Luminar Group Share Discussion Threads

[nikesh] 15/7/2010 16:21

gdasinv2 can you explain further

[gdasinv2] 15/7/2010 11:49

LMR is been refinanced....news in way

[spectoacc] 14/7/2010 11:46

Or they could do a JJB - pre-pack part of the co whilst remaining listed.

[jeffian] 14/7/2010 11:39

"The administrator would then try and either sell the company as a going concern (which it could be without the debt) or otherwise sell the separate assets."

Or, of course, they could do a 'Pre-pack' (i.e. where they put it into administration and management buy it straight back without the poor-perfroming outlets, onerous leases and residual 3DE obligations).

[kiwihope] 14/7/2010 11:24

IMO existing covenants will fail test in Aug (or will expect to shortly after). So management will seek to relax these profit-related covenants and try to shift to a more cash-flow one. I'm guessing the lenders will agree with this (whilst extracting their pound of flesh with a one-off fee and higher interest charges). Whether management do in fact succeed will depend upon what security they can offer, their credibility with the lenders and obviously the forecast figures.

If Luminar can convince the lenders that the net debt is not going to get any worse (even better if it decreases) and they can maintain some sort of collateral, they should succeed (which I think they will).

If the covenant test fails then the lenders could call in their loans and the directors would then have no choice but to put the company into administration. The administrator would then try and either sell the company as a going concern (which it could be without the debt) or otherwise sell the separate assets. If he sells it as a going concern then the lenders would get the sale proceeds minus their debt, which would be a negative number, so they make a net loss. If they sell the assets they probably also make a net loss. So providing Luminar can keep reducing their net debt and maintain their net asset value it would make sense for the lenders to prop them up, in the hope things may improve and they get more of their money back. The problem for Luminar really comes if they cannot convince the lenders that they can do this.

We will probably find out in a few weeks time.

[spectoacc] 14/7/2010 10:29

Exactly; recent director buying suggests they're confident re covs, but ultimately it's up to the banks.

And even once renegotiated, LMR ultimately still needs trading to improve - it's only gone one way lately. But if it does improve, the upside is signifcantly north of 16p IMO.

There's been plenty of "bust" minnows multi-bagging on minor recoveries (I had AHT once; PDG was one I missed). But plenty more that did go bust.

[spectoacc] 14/7/2010 10:09

@Deanr - you've yet to make a single post of any substance, why are you here?

@fjgusto - don't disagree, could go anywhere - both targets (6p & 16p) are pretty meaningless. Either LMR pulls through (30p? 50p?) or it doesn't (0p). I reckon they'll get banking covs renegotiated no prob & will eventually see an improvement in trading; but if they don't it's far from impossible that they'll be zero before the year's out.

I like the risk/reward, but certainly not for widows/orphans.

[deanroberthunt] 14/7/2010 09:53

Spec...

take those rose-tints you're wearing off and things will be much clearer

[spectoacc] 14/7/2010 07:37

You short @fjgusto? You've posted the same analyst comment from yesterday twice, without posting the other one:
"0648 GMT [Dow Jones] Luminar's (LMR.LN) interim management statement is in line with expectations says Altium. Says trading over the first 19 weeks of the full year remains challenging. Says gross margins for the period are broadly in line with last year and encouragingly, given the trading backdrop, Luminar reiterates that it expects to achieve GBP10M of cost savings in the '10/'11 financial year. In terms of valuation, says the group will be loss-making this year. Says: "We need to see an improvement in the wider economic environment and in particular the level of youth unemployment before Luminar can rebuild its profitability." Has Luminar at hold with 16p price target. Shares closed at 12p. "

[landpath] 13/7/2010 20:18

thank you jeffian, much appreciated.

[jeffian] 13/7/2010 20:10

Well they won't be in a close period at the moment as they've already announced the full year results and the next half-year ends on 27 August.

A close period is a period of (usually) 2 months prior to the publication of a company's results (i.e. when the Directors know how the company has performed but the market doesn't) so the Directors are precluded from trading with the benefit of this 'inside knowledge'. In LMR's case their close periods are end-Aug to end-Oct for the interims and mid-March to mid-May for the finals. The Directors may also be in a 'close period' if they are privy to any price-sensitive information which is not generally available to the market (e.g. takeover approach etc.).

[landpath] 13/7/2010 18:55

hi, i read on here that somebody said the directors are in a closed period when they cant buy their own shares, for what reason is this? perhaps leading up to results, dont know. appreciate if someone on here would let me know. thanks.

[hotfinance14] 13/7/2010 13:44

You will see 5p this year!!

[jeffian] 13/7/2010 11:32

when gdasinv2 said "this is the last chance you will see 12p", which direction was he talking about?

8-)

[deanroberthunt] 13/7/2010 09:57

might be worth a punt around 3p......with a remote chance of recovery, not for widows and orphans, a bit like TW.

[spectoacc] 13/7/2010 09:51

Good post @Kiwihope, agree with all that. While it's generating cash, there's little point lenders pulling the plug: and if they were going to do so, they'd have probably done it already.

But long term survival does rely on business eventually turning up.

@Themariner - I don't think LMR's another REG; it's a stronger, better capitalised (relatively!) business. Not saying you wouldn't make on a short, but when (if) LMR does see a pick-up in trade, particularly against weak comparatives, it could go from a £10m co (10p) to eg a £30m co (30p) in a blink.

So on the plus side: weak comparatives coming up, hopefully no repeat of recent "one-off" events, debt reducing, costs being cut, directors were buying, banks should renew covenants.

Negative side: does need trading to pick up; banks not guaranteed to play ball; no indication of the quantum of debt reduction or how far costs can be cut; danger of a UK double-dip hitting trading further. I'm happy enough being long down here, I think the risk/reward's in LMR's favour.

[themariner] 13/7/2010 09:32

It's a Zombie buisness now with nowhere to go bar forced deleveraging by their banks. I mean, those like for likes were appalling, with or without the world cup. We've seen what happened to Regent Inns last year - it pre-packed, despite saying all along it was cash generative. I'd say the only reason it's not been pre-packed already with the banks taking a hair cut and the most unprofitable outlets dumped, is because until the share price hits 1p, there's still an element of hope.

I thought Regent Inns became undervalued at 5p and bought in, on the basis that it was rock bottom and the upside could be huge if it survived. I took a bath on that clever move! I suspect LMR's fate is similar - town centre nightclubs are dead. I'm looking to short this.

[kiwihope] 13/7/2010 09:30

Statement as good as can be expected. Things didn't turn really bad until Aug/Sep last year so the last 19 weeks of this year are being compared with stronger trading last year (so I'm not surprised like for likes have decreased quite a bit). But gross margins are holding up well, the company is generating cash and debt is reducing (though by how much we don't know).

Luminar continues to be hit by a series of exceptional events. The very cold winter, January snow, and now the world cup. At some stage these will stop. The overriding problem, which will not quickly go away, is the government's austerity package. Recovery will continue to be slow and patchy so there's not going to be fast growth in the economy to help the company recover.

But the most immediate worry for shareholders are the loan covenants which are tested next month. We just have to wait and see what happens there. Unless there is a sudden worsening in trading I would be surprised if the lenders didn't just agree to some renegotiation of the terms, which will cost Luminar more of course, but could ensure its survival. They still have lots of cash and lack of cash (and having to ask for more) is usually what puts companies out of business. No guarantees though. It's still highly speculative.

[peterboroughmatt] 13/7/2010 08:53

yeah even for 4 games, it wouldnt have cost much and is better than the venues sitting there empty.