Raven Prop P Discussion Threads

[kenny] 25/2/2022 19:34

I am here and watching everything.

As far as I can see, the banking sanctions do not effect the company e.g. it does not effect banking transactions where neither party is in the USA, Europe, UK etc. They are similar to those introduced in 2014.

In relation to dividends, bear in mind that the company holds more than 2 years worth of coupons in cash. I believe most of that cash is not held in roubles and further not held in any account in Russia. In any event, restrictions on companies only apply where more than 50% of the equity is owned by one or more on Putin's cronies.

[my retirement fund] 25/2/2022 18:47

Kenny's gone very quiet?

[rayg5] 25/2/2022 12:34

But Putin wil find a ready market for its oil and gas in China.

[rayg5] 25/2/2022 12:28

I suspect Swift may be the key to this. I cannot see widespread economic damage to Russia. The best outcome, of course, is an overthrow of the illicit Putin regime.

[montyhedge] 25/2/2022 11:10

Been in this for 11 years, economic downturns 2014 invasion. Always paid out every 13 weeks.All risk reward, I can't get this yield for amount of risk anywhere else.

[mwj1959] 25/2/2022 11:04

I'm not sure that the prefs would be worthless in any winding up, but as my post highlights there is plenty of debt ahead of them in the pecking order, so ultimately it would depend on how any sale went. And the risks are that it would be below the current price. Clearly the more distressed / forced the greater the risk. What I am pretty sure is that Ord shareholders would struggle to receive anything against such a backdrop. Management owned around 24% of the Prefs (29% Ords)at the end of 2021, so that is probably the only way that they will be able to realise any value from the company if such a scenario unfolded. At least they have significant skin in the game. I wonder how Quilters see things given that they own 32% of the Prefs and 24% of the Ords.

[zangdook] 25/2/2022 10:52

I'm not sure that would be an upside from RAV shareholders' pov (or, perhaps, from anyone's - maybe some oligarchs would benefit from the chaos).

[hpcg] 25/2/2022 10:38

Agree no change to Swift is on the horizon, but I struggle to see the Rouble gaining much ground. The cut off of hard currency lending will degrade the economy significantly over time. The impetus for Europe to build out renewables and insulate houses could not be any more significant. Sanctions are more likely to get worse over time, not better, at least until Putin departs.

No one has property rights in Russia so the exogenous threat of losing everything makes anything but about a 50% dividend a poor risk adjusted return IMO. As mwj1959 points out the value to ordinary share holders is actually threatened by the prefs and next in line, at best, would be the prefs become the ordinaries. Much more likely is a winding up and the prefs are so far down the stack as to be worthless.

The upside is if something happens to Putin in the short term and that is simply incalculable.

[gfrae] 25/2/2022 10:06

Another to ponder, as mentioned somewhere above, is that the loan to hold the shares bought by the company and directors was from VTB, how does that effect things ?
Rising Rouble interest rates are for now fully hedged which is one large consolation though.

[mwj1959] 25/2/2022 09:50

A few considerations that need to be factored in to any investment decision here:
1. What will the economic impact will this be on the Russian economy over all time horizons. That will impact occupancy etc., which ultimately drives revenues. 25% of the occupants (according to interims)are international companies. Will they stay or leave? If the latter are they easily replaceable?
2. What happens to the Ruble? Rents are almost totally in Rubles. Liabilities (interest / dividends)are not. How might this impact the ability of the company to pay its dividends?
3. What happens to the cost of borrowing? The company has to re-finance its debt at some point. Fortunately only 1% is due in 22 and 14% in 23. The big re-finance is in 24 when 46% comes up. Sharply higher borrowing costs would impact profits and ability to pay dividends. With 38% of the debt in Euros servicing that debt even now has already got more expensive. And when that part of the debt comes up to be re-financed will European banks (I presume these are the Euro lenders) either be prepared to or be able to lend to a company doing business in Russia?
4. Will the company still be able to transfer money out of Russia?
5. The Prefs sit ahead of the the Ords in terms of receipt of dividend and if dividend payments are in arrears interest will accrue at 15%p.a. for first 6 months on unpaid amount and then 20%p.a. thereafter. Clearly something that the company would look to avoid, but if some or all of the above occur may not be able to do so.
5. There is £679m of debt outstanding against an NAV at interims of £1.16bn. In terms of call on assets Prefs, of which there are 216m, are next in line in the capital structure. At 80p that is equivalent to £173m. Is that covered by assets if the portfolio had to be disposed of, particularly in a fire sale environment (lots of oligarchs would love to take the portfolio over if that were to occur given quality of assets).
So a few things to ponder over (and I admit that these are probably not all encompassing and may not be 100% accurate) and I have to say as I put them together my feeling is that there is potentially considerably more downside to the Prefs price if the situation were to deteriorate further.

