Ocean Wilsons (holdings)... Share Discussion Threads

[last of the mohicans] 08/11/2024 00:36

Now just wait until you see the Wilson & Sons results for Q3 in the morning !

Only then will some of you start to grasp the weight (fixed costs) that has been holding back the 2 container terminals performance for years now. Now that usage is increasing sharply, it results in an even sharper hike in EBITDA & Profitability.

And just when we're about to reap the rewards of that ..............

LOTM

[last of the mohicans] 05/11/2024 15:08

October's Operational Data is out.

Now remember these figures were achieved while there were operational issues at both terminals!

RG up 29.3% 78,100 TEU's compared to 63,000 TEU's in October 2023

Salvador up 44.5% 57,800 TEU's compared to 40,000 TEU's in October 2023

Total for the year so far ...........

1,108,000 as against 870,700 that's up 27.2%

They sold out at the wrong time for the wrong price!

LOTM

[flyfisher] 05/11/2024 10:59

varies, Not a simple decision with so many issues to consider.

Fortunately my holdings were in isa's and sipp's so i had no tax consideration to make.
I exited immediately on the announcement due to unexpected poor terms of the disposal. In $ terms the deal was at about a 26% lower level than the original rumoured price from bradesco, due to a lower price and a weak real. This was compounded by the sale being at the company level rather than the OWOIL holding company level and so incurring a cgt charge which i had not expected.
I did a quick calculation of expected share price allowing for a 20% cash return at nav and applying a 40% nav discount as being what hansa trades at and concluded that there was no point holding.
It took about an hour to exit an outsized holding in lots from 3000 to 500 and from 1630p down to 1496p. At one point my broker only quoted in 250 size.
I have had several forays into OCN and this last holding was from a couple of years ago. Thanks to all contributors for a civilised discussion board over the last two years.
Good luck.

[varies] 04/11/2024 18:27

LOTM
Many thanks for your helpful comments.
As it happens, l have as much money invested in AIM stocks as in quoted investments. Some have done remarkably well but I have had many disasters too.
The recent changes to the IHT treatment of IHT stocks are unwelcome but I had feared worse.
You are so right in warning against selling now, paying the CGT and one's heirs suffering a charge to IHT on what remains of the proceeds.
I have just been reading the Budget document as published by HMRC. It is a vicious piece of work !

[last of the mohicans] 04/11/2024 13:15

Hi varies,

The problem is they won't be subject to CGT (on death) as long as you haven't sold them before you die, but they will be part of your estate & possibly subject to IHT at 40%.

The taxman kind of wins both ways, but the worst would be selling, paying CGT & then IHT as well on the estate.

Have you thought of gifting some of the shares to your heirs, if you know you've going to be above the IHT level ?

That was part of the reason I suggested before about using a couple of qualifying AIM stocks to give you a "free shot" see that earlier post & only needing to hold them 2 years to be IHT free.

LOTM

[varies] 04/11/2024 11:30

ajbird
Thank you for your suggestion. My cost dating back to 1984 is 27p per share and so l have a gain of about 1360p if l sell now. I am not sure when the increase in the CGT rate comes into effect but even at 20% my CGT per share comes to 272p reducing my net proceeds to about 1110p.
Subject to various risks including a fall in value of the R$, the NAV of OCN shares is about 2000p.
Another factor is my advanced age. As the law stands, there is no CGT on death and my heirs stand to inherit these shares with a CGT cost to them equal to their value at the date of my death.
If l were younger and had a smaller gain per share, l would indeed be tempted to sell my shares.

[ajbird] 03/11/2024 17:13

Why not just sell up? I did!

[varies] 03/11/2024 15:38

LOTM
Your point about the currency risk looks all too valid and I think that this should have been explained more clearly in the announcement. Well spotted.
i am writing to the directors in Bermuda to check on this and ask whether OCN will hedge against the risk.

[last of the mohicans] 03/11/2024 07:37

Brazilian Real is already down 4% on the exchange rate used to calculate everything into $.

