Raven Prop P Discussion Threads

[my retirement fund] 26/2/2022 14:15

Apparently Hungary gave the president a pledge this morning to switch swift off and the former president has just suggested everyone has agreed in the EU so it sounds like swift will not be opening on Monday for the Russians. Hope so!

[montyhedge] 26/2/2022 14:13

Kenny who know this company inside out, get his thoughts, would they pay Pref if Russia out of Swift ?

[montyhedge] 26/2/2022 14:09

Germany and particular Hungary no chance I would have thought. Could not afford to.

[waterfall city] 26/2/2022 14:00

How important is wheat and corn in all this, long term the worlds growing population needs feeding.

[my retirement fund] 26/2/2022 13:37

Thanks Kenny clearly your remaining calm. A difficult thing to do when putting your money into a violent mafia state with nuclear weapons.

[irish_neris] 26/2/2022 13:36

Italy are agreeing to boot them off swift according to Bloomberg

[montyhedge] 26/2/2022 12:33

KennyWhat's your thoughts on Swift, I don't think they will take Russia off Swift, because Germany, Hungary, Italy would be hit and want to keep Russia in.But if they did, would Raven still be able to pay the Pref coupons?

[stemis] 26/2/2022 11:42

Possibly one of the reasons for the timing of Putin's move on Ukraine is the strength of oil and gas prices which should ensure some protection from Russian finances from Western sanctions.

Ultimately Putin needs some sort of peace, either through a negotiated settlement or a viable replacement puppet government. A long term guerilla war or armed occupation (bearing in mind the population of Ukraine is 44m, nearly a 1/3 of that of Russia) isn't sustainable by him...

[zangdook] 26/2/2022 01:40

All he needs to do is put in place a government which agrees a constitutional amendment declaring neutrality, and then (maybe the tricky part) ensuring that no subsequent government reneges on that. It seems tricky to me, but he's not a man who acts without a plan.

He's probably calculated that if he can permanently remove the perceived threat from Ukraine, in time the sanctions etc will be lifted; maybe not in his lifetime, but that's not the timescale he's working on.

[kenny] 26/2/2022 00:28

Your questions and my comments:

Q. Do you think Kenny they can remain solvent and refinance in the likely medium and longer term decline of the economy there in the absence of regime change?

Comment: Yes. Russia has already announced they will provide their banks with liquidity. As Russia has $640B in reserves, mostly held in gold, I do not think Russia has a financial problem.

Q. Do you think they can avoid retaliatory sanctions from Moscow?

Comment: I cannot see why Russia would sanction a property company?

A side note on sanctions. In history, when have sanctions worked? The only historic case of sanctions working is South Africa and even there a) it is not clear sanctions were in fact the reason S.A. was done in and b) even if it was sanctions that did in S.A., it took over two decades for them to really bite and c) S.A. did not have the oil, gas and material reserves that Russia has. In no other case have sanctions brought down a regime.

Q. Do you think the west will forget about this and return to the status quo again?

Comment: No, this is a total change. NATO will be considerably strengthened and Russia under Putin and his billionaire clique will be permanently excluded from the West. Little point in having billions if you can only visit China and other such countries with your fancy cars and boats.

Q. It really feels like a watershed moment to me, there will be good long term careers in the army now stationed in Eastern Europe, it won't be easy to forget long term imo.

Comment: I agree this represents a turning point in World history. However, I also think while we may have a cold war type status, I doubt it will last for quite so long. Russians themselves will rise up. Look at the recent revolts in Belarus – violently put down - as an early sign. I think Ukraine will open Russians minds to what is being done in their name in a county with close ties and relations living in Ukraine. Look at how the Russian army is being careful to avoid heavy civilian casualties - which is not usual for Russia, in its moves against other countries.

Putin thinks Ukraine is the puppet state it was until about 30 years ago and that is his biggest mistake. If you are Ukrainian, you have had 30 years of freedom, so are not going to want to go back to being controlled by a foreign state. If Putin succeeds in putting in a puppet government, its’ not going to be long before 44 million Ukrainians rise up and throw them out. In other words, a repeat of what happened with the Maiden revolt in Ukraine.

End game is Putin is removed by Russians as he cannot hold a country as large as Ukraine – especially with the West supplying arms and other support to rebel groups against any puppet government Russia installs. It may actually lead to a very different government in Russia - and Russia then withdrawing from Ukraine, Georgia and all other foreign states where it is currently meddling. Only reason this may not arise is if China really supports Putin.

[my retirement fund] 25/2/2022 23:18

Do you think Kenny they can remain solvent and refinance in the likely medium and longer term decline of the economy there in the absence of regime change? Do you think they can avoid retaliatory sanctions from Moscow? Do you think the west will forget about this and return to the status quo again ? It really feels like a watershed moment to me, there will be good long term careers in the army now stationed in Eastern Europe, it won't be easy to forget long term imo.

[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.