Rare Earths Share Discussion Threads

[sherlock the stock] 30/9/2004 20:39

Reduced dividend on the cards and a rights issue at between 10 to 15p. Its a narrow brand susceptible to fashion, in this case Australia and the backpacker brigade. Firstly the euphoria of the Sydney olympics is gone and backpacking, in the age of global terrorism is on the ebb. Can't see this company as being a survivor in five years. Seems fully priced above .30p, must be dividend Johnny MM's propping the price. For the small chap, bail out now while there's still enough height for your parachute to open.

[ragweed] 27/9/2004 09:36

especially when they announce they are suspending the usual huge dividend!!!

sub .20p

[oligoad] 24/9/2004 17:29

will be able to pick this up at much lower price bearing in mind banking issues outstanding

[0800] 23/9/2004 09:01

Maybe a bid, most likely from a private equity player, who sees the current flaws and the possible upside

[themariner] 21/9/2004 18:08

Seen today's announcement. Cantor Fitzgerald's holding (presumably on a client's behalf) up by 500,000 shares (at 35p, about £175,000 worth). This is significant, in that it's reasonable to assume that this/these purchases were done after it came out that the ceo and fd had gone and that there was this breach of banking covenant. Either someone knows something or they're really confident or they are preparing to bid.

[timc] 16/9/2004 14:41

Jeffian

I remember well the SUF saga-I followed the company for a long time and very nearly invested, as the growth there when it was on AIM was exponential.Of course as confirmed now it was all done through agressive openings financed by a stream of bank borrowings and backed by a dubious concept.

Your sale of property shares is very interesting-I was heavily overweight all the mortgage banks until 18 months ago, but sold the lot-The sector is as good as it gets I feel.

I take it you still hold Lupus though-its very quiet at present,and I have a slight worry whether there is going to be a deal there.If there isnt, then the shares will have only one way to go.

[jeffian] 16/9/2004 14:08

Hi Tim,
I'm a Chartered Surveyor with a background in commercial property development and as Property Director of a small regional pub/brewery group, hence my interest in those fields. I once had the pleasure of going round the SUF estate in the company of ex-Chairman Hill. Errrm, how can I put this legally? I was not entirely surprised how things panned out there! I don't know anything about Regent (I'm a huge fan of the regional brewers and tenanted pubco's, but not the 'fashionable' High Street bar chains), but profit warnings, breached banking covenants etc. should not be taken lightly in any business IMHO. It usually only gets worse!

I'm out of the property business now (in fact, I'm out of every business!) and, other than my own house, sold all my directly-held property investments at the bottom of the interest rate cycle. I do not hold any property shares.

Regards, Ian

[timc] 16/9/2004 12:49

Jeffian

Glad to see further wise posts from you on Regent.I too was caught up in their mess, but bailed out in January this year to invest further in Lupus.Now its apparent just what a mess Regent are in, and unfortunately I think the company is not too far away from closing time.
Incredible how this sector has got itself into this state:I remember the early '90s when Regent,Weatherspoon,Surrey Free and then Luminar were all shooting stars.However look down any High Street in the UK and it becomes clear just how many chained pubs are all in business.
Hopefully there will be some good coming out of all this:As the Springboks and Walkabouts are all put to bed,perhaps decent operators like Luminar will find cheap space to grow again and aquire assets on the cheap.I had LMR until just before i sensed they too were going to struggle, but am thinking of having a serious look at the company again.
I see from your posts on SUF you were a property specialist.Whats your view on the sector now?

Regards
Tim

[jeffian] 16/9/2004 12:04

oligoad,

You either didn't read, or discounted, my post#64, but to save you all that reading, when the moment comes, it looks like this! :-

"Mr Ashley James - 12 Nov'02 - 12:11 - 135 of 259


Gerry,

We know that, the price has collapsed 90%!

And the point you are trying to make is?

Who are you working for trying to get SFI stock?