Who knows what it will be at in a years time!

This deal was just plain daft from start to finish

LOTM

[craigso] 29/10/2024 18:04

It does seem quite plausible that a tender offer would be the preferred option for the families. They could stay invested with NAV accretion whilst everybody else can sell at a reasonable price.

The problem might be the takeover code, since by not tendering the families would probably end up with majority control. But since Hansa also owns the same funds, perhaps a merger of some kind would be on the cards anyhow.

Complicated stuff...

[sageman1] 29/10/2024 15:01

Solomon gifting shares CGT worries ahead of budget?

[livingstone20] 26/10/2024 17:41

Good post. I agree - this is scenario I came here and went big for. Fingers crossed it plays out as we hope!

[eekhoorn] 26/10/2024 16:17

Whilst it's difficult to second guess the long term aims of the two families, I think we can assume a lot of the minority shareholders will want an exit as near as possible to NAV. With the ports sold off there's nothing left to stick around for. The biggest minority shareholder is the value investor 'City of London' whose stake rose above 5% in November 2022. So their stake is currently worth about £25m, well worth them fighting to get a good deal and I expect they'll be making their opinions about how the money can be best used forcefully to the board. The post deal NAV currently comprises approximately:Offer as near cash £13OceanWilsons investment portfolio £7So with the share price at £14.20 if you take off the offer cash you get £7 of investments for £1.20 a discount of over 80%.The market clearly does not like OceanWilsons (Investments) Limited and is voting against the prospect of reinvesting any material part of the proceeds there. I would hope that the directors will take this into consideration. They are on record as saying they will "ensure that its decision considers the views of shareholders as a whole." They will certainly need to do this to get the 75% vote required.Personally I'm hoping the directors will offer a substantial tender at 10-15% NAV discount, most minor shareholders would be happy with that and the family and those with CGT considerations would get a useful increase to NAV. Everybody wins but maybe wishful thinking on my behalf!

[varies] 26/10/2024 11:34

LOTM
I see that you are indeed right about the exchange rate risk and that the consideration of R$4,352 billion is to be converted into US$ just before the Completion Date at the rate then prevailing. As this date may be 12 months away, we are exposed to a substantial risk.
When I write to the directors, l will ask whether OCN will hedge against this risk.

As for my own CGT position l already hold a fair number of investments that have lost most of their value but need most of these losses to set against gains made this year.
I intend to hold my OCN shares into 2025/26 and obviously cannot tell yet whether l shall have further losses by then. I expect so but hope not !

[varies] 26/10/2024 11:05

LOTM
Thank you for your latest post.
Whilst l agree that we should have been given some warning in the accounts of the potential tax liabilities in Brazil, l cannot see any advantage in remonstrating with the directors about this now. It is not as if l had any cause to regret my investment in OCN shares.
I intend to write to the directors soon to express my views on the course of action that be most favourable to small shareholders.
Thank you for reminding me of your recent post about WS dividends paid to OCN.
I will continue this post shortly but want to have another look first at OCN's announcement to check on the exchange rate provisions.

[last of the mohicans] 25/10/2024 10:56

Hi varies,

I'm still shocked that you & lots of the other long term shareholders here are not calling out the OCN board of directors for misleading all of us for years as to the true TNAV of the company.

As to your valuation, well that might be the case today, but what will the exchange rate be in a year's time ? The Brazil Real could be down 10% by then & what is a terrible deal now turns into a total disaster area.

I posted just a few days ago that OCN has around £0.77 per share for this year in dividend from Wilson & Sons that haven't been paid out ! (that includes the recent payment of £0.34 per share).

There are currently issues at both container terminals, berth occupation at both is near 100% & multi ships are queued for both & there have been multiple cancellation as well. I recon they are only working to 70% nameplate TEU daily capacity.

There are 8000+ TEU's on ships waiting to be dealt with at RG, it was as high as 12,000 !

