R.e.a Hlds 9%pf Discussion Threads

[cwa1] 08/6/2023 06:23

AGM Statement:-

In addition, IPA and ATP are exploring options for refinancing a portion of their existing loans from the group.

Results and dividends

Results for the group for the first half of 2023 will reflect the lower selling price for CPO by comparison with 2022. In addition, it is likely that the results will include a significant exchange loss arising from the strengthening of the Indonesian rupiah against the US dollar with the rupiah currently standing at Rp14,888=USD1 against Rp15,731=USD1 at the beginning of the year.

As previously announced, the semi-annual preference dividend of 4.5p per share falling due on 30 June 2023 in respect of the half year ending on that date will be paid on 30 June 2023. The directors continue to expect that the semi-annual dividends on the preference shares arising on 31 December 2023 and in 2024 will be paid as they fall due.

The directors stated in the annual report published on 19 April 2023 that, provided that operational performance and cash flows continued at satisfactory levels, they would aim to eliminate the arrears of preference dividend (7p per share) by the end of 2023. The recent fall in CPO and coal prices, if sustained, will mean that results and cash flows are likely to be lower than was expected on 19 April 2023. Nevertheless, provided that there is no further deterioration and the financing initiatives noted above provide the additional funding that the directors anticipate, the directors still expect that payment of the arrears of preference dividend can be made in conjunction with the semi-annual dividend arising on 31 December 2023.

[pbaker] 01/6/2023 08:46

ex dividend today

[hindsight] 01/6/2023 08:31

Think its ex 4.5p today but palm price not helping

[ntv] 01/6/2023 07:51

Has this gone xd today or is it the fall out of CPO prices?

[pbaker] 24/5/2023 10:04

Sensible to pay the arrears later. The only reason to have paid them off early would if they were going to make a token payment on the ordinaries. The news has caused a spike in volume with 106 shares traded when I last looked. I have been trying to buy 2000 more shares at 90p for the last few weeks. So even though the spread is 87.5 to 94.5. To buy you will have to pay near 94.5.

[hpcg] 24/5/2023 07:56

No chance of any arrears catch up for the first half. They are rightly offsetting against other debts for the full year.

[dandigirl] 24/5/2023 07:45

Thought they might pay half the arrears too. Hope the CPO price firms up in the second half.

[cwa1] 24/5/2023 06:44

As expected:-

Dividend in respect of 9 per cent cumulative preference shares (the
“preference shares”)



In the company's annual report for the year ended 31 December 2022
published on 20 April 2023, the directors stated their expectation that
the semi-annual dividends on the company’s preference shares arising
during 2023 and 2024 would be paid as they fall due.



In line with that expectation, the directors have today declared that the
semi-annual preference share dividend of 4.5p per share falling due on 30
June 2023 in respect of the half year ending on that date will be paid on
30 June 2023 to holders of preference shares registered at the close of
business on 2 June 2023.

[russman] 15/5/2023 16:53

The share price is nearer the all time low, than the all time high.
Prospect of pref arrears being paid this year are odds on.

[pbaker] 13/5/2023 10:53

It is good to see some chat on this company. So what do people think of the price? The last 2 days saw trades of just 10,000 shares each day at 91p and 91.42p. Making the current yield 9.84% ongoing and 17.5% as a one off for this year if all arrears are paid up as the company expects (all things being equal).
It feels like a bargain in my mind. I keep thinking 110p would be a fair price representing the risk reward.
As I have said before i own more than I should. Though with a little cash in my SIPP I could buy another 2000 adding an income stream of £180 a year,£15 a month. That is a meal out at the local Greene King pub once a month. We might have to share a drink.
Do other people think like this when they invest?
What do others think of the share price, where it is going and what they expect?
Where would you sell? I think in current market a price near 125p would represent a sale price for me. 128.25p is the record all time high.

[hpcg] 13/5/2023 10:13

The coal really should be sold. For now I think they are a major customer of the stone for hardening the roads so I think that is less important.

[hpcg] 13/5/2023 10:12

The company cannot demand the preference shares be redeemed. It can of course do anything in the market, just like every other company.

[russman] 13/5/2023 06:17

"stone & coal interests" should be sold.

[tradertrev] 12/5/2023 20:50

Think we're going round in circles. Permanent capital is capital that can't be demanded back by the capital provider. If the company has the option to buy it back, whether through a fixed price redemption clause or by just offering an attractive price to tempt sellers, it's still permanent capital because the decision rests with the company, not the capital provider (i.e. the shareholder).

