% down on such low volumes? Never seen such nonsense.

[grlz] 01/7/2008 23:32

Mean - wasn't being critical of you, far from it. My point is Management want to paint a dire picture of LSB - Your right the £52m for unwinding UCC has as far as I can tell been plucked from the air, its vague and its bleak - Management are even adding in losses for 2009 which haven't been made yet - ITS CRAZY and serves no purpose other than holding the share price down to favour potential bidders who won't buy-out holders but wash their equity away in a fund raising.

Lets get this straight the £52m has been rolled out in full knowledge that it looks like ticking bomb in the balance sheet - it's at best a projection of if's and maybe's painted in red - What I find unbelievable, but not surprising given how management are over-booking impairments is that this "worst case scenario" is not offset by a "best case scenario" or even a number in-between - NO we just get told to accept the cost is £52m while management tries to negotiate a £45m recapitalisation with a balance sheet they have turned to sh#t

I maybe strong on this but given it now looks existing holders are now set to be pi##ed down the river by a rights issue/underwritten placing at terms totally loaded towards potential investors I feel I have a right.

all imho/DYOR

[meanm] 01/7/2008 16:43

The "£52 million"!!!

If you look carefully at the detail regarding this £52 million sum, it becomes a little vague as to what this sum actually involves.

"Depending on which option is followed, the trading losses in the Unsecured Consumer Credit division and costs of restructuring and exiting over time from the U.C.C. division, together with the costs of restructuring the supporting central functions, under the Board's best estimates of the likely worst case cost, could amount to up to £52m."

The point I am unclear about is the "trading losses in the Unsecured Consumer Credit Division." Does this include "trading losses" that have already been accounted for? Does it include Goodwill Impairment charges? It must do as the statement then goes on to say that the costs will "mainly be incurred in 2008." Thus, I think this £52 million is being overplayed and has already been accounted for to a large extent.

More reason for me to believe that certain "relevant" pieces of information are making it into the public domain for the purposes of suppressing the share price Board member's do not volunteer information for any other reason than to achieve their aims.

[meanm] 01/7/2008 16:27

grlz - Do you never get the impression that what you may be getting told is not, exactly, the truth? The "£52 million" is a worst case scenario. To my mind, this has been added to the results, in combination with the unlikely £45 million share issue, in order to dampen the news that the Group is effectively for sale. As you yourself said, the costs associated with a movement away from Unsecured lending will be overdone.

My conservative estimate of the value of LSB of £20-£30 million comes from the fact that both RW (£6.294 Million) and the Mortgage division (£2.02 Million) generated respectable profits in the half year. If they continue in the same vain over the entire year, then before costs, etc, the profitable side of the business with generate approximately £16.6 million. Yes, "£52 million" is not a clever sum to have to raise, but this figure is given as a TOTAL cost. It doesn't have to be generated immediately.

Assuming it does have to be raised short-term, then if we have a profitable side of the business generating £8-£10 million pounds NET PROFIT a year and it is valued at ten times it's level of profitability, £80-£100 million subtract £52 million leaves us with a net worth of £28-£48 million. Clearly, the £52 million, WHICH IS WORST CASE!, is a large sum for anyone to come up with. But longer-term, LSB has profitable assets that clearly a "number of interested parties" are interested in.

[cyclingnut] 01/7/2008 16:03

so basically small pi's like us are screwed?

[grlz] 01/7/2008 15:22

Mean - I don't know were you get £20/30m as they have a further £52m to fund to unwind Unsecured Lending making the business worthless, once you add all the impairments that management are so keeen to charge - overbooked by around £40m imho - whoever ends up with LSB will do so for the price of the recapitalisation - it's a sweetheart deal in the making that will leave existing holders with 5/10% or it could be another TRX

DYOR

[meanm] 01/7/2008 14:18

It's not going into Administration. The banks involved in the newly-agreed loan agreement would not have stipulated that LSB must actively look for buyers and, more importantly, provide funds to the tune of £85 million if LSB were going into Administration.

The current share price is merely the MM's playing on the weakness of the company and on the concern of the small-time P.I.

Actually look and see how much selling is going on. Very little.

MM's want this stock, as the next major movement will be in North. I am not ramping it, but as far as I can see, all the negative news is out. All that will happen, IMHO, is that a buyer will be found for LSB and it will be sold for around £20-£30 million to a business that can oversee the running down of the Unsecured Lending division and, in time, profit from RW, which will undoubtedly continue to grow in strength.

I would welcome others views on the situation.

[cyclingnut] 01/7/2008 13:27

It is being priced for administration!