So the commentary with the November figures (& quarterly report) will be very interesting indeed.

The sale PE ratio is likely to drop quite a bit once the Q3 numbers are out, which is going to just highlight how bad this deal truly is.

As for your CGT issue, here's something to ponder, given the rough terms of the deal you'll have an idea of how much CGT your going to be liable for (may well increase further when the budget comes out next week).

So if you don't have back dated losses, or losses that you can crystallise to help with the offset. It might be worth looking at investing that sort of cash in a couple of high risk / high reward AIM stock. Things that qualify under the 2 year IHT rule (free of tax) & could go bust but could also increase 2x, 3x, 5x or more before 4th April 2026.

Think of it as a free play courtesy of the government! If they go bust then the cash lost is offset against the OCN gain & your none the worse off (only the Taxman is) If they jump in value by anything like those multiples, well you'll have to pay the CGT on the OCN shares, but if you've made those investment by say mid Dec this year, then you'll only need to hold them to mid Dec 2026 or less. To have no IHT to pay on the gain & can gift them to family members etc, who can then sell them etc.

LOTM

[varies] 25/10/2024 10:11

I have been looking again at the terms of OCN's sale of its 56.5% interest in Wilson Sons translating $ into £ at 1.00/1.30 and taking the number of OCN shares as 35.4 million.
After deduction of Brazilian tax and other expenses OCN expects to receive at least $593m, say £456m or 1288p per share.
Wilson Sons expects to pay dividends of $22m per quarter until the transaction is completed.
OCN's share of $22m will be $12.4m, say £9.6m or 27p per share.
My understanding is that a dividend has been paid by Wilson Sons recently. It is not unreasonable to hope that part of these dividends will be paid out to OCN shareholders before the transaction is completed.
Whilst many longstanding shareholders (of whom l am one) have large contingent liabilities to CGT, the shares at their present level seem to offer a good return to newcomers as the expected proceeds from Wilson Sons and dividends from that source represent about 95% of the present market cap.

[ajbird] 24/10/2024 11:45

Wishful thinking LOTM?

[last of the mohicans] 24/10/2024 02:17

No I Square offer now coming.

So I Square made a mistake of warning OCN in advance of it going to make an offer, which allowed OCN & MSC to frantically agree terms & get it out into the public domain.

Had I Square put out an offer 1st of all it would have caught the others off guard.

LOTM

[extrader] 22/10/2024 17:18

Oh! wait....
Re my 1870

From today's online FT :

Mubadala Capital sees chance to buy up large private equity stakes

Emirati unit raises $3.1bn for its latest fund hoping to appeal to groups looking to raise cash

OCTOBER 22, 2024

.." It is positioning the fund as a solution to private equity groups seeking to exit large bets, or PE-backed companies managing heavy debt burdens that need fresh capital.

Mubadala’s private equity fund generally is seeking to invest between $150mn to $350mn in equity per investment, but will push that investment to as much as $500mn for “great ideas”. It now manages $24bn, three-quarters of which comes from external investors...."


AD Ports (also from Abu Dhabi) is vying with MSC elsewhere, on the East Mole development at Pointe-Noire, Congo Brazzaville.

GLA

[extrader] 22/10/2024 14:26

I listened in to the Wilson Sons conf call.
A bit of a 'nothingburger', IMO.

- Completion is expected in H2 2025, after which SAS will offer to buy in remainder (on same terms). SAS might then go for an ('incentivising'?) de-listing. No decision as yet.

- BTG Pactual asked 'early or late H2'? Reply : depends on regulatory approvals and timelines, not something we (Wilson Sons) can answer.

- what about counter-offer, break fees etc ? Don't ask us, ask Ocean Wilsons !

- what are the synergies/benefits arising from the sale ? Don't ask us, ask MSC !

Must say that a likely 12 months of regulatory uncertainty + commercial, forex and political risk doesn't appeal at this sale price.

Let's see if a counter-offer appears, otherwise I'll probably draw stumps.