[pbaker] 12/5/2023 18:21

(the preference shares are not redeemable shares)
In company parlance that just means, we as shareholders can not redeem them.
The company as always can do what it wants and we as shareholders get an annual chance to question their wisdom or lack of.

[hpcg] 12/5/2023 17:42

From the supplementary prospectus from 2010 when additional preference shares were placed:

The capital of the group currently comprises the issued ordinary
shares, the issued preference shares, the dollar notes, the
sterling notes and other borrowings. The share capital
represents permanent capital (the preference shares are not
redeemable shares).

[dandigirl] 12/5/2023 16:38

From the Articles of Association of 11 June 2020:

6. Purchase of shares

Subject to the provisions of the Statutes, the company may purchase any of its own shares (including any redeemable shares).

Nothing is permanent it seems.

[pbaker] 12/5/2023 11:29

Just one thought on this. Is it permanent capital?

I hold lots of these prefs(in comparison to my overall portfolio)and like the idea of a hopefully guaranteed future income bought at a discount.

The reason i ask is it permanent capital, is Aviva tried to stitch up their preference holders back in 2019/2020. The price of GACA (and others)were 155p and Aviva tried to say they could buy them back at par 100p and cancel them. The GACA price collapsed from 155p to 110p in hours and only a concerted campaign stopped them.

Though if REA tendered 100p cash today (I know they do not have it)they might get a few takers as long as dividends were paid up to date. Again just saying for conversation. I still think REA prefs are good value here but I have more than I should already.

[tradertrev] 12/5/2023 10:29

We are agreed that it is permanent capital and hence very useful.

[hpcg] 12/5/2023 09:43

I couldn't care less about the ordinary shareholders, excepting what is good news for them is by extension good for me as a pref holder. I am in no way suggesting they don't want to pay dividends, it is a simple fact that the preference shares are equity and thus the very safest tier of capital. They would not consider buying it in ahead of paying down actual debt. It is why multi-billion dollar market cap companies still carry permanent preference capital on their books.

[tradertrev] 12/5/2023 09:29

hpcg I don't agree with the idea that they would never buy in prefs or that it is extremely effective debt in any other scenario than one of intentionally being a zombie company.
While there isn't a legal obligation to pay coupons or repay principle on the prefs, they can't pay ordinary dividends without the prefs coupons being fully up to date.
It isn't a realistic proposition for management to run a listed company with a permanent intention not to pay ordinary dividends.
With the price of the prefs where they are, it would make a lot of sense to buy them in, if the overall capital structure were stronger. However, if the capital structure were stronger the price of the prefs would almost certainly be higher, the yield correspondingly lower.
I hold these because I believe the capital structure is strengthening and hence I believe I have bought an undervalued future income stream.
Time will tell whether I am completely wrong or not!

[hpcg] 12/5/2023 09:05

They won't ever buy in the preference shares; it is extremely effective debt for the company carrying no interest or repayment obligation. It naturally shrinks through inflation.

[pbaker] 12/5/2023 06:40

Russman.
You are probably correct if management were sensible! A sensible strategy would be to pay down debt. Much lower levels taking the actions you suggest.
Also Repay the dollar and sterling loan notes.
Rather than pay dividends to ordinary holders if the preference shares stay near 90p. Buy back Preference shares in the market to reduce future preference dividends.
My maths suggest current pref dividends at 9p cost the company £7.83million a year.
The current capital structure could change but i am not sure preference share holders would want to convert to ordinaries, not unless there was an incentive (why give up the current 10% yield at 90p) which would dilute the ordinaries.
Though in a perfect market preference could convert to ordinaries at 1 to 1. Then do a 1 for 1 share issue at 100p with full take up and this would reduce debt to near zero.
Again do not believe my maths.
EPS would drop from $0.395 to $0.126. Creating a debt free company that could pay 10p a share dividend? Though now with 260 million shares in issue instead of the current 43.83million.

[russman] 12/5/2023 05:52

Expedite recovery of interco loans & sell any superfluous subs for your debt reduction program.
Cannot see the ords receiving a div in the next decade unless drastic action is taken to their capital structure.

[tradertrev] 10/5/2023 08:23

Whether or not they classed as equity or debt for the purposes of accounts, arrears of pref dividends are debt, which need to be cleared before any ordinary dividends can be paid.