I am an ADVFN trader not just a complete fool!

My position is small now, I had better buy more!

Cheers

Ash

NAV_Mike - 12 Nov'02 - 07:41 - 136 of 259


Goodnight Vienna........

VATTETON - 12 Nov'02 - 07:45 - 137 of 259


RNS Number:6573D
Suspension on LSE
12 November 2002

NOTICE OF TEMPORARY SUSPENSION OF TRADING ON THE LONDON STOCK EXCHANGE"

Regards, Ian

[oligoad] 16/9/2004 11:06

will start to look attractive in high teens imo

[ken35] 15/9/2004 21:19

I wish I had headed the warnings on this one a lomg time ago I rang my broker the day the results were due out he said bail out things looked grim better to take a loss than risk lossing all my investment.

[jeffian] 15/9/2004 16:41

Hmmmmmmm! Well before you plunge in and buy/hold for recovery, it might bear comparison with SUF. Have a look at the thread entitled "Is SFI Group Massively Oversold" (a title uncannily like the one at the head of this thread!) and see people convincing themselves that a breach of banking covenants, dividend waiver and profit warning was a 'buying opportunity' right up to the point where the shares are suspended!



My spanner in the works started around post #34. Read and learn!

Regards, Ian

[adam] 15/9/2004 13:07

seems pretty dire, but who is buying? the price would fall further on the volume of trade going through, so someone thinks there is value. the EVBG note seems very downbeat on prospects of a bid above current price.

[hybrasil] 15/9/2004 12:06

oh yikes this is definitely one to sell

[jeffian] 15/9/2004 11:15

Yes, hybrasil, shades of SUF I suspect.

Just to continue with the 'swaps' thing, as explained by me and Jeff H above, the 'swaps' instrument has a life of its own quite separate from the debt it is hedging so, as in Jeff H's example, Regent probably had a variable-rate loan from its bankers (subject to the usual covenants about profit/interest cover etc.) which it hedged with a 'swap' at a higher rate, but that could have been with another party and may not have been disclosed to the bank. It depends how it was accounted for, but it is possible that the original variable-rate loan was disclosed as 'interest' but the higher payments being made elsewhere were 'lost' as part of overheads or exceptionals. Obviously, if only the lower variable-rate loan was being declared as 'interest', this would boost interest rate cover whereas had the net effect of the two 'swaps' transactions been known, this may have reduced interest rate cover to the point where banking covenants were breached. Reading the statement ("It became apparent yesterday afternoon that the treatment of out of the money interest rate swaps in the historic calculation of the interest cover covenant in Regent's banking facilities has not been strictly in accordance with the
procedure set out in the loan facility documentation."), I suspect this is what happened and the hasty departure of the FD along with the MD would also point in that sort of direction.

Regards, Ian

[hybrasil] 15/9/2004 09:36

down again today. It doe s eem that the bankers control this co. Hard to see how its current valuation with (i believe) virtually all leasehold property can be justified

[hybrasil] 15/9/2004 08:09

Jeffian and jeff h
Many thanks for the explanation. I realise the amount of typing involved.

[jeff h] 15/9/2004 00:41

I'd guess that as the Interest Rate swap goes back a few years,
Regent will have effectively swapped a Variable Rate loan for a
Fixed Rate one.

3 years ago they may have thought it to be a good deal to Fix the
rate at say 7%, and they will have arranged with their bankers or
another company for Regent to make a commitment to pay the other
sides Fixed rate loan and the bank/other company to pay Regents
Variable rate loan.

Hence Regent ends up paying a Fixed rate of interest (the 7%) and
so has protected itself from rising interest rates.

Regent will still retain its obligation to its original lender (the
original variable rate loan) and as interest rates fell a couple of
years ago then the payments to the original lender would also fall.

If they hadn't entered into the swap that would be the end of the matter
but they would be paying 7% to the company/bank that they've entered into
the swap with and they would be paying to Regent the variable rate, hence
as time marched on and interest rates fell Regent would be receiving less
and less from the other party to the swap.