NAI, DYOR etc etc
ATB ...and GLA

[cousinit] 22/10/2024 11:53

I'm trying to figure out what the two families might be wanting to achieve as a result of the deal.

At the moment (if I've interpreted the shareholdings correctly) the income currently looks like:
WS - OCN div £3.1m, HAN div £0.5m, Mgt fee profit £1m (say) - total £4.6m pa (on NAV c£150m)
CT - OCN div £2.7m, HAN div £0.33m, Mgt fee profit £1m (say) - total £4.03m pa (on NAV c£120m)

With Wilsons sold, it is likely that the natural yield of any replacement assets would be much lower, so any future OCN div would be much, much lower if it was to be supportable (maybe 80% lower?).

The current Hansa dividend isn't quite covered by earnings, where the OCN div is the current main income source.

If very little of the Wilson proceeds were distributed then there may be scope to squeeze out more management fees, although we can all see that the current fee arrangements are not very competitive/reflective of market rates given it is basically fund of funds. You would hope that the various Boards wouldn't just be supine in nodding that through!

So, if the level of income would fall for the families by more than half, were the investment portfolio route to be taken over meaningful capital return, is that what they are looking for? As we have seen, these trusts with a low yield and family controlled assets (including PE in the portfolio) will happily sit at 35-40% discounts to NAV.

I would assume that if these entities will still hold a large chunk of the family wealth that means effective control must be maintained, so direction can be set absolutely.

Clearly the tax position for each of the families will play into this, but if meaningful cash isn't returned as part of this deal, then it is likely to remain in unloved vehicles on a chunky discount, but now with minimal yield (so can't see piecemeal family selling over time being a realistic option).

Capital returns could be made by tendering for shares at, say, a 20-25% NAV discount. This would increase the underlying NAV for the family holdings if they didn't take their proportion of cash. But is asset harvesting what they all want?

So unless the shares can be used as collateral for the families to raise cash against, my instinct is that a meaningful cash return (up to 50% of net proceeds) may be the route? Any views?

[varies] 22/10/2024 10:14

LOTM
Thank you for the further information provided.
I had not realised that OCN had large commitments to provide further funding on its private equity holdings and have looked at the latest Annual and Interim reports for details. I cannot find a figure for these commitments but do see that OCN held $118 million invested in Private Markets at 31 Dec 2023 being 38% of its portfolio.
This does indeed make OCN less attractive to any prospective purchaser.
I see that the price of Wilson Sons shares fell yesterday to R16.15. This is not surprising given the long wait before shareholders can expect to receive R17.50.
My understanding is that WS shareholders including OCN will receive dividends during the wait and that these will not reduce the price of R17.50 unless they exceed a stipulated figure.

[last of the mohicans] 21/10/2024 20:59

Wilson Sons S.A. (B3: PORT3) (“Wilson Sons” or “Company”;), as per the Material Fact disclosed on this date, invites investors, analysts and other market professionals to its conference call regarding the execution of the Share Purchase Agreement between its controlling shareholder, OW Overseas (Investments) Limited, and SAS Shipping Agencies Services Sàrl, a wholly-owned subsidiary of MSC.

Date: 22 October 2024 (Tuesday)
Time: 10:00 (Brasília) | 14:00 (London) | 09:00 (New York)

Webcast: access link

LOTM

[extrader] 21/10/2024 19:38

Thanks LOTM!

If the buyer of OCN were from private equity themselves, that aspect of any deal might not be an issue...and the buyer would have a better-than-average idea of what the private equity future commitments were actually 'worth'...

I wonder whether OCN's commitment is irrevocable?

Or whether a parastatal such as AD Ports from Abu Dhabi might enter the fray, leaving other arms of the State eg Mubadala to pick up the equity side of things?

Mubadala already has a longstanding investment in Acu port ( largest private in Brazil) and in J/V with EIG, a private equity infrastructure fund...

Interesting times, in any event!
ATB