Mouchel Share Discussion Threads

[spot1034] 20/12/2011 12:04

As far as I'm aware they are generating sufficient cash to make repayments at present, so is debt for equity the most appropriate way forward? Could they not do a share consolidation (which would probably happen under the alternative scenario as well) and then do a large placing and open offer to raise enough to get the debt down to a more manageable level? This would give shareholders the chance to invest more to keep their existing stake in the business if they so wished - and with lower debt it might not be a bad investment going forward. Is the board's primary duty not to protect the interests of shareholders if at all possible, and would this not be a better way of doing so than diluting their stake without giving them any option to take part in a refinancing exercise?

[paragon157] 20/12/2011 11:48

Hmm .. Well somebody seems to be Buying fair chunks of them still over the last 5 days or so ?

[hairballradical] 20/12/2011 11:13

dean,

if they have a debt for equity swap, the share price would fall to less than 1p. Say they went for £60m fundraising, that's 1Bn extra shares. Ok so most of the debt gets paid down but the existing market cap of £7m is now shared among 110m existing holders + 1Bn new holders (ie. the banks).

This equates to 0.64p per share.

As much as I'd like to see them succeed, I can't see much in these now.

The board of directors involved in turning down two offers in excess of £1.50 this year were both very stupid and very naive. They clearly gave the impression that there was more value in the business as a standalone outfit and here we are today with a company that has had 94% of its value destroyed in less than 9 months.

Surprisingly enough, I'd be sacked for destroying 6% of the value of a business and rightly so but I wouldn't walk away with a big pay packet, a guaranteed and bolstered pension with the Old Boys club ready to take me on next week.

[deanroberthunt] 20/12/2011 06:15

Dealy

I have already explained that they could have a 95% dilutive d4e at 5p and still survive with shareholders ok buying in a this price....of course, those in at much higher prices would not, unless they do a rights.

[dealy] 19/12/2011 22:01

possible that we get some director buying now after the IMS. the use of the term "balance sheet restructuring" could be a warning to shareholders though. Still, apart from a 100% debt for equity swap or insovlency virtually all bad news should be priced in at the current market cap.

[spot1034] 19/12/2011 20:18

If they could find a way to involve present shareholders in any fundraising I think it would be much appreciated, given the way many were well and truly shafted by the previous management.

[deanroberthunt] 19/12/2011 19:47

dunno wht they just don't do a rights at 5p for 2bn shares.

[deanroberthunt] 19/12/2011 19:38

ok so they swap 2bn shares at 0.05p for the debt, so now the company is valued at 105m mcap with no debt....just need to deliver around 8-10m pbt to make that valuation ok......to me that sounds ok, so the company isn't dear at 6p

[deanroberthunt] 19/12/2011 17:54

so thats probably why the funds have been offloading and we've had no Director buying......sort of makes sense now.

[hairballradical] 19/12/2011 09:39

Salpara111, agree. Think that it will all be out there within 6 months but what it will be will not be pretty for existing shareholders. This may end up being owned by the banks. Reducing turnover, tough markets, just make the prospect for timely debt repayment even less convincing.

[dealy] 19/12/2011 09:25

i think today's ims gives hope to equity holders. probability of the company being worth more than the debt seems to have increased imo

[salpara111] 19/12/2011 09:22

Hmm,

Mention of a "balance sheet restructuring" to come in the first half of the year.

Given the share price I doubt that can be done via a rights issue which suggests there will be some form of debt for equity swap meaning a massive dilution for current shareholders given that total equity is currently circa £7.5M and they would need to swap at least £50M of debt to make a meaningful difference to the balance sheet.

Again, I would reiterate that there is no reason to get involved here for at least 6 months.

[dealy] 17/12/2011 11:59

the holders who are selling have quite simply reached the conclusion that the company is worth less than the total debt and therefore the equity is worth zero. There can be no other explanation.

Total debt includes: financial debt, contingent liabilities (fees owed to banks in addition to debt, fees that will have to be set aside for advisors), pension debt, net accounts payable. All of the above is probably about £150m. The company is probably worth less than that (money generating power of the assets, the franchise, the backlog etc. taking into account risk).

The questions is: are they right or are they wrong?

[deanroberthunt] 17/12/2011 07:17

13 sessions, 12 down, 1 up

[pikey01] 16/12/2011 11:43

Rochdale council have rethought their partnership.

[guru121] 16/12/2011 10:50

Funds sell for all sorts of reasons.btw only few are selling not all of them.

[salpara111] 16/12/2011 10:49

I guess some people are looking for a short term technical bounce once major institutional selling is out of the way but for a meaningful and sustained rise in share price the institutions have to be consistent buyers again and as I mentioned before vis a vis my holding in COST it can take a very long time to see any measurable sustained rise in the sp, once bitten twice shy etc.

I keep watching because IF they make it through the next 12 months ( and given that they are the weakest of the players out there and have little exposure outside the UK, that is not a foregone conclusion) then there could be a really great multibagger to be had here but there is no reason to be invested yet.

[pikey01] 16/12/2011 09:41

Whilst I agree the funds are selling and that seems to be driving down the price, does it not beg the question "why are they selling?"

Pinning hopes on a recovery once all the funds stop selling seems an odd thing to do - IME the price rises when funds want "in", not "out".

[deanroberthunt] 16/12/2011 09:05

funds selling is driving this down, well L&G are under 3% now, so not long hopefully.

[goliard] 15/12/2011 16:19

Big holders can't sell as any volume will put the price down. They are too late now and may as well wait for the outcome. Also the board can't buy even if they want to as all the restructuring etc they are trying to do is price sensitive. I am not a holder and never have been.

[deanroberthunt] 15/12/2011 16:18

not after servicing the loan and pension they don't.

[bachellor] 15/12/2011 16:13

do they have any cash left?

[the_beagle] 15/12/2011 15:32

If the big boys thought we were going bust there would be more selling than this. In fact there have been 1.2 million buys to 800k sells, but the damage has been done by AT traders who can move this with a less than a grand's worth of sells. Anybody's guess as to their motive. Nervy I know, but I can't see it going out.

[deanroberthunt] 15/12/2011 13:43

thats a contradiction mate.

[deanroberthunt] 15/12/2011 13:42

why buy at 4p if its doomed?