Blimey I aint explained that well.

Regent Pays Original Variable Rate loan say LIBOR +2% to Bank

Then with the swap:-

Regent Pays Fixed Rate 7% to Company B (or Bank)
Regent Receives LIBOR +2% from Company B (or Bank)

So if interest rates fall (as they were couple of years ago) Regent
ends up overall paying more.

The advantage to Company B (or more likely a bank) is that it has
effectively swapped a Fixed Rate loan for a variable one.

Ironically as interest rates have been rising over the last year the
net payment by Regent has been reducing.

[jeffian] 14/9/2004 23:58

hybrasil,
Swaps are a mechanism for hedging interest rates. As a property developer during a period of very volatile rates, I used to use them to roughly 'fix' the rate I paid so I knew where I was during the development period. Usually, you pick a narrow band in which you are prepared to pay interest and then enter into 'swaps' whereby you pay out if rates fall below the agreed level, or receive payment if they rise above it. Whilst I used them specifically linked to particular projects with a defined sum of money, more 'sophisticated' punters realised that they had a life of their own and could simply be used as a 'bet' on interest rate movements. This famously ended up with the London Borough of Hammersmith & Fulham (in which I live, coincidentally!) nearly going bust after running up about £750m(?) debt writing 'swaps' simply to make money (i.e. not related to any specific borrowing required by the Council) which went against them, and they were only saved by the Courts which decided to let them off on the technical grounds that they didn't have the legal power to enter into such agreements in the first place. The banks ended up carrying the hit. Anyway, if Regent Inns are "out of the money" on a swap, it means that they are paying out to someone because market interest rates are below the level they anticipated. Whether they entered into such a 'swap' to try to protect their borrowings against an anticipated rise in market rates or were simply trying to make additional cash on the side by 'playing' the markets like Hammersmith & Fulham, I don't know.

Regards, Ian

[ken35] 14/9/2004 20:43

I had to sell today seems like another Mayflower to me took advice from a broker and sold whils I still had some money left to get out very disapointing share wish I never heard tell of this one kept hoping for upside but today was last straw.

[hybrasil] 14/9/2004 20:15

themariner
I agree
Does anyone know what an "out of the money interest rate swap" is?

[themariner] 14/9/2004 18:30

I've been preaching for ages that REG was, under the just departed management, a business that was fundamentally mismanaged. They couldn't run what they had, even before the ill judged expansion. It's a mess now, the sound of chickens coming home to roost is just deafening. All I can say is "I told you so!".

The final straw for me was when I actually met Stephen Haupt. To say the guy was arrogant is an understatement. As far as he was concerned, no one could possibly have any advice worth listening too and anyone who dared to question him, was missing the bigger picture.

Out of the money interest rate swaps for goodness sake!

If I was their lender I couldn't see how I could continue their credit right now. The former property director seems to be the ops director and there's no senior management. I'd insist on a fire sale of the two chains (there will be buyers out there, but a knock down prices, and the longer the delay, the more the price will fall) and consider muself lucky if I got 50p in the pound. Shareholders will, as always get nothing. Anything else is a fudge that will not bring back any shareholder value. There should never have been 20 comedy clubs, and Walkabout just got left behind.

[hybrasil] 14/9/2004 16:24

What in the name of you know who is an "out of the money interest rate swap"?

(ie the thing referred to in this mornings RNS) and what is a pub company doing with one. I work for a lot of publicans and while they mind their pennies they always seem to get ripped off by the big things. This looks like the bankers have won again.

[targatarga] 14/9/2004 10:42

hybrasil - not all pub companies were as good as Yates. Amec should be my next takeover at a good premium of todays price.

[hybrasil] 14/9/2004 08:37

I had for me a big holding in Yates . IT traded and indeed was taken over at a discount to NAV. These therefor have to fall