Mobico Share Discussion Threads

[paulywally] 27/11/2009 12:03

The vote went in favour of the rights issue.

[canny scott] 27/11/2009 11:51

Yep, noticed that too Hamster, reckon just bad journalism.

[hamsterape] 27/11/2009 11:14

That's odd - the article seems to assume the result of the vote
before the meeting this morning has actually taken place.

[s50cam] 27/11/2009 10:26

No rocking the boat at National Express

[hamsterape] 26/11/2009 16:42

...the management pulled out, not SGC. I believe it was at the
point SGC were asking to view the books. Lol! Surprised you didn't
put an appropriate emoticon in there somewhere.

"Who will give me five pounds for what's in my mind?".
Classic "Mock Auction" stuff.

SGC effectively walked away from buying the
proverbial "pig in a poke". Can't say I blame them - in
hindsight it looks like they were right to.


The assumption was that if the RI gets voted down it would pave the
way for another deal with SGC and therefore be positive for the share price.
Now that one of the skeletons has come clattering out of the closet, would
a "no" vote actually be worse than a management-supportive "yes" vote?

[jtcod] 26/11/2009 15:55

Perhaps the Management were expecting SGC to both save the Rail franchises by leveraging their better reputation and pay for the privelage. ;-)

[jtcod] 26/11/2009 15:48

Perhaps for the first bid HA. Though it doesn't explain how the management arrived at a value for the business of 500p if they assumed the rail side of the business had no future. The second bid failed because the management pulled out, not SGC. I believe it was at the point SGC were asking to view the books.

[hamsterape] 26/11/2009 15:38

Presumably the uncertainty over this was the real reason why
the two bid attempts failed and the offerors walked away.

[jtcod] 26/11/2009 14:37

If we assume say £1bn debt and ongoing interest costs of say £50m (-£63m last year) + £50m net profit excluding rail and assuming SGC feel they could do a deal to save the last franchise under their ownership then perhaps on say a multiple of 12x plus some synergies thrown in (£15m?), NEX could be worth up to 330p to SGC. Hard to get any higher than that though imo.

Obviously they would need to spin off the Cosmen division from there.

[jtcod] 26/11/2009 14:13

Hamster
Not sure what to make of it.

For the management to be 'disappointed' seems to imply they held out hope. If they are saying like you that 'it was a foregone conclusion' then with 55% of earnings lost with no hope of return, their hardball stance on 2 failed negotiations looks stark raving mad. The statement is a hairs breadth away from an admition of negligence imo. Ongoing earnings net of tax would reasonably be projected at just £50m without rail yet they were holding out for £1.75bn including debt. The only way they could justify a valuation like that imo is to claim they believed the relationship with the issuing body could be salvaged.

[hamsterape] 26/11/2009 13:51

"26 November 2009

National Express East Anglia Rail Franchise

National Express Group PLC (the "Group") notes the decision announced today by
the Department of Transport, not to extend the National Express East Anglia
franchise beyond its normal termination date of March 2011.


Whilst this decision was expected given the event of the default of the
National Express East Coast franchise, the company is disappointed given
the excellent improvement in performance delivered by the Group over the
past 5 1/2 years of operating the franchise. "


So the board were at least aware of a strong likelihood for some time and knew
for definite yesterday, which, along with the absence of Cosmen buying any
more, may help to explain the drop off in price before today. I can't help but
wonder whether Cosmen was kept fully aware about this by the other board members?

It also seems suspiciously coincidental that this official confirmation
letter should be dated the day before the rights issue vote takes place.

What do you guys make of that?


I'm short of NEX, to answer JT

[jtcod] 26/11/2009 12:42

Hamster
Do you hold shares in NEX?

[hamsterape] 26/11/2009 11:36

What I mean is that this loss of the franchise is not fresh news today,
as "newseller" thought - the RNS is just official confirmation on what
was already a foregone conclusion.

[jtcod] 26/11/2009 09:56

Hamster
Maybe you assumed it but I don't think the board did.