[cyclingnut] 01/7/2008 12:02

Davius,

will shareholders here get anything if they are taken over?

[davius] 01/7/2008 11:44

Have to admit to ditching most of my main holding a couple of weeks ago and have done the same in my ISA today. Just left with 20K shares. Am now 40% cash in my ISA, the markets are terrible with any share liable to getting trashed through short selling. I'd contemplated a punt on SCHE today after the bounce yesterday, glad I didn't go for that one.

It seems anything that goes up one day comes back down the next. Anything that drops one day drops again the next.

Quite remarkable, I can't see a single blue stock on my watch list today.

[cyclingnut] 01/7/2008 09:55

so in a nutshell.....anything for shareholdfers if LSB is taken out?

[grlz] 01/7/2008 02:16

This is being walked down by management to disadvantage shareholders - I had to re-read the accounts just to believe what I was reading - impairment charges are ridiculous.

Management would have us believe that their unsec/secured £280.8m loan book needs a £72.3m impairment charge with a further £52m worst case scenario to complete the unwinding of the Unsecured Lending Unit - I just don't buy it as that would equate to 44% of the book not in default or arrears but unrecoverable - no one has that kind of impairment, you could sell the book for more - even an Administrator/IP has a better recovery rate - for it to be that high begs the question has LSB been lending £million's to nigerian fraudsters to fuel bonfires with bundles of notes?

The sad fact is over-booking impairments on the balance sheet effectively washes away the equity of existing shareholders to sell the company on the cheap - leaving the new owners/investors or MBO team ??? the benefit of discovering as if by magic that some of those loans were not actually as worthless as first thought and could be collected or new repayment terms applied.

It seems the reality here is there is only a £7m regulatory capital shortfall and RW reported in this period £6.3m profit - Allocated costs are £2.0m leaving a profit for the period of £4.3m or around £11/14m for the year imho

That makes RW worth £80m on a conservative valuation

BUT

Management have what looks like an impairment wish list, wanting to add more and more charges - frankly some of what they report contradicts itself, for example in the Business overview:

The first charge mortgage business continues to perform well with low impairment charges of £0.2m (H12007: £0.1m). The second charge secured business is trading at around break-even after impairment charges of £1.9m (H1 2007: £1.4m).

then in outlook:

The Directors expect that the second charge secured loan business will continue to see rising impairment charges, thus reducing the overall performance of this division.

Lets hope the roof falls in to......

LSB's treasury wants us to believe that one lending book worth £280m needs a £72m impairment charge and the £87m loan book of RW only needs a £0.8m impairment.

DYOR

[meanm] 30/6/2008 19:07

The group is for sale!

Will the share price rise or fall?

Tomorrow will be interesting.

[davius] 30/6/2008 18:44

The Group is currently engaged in a process of seeking to raise a minimum of £45m of equity capital and has also commenced discussions, which may or may not lead to an offer for the Group, with a number of interested parties.

...

The Group's future will depend on the outcome of the process to raise additional equity capital and the discussions with interested parties in relation to a possible offer for the Group.

[davius] 30/6/2008 18:40

Regulatory Capital

The Group is currently engaged in a process to raise a minimum of £45m of
equity capital. The Directors consider the Group's access to retail deposits to
be a key source of funding. As at 30 April 2008, the Group had a regulatory
capital shortfall of £14.0m. Whilst a regulatory capital shortfall remains, the
Financial Services Authority (FSA) has powers to restrict the Group's ability
to accept retail deposits.

The disposal of the Factoring business, if approved by shareholders, would
increase the amount of Tier 1 regulatory capital which the Group holds and
reduce the regulatory capital shortfall by approximately £7m.

[sleepy] 30/6/2008 18:27

Half-yearly results:

[meanm] 30/6/2008 16:08

Maybe I am just a Masochist, but the fact the MM's want to drop the share price when buys outweigh sells, tell me they want this stock. They are running this as low as they can do, in the hope of picking up some cheap stock.

Half-yearly results will give us all a badly needed "s.p. correctional" update.

[davius] 27/6/2008 12:59

Looking pretty level right now...

[lawson27] 27/6/2008 11:56

Davius,

is something cooking on them books?
because i'm sitting here shirtless and im not topping up my TAN if you know what i mean!

[grlz] 25/6/2008 16:27

MeanM - closing a T-trade maybe, he purchased roughly the same amount not long back - takes him back under 3% so short of a bid won't show as a major holder.

all imho

[meanm] 25/6/2008 14:17

Did Murtagh wish to short the stock in the belief that Gregory King's offer might appear more tempting?

Seems strange he sold the amount that he did. What was he trying to achieve?