Marston's Share Discussion Threads

[skinny] 10/7/2024 10:40

FWIW :- Jefferies raises Marston's to 'hold' (underperform) - price target 36 (27) pence

[dexdringle] 09/7/2024 16:35

Not here there won't be.

We'll be lucky to get an offer in excess of half the value of the net assets (should an offer even materialise).

[wigwammer] 09/7/2024 16:03

The key driver for any corporate buyer or shareholder is the same - buy assets at the right price. Yes - there may be merger synergies, but there is also usually a big fat premium to get control.

[dexdringle] 09/7/2024 15:37

£1.05. Just three years ago.

Turning that down was rank stupidity.

[skinny] 09/7/2024 15:25

Yes - happy days (not) :-

[jeffian] 09/7/2024 14:47

I'm with dex on this (and have said so before here). Sadly (as an ex-brewery man myself) I don't see a realistic recovery (i.e. at least to NAV) in a reasonable timeframe other than by corporate action. The complete split of the brewing side from the pub estate facilitates that. Whether that is by design of the new management or whether it will attract hostile interest, the outcome could be the same - a sale of the remaining pub estate - and I believe that is the only way shareholders are likely to see real value any time soon. Just a pity they didn't recognise it when the last bid came........

[dexdringle] 09/7/2024 14:36

It's not going to make a significant profit in a million years. It's over. Time to wind it up and distribute the net proceeds before Private Equity comes along and does so.

[my retirement fund] 09/7/2024 14:30

Well, that's one view. However, patient investors underwater will eventually be rewarded for not selling out. The debt is decreasing, but per unit turnover and profit is improving. The last 2 years of 15% retail price increases are a perment rise.

[dexdringle] 09/7/2024 14:11

....especially as it doesn't pay a dividend so under water investors aren't even being paid to wait.

Essentially, the business is incapable of making a profit from the £600 million of net assets. So the assets may as well be sold, the debt cleared, and the £600 million net capital returned to the owners who can then put it to work somewhere else.

[my retirement fund] 09/7/2024 13:19

I'm guessing the company carries a lot of legacy investors holding losses from 80p or even £1.20ish levels. Some of these employees. There will be a lot of bitter investors out there!

[barnes4] 09/7/2024 12:25

Best tell KY boi that message R fund!!

[my retirement fund] 09/7/2024 12:00

Assets 2.1BN, Debt 0.9BN. Debt should be uprated later in the year from BB- to A- or better, allowing headroom for further interest payments. Profits can only go one way here. A decent dividend could even be reinstated next year.

[pj84] 09/7/2024 08:18

"‘For Marston’s, a cleaner business, with greater visibility on earnings and increased financial flexibility. At the headline line, we see it broadly neutral on earnings per share, modestly dilutive on free cash flow and net asset value, but significantly enhancing balance sheet metrics.’

The proceeds of the sale will be used to pay down debt and will mean a ‘much cleaner and less geared business, meaning the property assets form a greater part of the net asset value (NAV)’.

Johnson said that on top of this, interim results were positive ‘showing robust underlying momentum and with the balance sheet significantly improved, we see destiny comfortably in management’s hands’."

[fenners66] 08/7/2024 23:09

>darrin1471
"8 Jul '24 - 14:04 - 7354 of 7356

fenners66. As the leverage falls, due to the sale, the interest rate paid on the remaining debt should also fall.
If £1b debt interest rate falls by 0.5%, then that is a £5m saving. Leaving a £13m saving on the £206m"

darrin - thanks for having a go at explaining it.
That in essense is a reversal of the additional cost which I have harped on about in the case of borrowed money to fincance buy backs. That when companies keep adding to their debt it is not just the cost of the new debt - but the added cost to all renegotiated or replaced debt because of added leverage. I have seen some mention of it in only one set of accounts (can't remember now which one).

However can this really explain what they think is going to happen here ?
They have told us for years that the debt is mostly fixed (until 2035 if memory serves)
None of it is supposed to be that high but there are gaps in the variable where the actual rate paid is not quoted , just some of the break down.

Since its mostly fixed your 0.5% surely cannot apply across the board.

As I said above if its avoiding a forecast of what they think is going to happen - then why have they not already told us that there will be some falling due and the cost is rising to the equivalent of adding 9% + to the last £200m?

After all with all the "non-underlying" disclosures of this and that aimed at a "better" understanding of accounts ... surely they would want shareholders to know ?

Your example leaves 13m at 6.3% which is lower with the current cost of 6.8% on the bank borrowing + securitised debt - so that works ok

So its down to whether there really is a measurable 0.5% reduction across the board after starting (I guess) with removing the variable £200m first ?

[careful] 08/7/2024 15:05

The debt in manageable.
The assets are desirable.
I doubt if the assets of the brewery just sold amount to much.
So net asset value could rise further.

If trading is solid and finances are well managed this share could do very well.

[rmillaree] 08/7/2024 14:11

careful
"The recent share price was priced for a worst case scenario."

With all respect this comment is nonsense - it would be easy for sherholders to nearly be compeltely wiped out with the debt being what it is if they hit hard times again. The whole point about large debt companies that 30p can easlly become 15p and then 7p and then 3p there is little downside protection If large rights issue was needed or than ran into similar issues eg if interest rates became too much.

[darrin1471] 08/7/2024 14:04

fenners66. As the leverage falls, due to the sale, the interest rate paid on the remaining debt should also fall.
If £1b debt interest rate falls by 0.5%, then that is a £5m saving. Leaving a £13m saving on the £206m

[m_kerr] 08/7/2024 13:18

THEy had some leverage with carlsberg wanting 100% so they could acquire britvic.

However they are massively geared, and on balance to reduce by £200m is a positive IMV.

Also dividends are not guaranteed whereas the interest payment is.

Its their inability to generate any real cashflow that is the problem and has forced them to dispose of their cmbc interest. M&b for instance generate far better cash flows whilst operating in a similar business, mainly because marstons have a very significant leasehold estate with lots of rent to pay (approx 33% of the estate).

[chinese investor] 08/7/2024 13:06

Good RNS !

[dexdringle] 08/7/2024 13:04

The reduction of debt and asset values equally makes no difference to the net worth of the business.

And the interest saved is offset by the loss of income from the asset that has been sold so this will have no effect on profitability.

The whole shebang needs to be sold so the net value of the assets as a whole can be realised which is the only way this is ever going to get back over 40p.

The balance sheet net assets are £600 million. There are 600 million shares in issue. Therefore, assuming the assets aren't overvalued, the equity in the business is £1 a share.

[ny boy] 08/7/2024 12:21

Dead cat bounces, the rns is not very good at all. OCDO a much better recovery play imo

[sooty snipes] 08/7/2024 11:47

I'm quite happy. More and more people are favouring eating out at their local pubs instead paying a lot more at a restaurant. I don't buy this doom and gloom about pubs being finished. Bought in at 28p Target 120p

[careful] 08/7/2024 11:15

The recent share price was priced for a worst case scenario.

The possibility that bondholders could take our company off us with the usual debt for equity swap was a fear.
Todays cash injection has now made that fear,always an issue when the share price is low, makes that a remote possibility.

With a decent trading situation, and the boost of Euro soccer must be happening.

A re rating is justified.