Pennant Share Discussion Threads

[dasv] 19/6/2013 08:56

Happy to say I never sold.

[owenski] 19/6/2013 08:55

Yep, encouraging, bought some more

[interceptor2] 19/6/2013 08:21

Very confident statement so early into the finacial year, with directors saying PEN likely to exceed current market expectation.

After making a good profit here last year, I have brought in again this morning.

ic2...

[royaloak] 16/4/2013 08:59

Waiting to buy again, but too easy to buy below Offer at the moment and difficult to sell, guess it will be drifting lower to attract buyers.

[dgwinterbottom] 13/4/2013 17:25

Gengulphus - many thnaks for that, an interesting insight into the realities of takeover bids. I was thinking more along the lines of an approach in your last paragraph a hostile bid being the more unlikely scenario!!

[gengulphus] 12/4/2013 22:35

That said in the event of a hostile approach the family do not - as yet - have the magc 51%!!!!

They've got quite enough to dissuade just about all hostile bidders. For a start, they've got the magic 25%, meaning they can defeat any special resolution - so hostile takeovers by a scheme of arrangement won't get off the ground, and hostile offers can at best hope to get enough shares to give the offeror operational control of the company. That doesn't give the offeror much pressure they can put on the family and other minority shareholders to accept the offer - in particular, they cannot pass a resolution to delist the company. And without being able to get enough shareholders accepting the offer, the offeror cannot progress to the compulsory purchase stage, the offeror won't generally be able to raise finance against the assets of the company - meaning they'll have to finance it all themselves... I.e. a hostile offeror would need to have pretty deep pockets!

An offeror with operational control of the company can make the company a cash drain on the minority shareholders, by refusing to declare dividends and by launching rights issue to finance expansion plans, and that can be used by such an offeror to put pressure on minority shareholders. But only by making the company a cash drain on the offeror as well - so again the offeror would need deep pockets to do it. (For an example of an offeror succeeding with that technique, see Tesco's takeover of Dobbies Garden Centres several years ago. But note just how much bigger Tesco was than the target!)

That requirement to have deep pockets to succeed with a hostile takeover will rule out the vast majority of potential offerors - and most of those who do have sufficiently deep pockets would probably find it a lot easier to offer enough to get a recommended takeover instead... Directors might say "No way!", but if enough is offered, their advisors are likely to tell them that they've really got to put the offer to the shareholders.

Gengulphus

[dgwinterbottom] 12/4/2013 17:31

ZOA - thanks for that "I did broach the subject with one of the directors" indeed that response came from a Director whose equity interest is not that of the Chairman and his family........ That said in the event of a hostile approach the family do not - as yet - have the magc 51%!!!!

My thanks to you both for attending the AGM and reporting back, much appreciated!!

[wilmdav] 12/4/2013 17:08

Yes, thanks to ZOA and valustar1 for attending the agm. I might well join you next year.

Thanks also to davidosh for pursuing the possibility of a Mello presentation - one I would not want to miss.

[zoa] 12/4/2013 14:30

DGW. I did broach the subject with one of the directors of the possibilty of a takeover by an international defence contractor requiring the unique knowledge and expertise that PEN posseses, he knocked that on the head and was adament that this would not happen, however I thought it prudent not to mention the question of age/takeover/succession.

[davidosh] 12/4/2013 12:32

Well done guys for attending the Agm and showing the directors that private investors are interested and appreciate their efforts on our behalf. I am very much on the case for getting a Mello presentation arranged over the next few months and for those unaware of our investor events...

www.freesharedata.com/mello

[dgwinterbottom] 12/4/2013 12:28

Orange1: Many thanks for that!! :-)

[orange1] 12/4/2013 12:00

unique selling points

[dgwinterbottom] 12/4/2013 11:50

Zoa - "perhaps the worry would be that eventually the diretors will want to take the Co. private, although that would rather leave the employee trust out on a limb" is it not just as likely given the age of the Chairman, that they will succumb to a takeover given a sensible offer?

Topvest: sorry you got me there: USP's?

[zoa] 12/4/2013 11:04

Good to meet you too Valuestar, hopefully again at AGMS, if Aims are admitted into ISA's I will be able to move my "steady Eddy" holdings into small caps. Yes outlook looking good, perhaps the worry would be that eventually the diretors will want to take the Co. private, although that would rather leave the employee trust out on a limb.

[valustar1] 12/4/2013 09:12

Hi Zoa, great to meet you yesterday.

Pennant dont make a great fanfare about their business, maybe the industry they are in, but are very confident about how they are growing. The outlook with the results says it all.

[topvest] 12/4/2013 08:27

Yes, agreed £1m a year is still a lot of training anyway and its probably one of their USPs to have this work with the MOD.

[dgwinterbottom] 12/4/2013 08:22

Topvest - your comments re spin off work crossed my mind (not a long journey) that is the point at which they can raise the margins in the longer term. better to have got the initial tender on low margins with that prospect than get nothing at all!!

[topvest] 11/4/2013 20:34

DGW - you may be correct - looks like £1m a year for 3 years and a possible 2 extra years. They do know exactly how much this work costs though as they have been doing it for a while. Probably very sensible to protect their position, even if at relatively low margins, as I'm sure there is spin-off work. I wonder if any other contactors won anything or whether Pennant cleaned-up! Anyway, very well placed for the current year.

[orange1] 11/4/2013 18:12

Thanks Zoa for your report.

[zoa] 11/4/2013 17:07

The directors were upbeat and enthusiastic at the AGM today, I would say quietly confident regarding the future prospects for the company; they confirm that there are plenty of tenders in the pipeline (with the caveat that tenders are often formulated over many years, in order to put together all the various technical aspects) and that in many instances they are not the lead contractor because larger defence contractors need the niche expertise that PEN posseses.

One intersting point that emerged from the meeting was that the board are not too keen to have institutional investors on board, for the simple reason that once the shares are purchased a big upwards move on the share price could very well tempt the institutions to offload, causing extreme volatility in the share price.

[wilmdav] 11/4/2013 10:21

AGM today at 10.30am. The absence of a pre-release rns suggests that there will not be any comment. They do seem to be rather coy about the MoD contract, certainly not crowing about it.

No doubt the house broker will be latching on to this, so will be worth keeping an eye on any forecast adjustments.

[dgwinterbottom] 11/4/2013 09:25

Topvest - "maybe the contract value is lower than envisaged" you could well be correct! My thought is they may have cut the tender to the bone to protect their previous MOD business and hope to recover things on the additional work that was in the tender!!

[topvest] 09/4/2013 21:08

Yes, maybe the contract value is lower than envisaged. I was expecting a bigger number. Anyway, think it's still very good news - they sound like they have probably got the next couple of years of decent growth in the bag, provided they can execute the work well as they have in the past. Odd reaction, as you say, but still undervalued.

[dgwinterbottom] 09/4/2013 09:20

Have to say I am rather srprised that there has been no reaction share price wise to yesterdays announcement of the MOD contract win.

[topvest] 08/4/2013 16:01

Presume it's this one. It's difficult to know how much the original business was I suppose, but over 21 sites so would hope they have been one of the winners!

"In my report with the interim results I mentioned that the UK MOD were tendering a contract for the support of training aids at a number of MOD training establishments in the UK. This contract combined the Group's existing contracts with contracts run by other contractors. The tender has now been submitted and the result is expected in the near future."