2010 earnings consensus including rail is for a pre tax profit of £142m profit. The BoD wanted 500p for the business. With 153m shares that's £765m + Debt of say £1bn That is an enterprise value of approx. 16.5x earnings net of tax.

Approx. 55% of that assumed profit is from Rail if we project current 'continuing earnings' shown in the 2008 acounts forward. That means 500p with your assumption that 'rail would be lost anyway' would mean they were seeking an enterprise value sale price of 35x earnings. Somehow I don't think that was the boards assumption.

Continuing:
Bus 27%
Coach 18%
Rail 55%

As I said earlier, the board have played Russian Roulette with shareholder value in not trying to secure a sale quickly at any reasonable price and following today's announcement, they have lost that gamble.

There's no way it's worth 500p now imo.

[philipm2] 26/11/2009 09:53

This company is yet another example of a badly run UK company and ranks alongside Cosalt & Raymarine to name others.

When times are good even poorly directed companies make money, however when the going gets tough directors failings come to the fore, as evidenced by Cosalt & Raymarine.

Companies with good brand names & products, but run by inept, self eluding, colonel brigade directors.

Come on Jorge & Brian - show them how to do it.

[jtcod] 26/11/2009 09:05

JTCod - 5 Nov'09 - 10:26 - 486 of 557 edit


I am surprised any broker would underwrite an issue expecting investors to rely on forecasts that have no way of estimating the damage caused by pulling out of their rail franchise. They could have alienated all government departments for all we know. Even those that have say in other forms of transport.

The shareholders need 'new owners' to bring an established reputation for dependability, integrity and fiscal control. Just hiring a new CEO will not achieve that and this BoD is playing Russian Roulette with shareholder value imo.

end



It seems that events have moved on rather quicker than some (on the board) might have imagined.

[hamsterape] 26/11/2009 09:03

It's not really news - it was widely expected for a long time.

[jtcod] 26/11/2009 08:58

The obvious answer would be that the Rights Issue is going to be voted down. At least that's the way it seems to me.

[newswseller] 26/11/2009 08:54

how can this be blue given that news?

[jtcod] 26/11/2009 08:41

National Express Loses East Anglia Rail Franchise



This management have really alienated themselves imo.

[hamsterape] 26/11/2009 08:31

You're eligible until the shares go ex-rights on the 30th.

After the "record date" shares sold are done so "cum rights" so
a seller indeed has the rights but has to sell them with the shares
until the "ex" date. It's a stupid system that confuses an awful lot
of private investors, not least because the record date is prominently
featured in announcements as "the qualifying date".

caveat emptor

[winston270] 25/11/2009 22:43

HamsterApe,

I was under the impression that shareholders could only take part in the rights issue if they owned the stock by close of business 24th Nov (the record date) or was that date to be eligble to vote as well?

[hamsterape] 25/11/2009 21:21

Shares bought until Friday ARE eligible, but I'm not sure
if they'll be votable at the meeting.

Not sure about the 101K "O" trade - seems to be almost the
same size as the closing auction trade and there's a "C"
next to it, whatever that means. I wouldn't assume too much
about it. Doubt it was the Cosmens, otherwise they would have
been buying yesterday too and we would have had an RNS, unless
it got delayed.

[winston270] 25/11/2009 19:08

There's been a lot of buys going through considering the shares bought are not eligible to take part in the rights issue if approved by shareholders. In particular the 101,000 purchase at close

Cosmens again?

[jtcod] 24/11/2009 15:15

"If the RI goes through and if Brough is correct, then surely the Cosmens may well end up dumping most of their rights on the market, having failed to achieve the size of blocking vote they'd intended."

Imo if the Cosmens thought this was a gamble they would not have committed these funds with the potential rights issue in the offing.

The approach to the former Chairman seems to imply (to me at least) that they believe they will be calling the shots soon.

Perhaps that move was to satisfy some other major shareholders who want someone they know and trust to oversee fair play on a potential SGC merger.