[cc2014] 25/2/2022 09:50

Right now Europe is reliant on Russia for gas and oil. But by the end of March things will start to look different on the gas front as the seasons change.

That gives Europe the summer to sort out LNG terminals and do some deals with Biden to guarantee purchases as fracking can be ramped up at reasonble speed.

All sorts of licences which have been slow to appear will be rushed through.

Perhaps not by the start of winter 22 but the winter of 23 things will look alot different. Of course Putin can still sell his oil to China and some of that will get resold onto the global market but European leaders now know it's the supply of energy (and some commodities) that is giving Putin leverage.

And the more we squeeze Putin, the more despotic he will become.



(Well done Specto at getting out at a great price before they went XD. I took too long and sold XD. I think it about 50/50 I will get the dividend but I've written it off in my head. Possibly the I sanction you/you sanction me will take time to escalate and we may see a few more dividends on RAVP yet. That's probably the biggest danger for current shareholders in that they get comfortable if the dividend continues to flow)

[spectoacc] 25/2/2022 08:48

Exactly - potentially a long way for things to escalate.

Saying that - gather the sanctions don't include oil/gas, or commods, payments. So not exactly hard-hitting.

But I'd neither remotely trust Putin (would anyone?) nor want to have capital in Russia.

[my retirement fund] 25/2/2022 08:44

All nice on paper but whilst we scramble to enshrine a raft of historic hard hitting sanctions into law. Russian sanctions haven't even begun yet, but could very easily include nationalising any foreign owned companies starting with those countries who have been the most aggressive in either calling for and brining sanctions themselves, or helping to oppose or simply the most vocal in condemning their actions and their regime.

[montyhedge] 25/2/2022 08:02

At 79p yield 15% got my order on, risk/reward.

[montyhedge] 25/2/2022 07:50

They won't stop Swift. .

[cassini] 25/2/2022 01:20

'RealPolitik' it is called...

[dandigirl] 24/2/2022 23:29

Surprise, surprise. National interests win again.

The countries with the biggest exposure to Russia include ............

France and Italy!

The other is Austria.

Germany? - well who would have guessed.

Cosying up to Putin - another bad move by Merkel.

[koolio] 24/2/2022 22:09

On the up side it’s a lot more territory to potentially build warehouses on.

[montyhedge] 24/2/2022 19:44

Not cutting Swift, EU have to all agree, Germany, France, Italy said no.

[uncle_sam] 24/2/2022 19:33

Above and beyond any sanctions against specific banks cutting off SWIFT will have implications to us here.

[rayg5] 24/2/2022 17:58

Today Putin has badly miscalculated, imo. It won't need a bullet.

[my retirement fund] 24/2/2022 17:32

I was also along but reluctant holder here and finally took my medicine and got shot of this. Its a sad day, its been a very long old friend to me over the last 15 years but unfortunately unless someone puts a bullet in Putin head and quickly, then I can only conclude this has a very bleak future indeed.

[montyhedge] 24/2/2022 17:10

I think their bankers are Royal Bank of Scotland, I may be wrong.

[cc2014] 24/2/2022 16:07

Suggest the risk is around sanctions on VTB bank who provided the loan facility to RAV for the Invesco share purchase deal.

Also, the movement in exchange rate is not going to be helpful

Edit: I have no idea who RAV's day to day banker is so my first comment might be pointless.