Northgate Information Solutions Share Discussion Threads

[powwow] 12/12/2007 11:43

hotfinance, debt is not a panic word so to speak. It relates to the fact that the uk economy, the uk housing market, the uk banks mortgage books, and the uk companies debt has been borrowed on cheap money for the last 12 years through numerous instruments , namely CDOs. Now as this has dried up and bansk are incurring huge losses, times will by now have changed.

Bank Lending is now more restricted
Risks on defaults are higher
Inter lending bank rate is at a 9 year high

and finally

Cheap money is no more

This means debt is not a problem to be looked at lightly. It's that simple really. You have a big debt balance, so how will you service that debt. Will you be able to cope with payments in interest if they suddenly increased 40% for example as a business.

You see it could be ok today but tomorrow is another day and things change. That has changed for NIS in the short term, hence the share price fall.

[powwow] 12/12/2007 11:31

Tradx666 I agree. I wonder if someone like Capita or some other IT Services business will be sniffing around NIS because as you say they have a solid business.

[hotfinance14] 12/12/2007 11:23

Currently if people here the word debt they panick as if a war had broke out...numpties.

[jimmy c] 12/12/2007 11:21

to be fair this marketis awful for small stocks, can't think of many that are doing well. Only mining holding the LSE together.

[jimmy c] 12/12/2007 11:15

probably is. Didn't realise how cash generative they were so not worth shorting. That other co wasn't making any cash, these have free cash flow as well as happy to pay a divi. Good luck.

[hotfinance14] 12/12/2007 11:12

Many other companies have the same debt problems.Total over reaction.

[drunker50] 12/12/2007 10:49

Is this a buying opp or is it catching falling knives.

[powwow] 12/12/2007 10:34

Hello Tradx666, was looking at why this has been falling recently. Shame its going down, but understandable under the current circumstances. I think many companies who took on too much debt, a tad like the banks and consumers, will find things harder next next year as finance becomes more expensive.

[brickred] 12/12/2007 10:27

hotfinance14 has gone very quiet.

He's not mentioned his usual 'the fundamentals haven't changed' statement for a while...

Maybe that's because the fundamentals have changed.

Why aren't there people calling for Stone's resignation? It's his fault that Northgate's now in this mess after all...

[tradx666] 12/12/2007 09:32

beercapafn,

the fact that they are carrying the debt, and are unlikely to be able to replace it anytime soon with cheaper instruments means that it will in all liklihood continue it's slide until either a cash-rich aquistor reckons that it looks fair game, or it can signficantly demonstrate that it can reduce the debt burden faster than it is currently doing.

I would not be at all suprised to see this hitting as low as 30p or so before rebounding on take-over rumours....

regards

T..

[beercapafn] 12/12/2007 09:22

hotfinance14

Oh come on, give if up, or is it now an even better buying oppertuinity.

Only hope here is if a company with a strong balance sheet soaks up NIS. IMHO.

[tsmith2] 12/12/2007 09:09

Excellent cash flows and hedged situation mean the interest is more than covered

The Group's strong cash flow has continued and is being used to reduce debt and
invest in the business. At 31 October 2007 net debt stood at #416.4m. Interest
exposure on this is hedged with 73% of the drawn debt being secured with fixed
interest agreements averaging 4.8%, and a further 13% of drawn debt being capped
at 5.5% plus any margin the Group pays over LIBOR and EURIBOR to its banking
partners. 46% of drawn debt is denominated in Euro, which provides a natural
currency hedge against the underlying investment in, and cash-flows generated
from ARINSO.

[salpara111] 12/12/2007 08:32

Have been watching this one but would have to say that despite its good operational performance I will not touch a company with gearing over 100% given the state of current debt markets.
One would have to wonder if there are references to gearing in their banking covenants as that could create a self fulfilling crisis.

[ards] 12/12/2007 08:18

well thats me out as stop just hit. was going to sell yesterday but listened to tw on tips.

[ards] 12/12/2007 08:15

just goes to show the power of the brokers. who is right? Still dont fully understand the issues. there are a lot of company who through acquistions take on too much debt eg smg and get stuffed when market gets bad. I suspose this is the risk premimum being applied to nis.

[drunker50] 12/12/2007 03:25

turner&floyd reiterate SELL target 33p

[ards] 11/12/2007 23:08

altium capital buy with target 85

[grlz] 11/12/2007 17:19

well it lost it's floor today with little fight

[superglide] 11/12/2007 16:54

a sell and 50p target for Northgate Information Solutions (NIS)- Numis

[hotfinance14] 11/12/2007 16:08

We should contact Stone and ask about the debt issue.

[brickred] 11/12/2007 16:02

Down more than 5% today on top of yesterday's 9% falls. Methinks that NIS is heading twds 50p now, especially with the news regarding the level of debt.

[brickred] 11/12/2007 15:22

Damn right hf14 - NIS certainly do need to reduce their level of debt. This will have far-reaching impacts on figures for 2008 & onwards.