Reach4entertainment Ente... Share Discussion Threads

[stewy_18] 24/11/2014 12:50

IronStorm,

I read your analysis and it has its merit. The point is that debt is not going away. So where are they going to go from here? St o cko pedia forecasts are £74 million for 2014 and £77 for 2015. The margins are waifer thin so there is no guarantee what the profit will be. One bad year could make things very difficult for them. In the mean time a really good year just helps them pay down the debt and leaves a little over. Because forecasting is so difficult ( weather may have its part to play as standish11 mentions), it makes it univestable for me. If they were going to have a bumper year this year (circa £82 million revenues) things might have been different, but I really can't see anything to get excited about now. The only way I could see a sustainable profitable future is if they sold off a part of the business and paid down the debt that way. They do not want to do this however.

Lets not forget, we are in a period of record low interest rates. For the refinancing, they have agreed a deal which...... establishes a six year term from 7 April and a new interest rate of 3 per cent over LIBOR, for r4e's £14.8 million revolving credit facility.

Thats fine, as long as LIBOR stays at its record lows. But I see interest rates rising (quite rapidly) over the next 2/3 years (keeping low in 2015). That is just my opinion, but if that scenario happens, there is no margin of safety.

If they could have a bumper year, get the shareprice up to 10/15 pence, and get off a bumper rights issue, or sell part of the business, things could start to look a lot different. The chances of that happening now however, seem low to me.

Anyway it makes two to make a market so best of luck.

[rumbers2] 24/11/2014 12:00

He's one of the most filtered irritants on ADVFN. He's lost a fortune on AIM and for that reason thinks everybody else should too.

[stewy_18] 24/11/2014 11:36

You keep deramping deanroberthunt, I'm sure you'll get your target price soon enough!

[standish11] 24/11/2014 11:36

I presume SpotCo trading in the US will be adversely affected by the icy weather they are experiencing.

[stegrego] 24/11/2014 11:11

Well if it drops 10 per cent every time someone sells 100000 it's not going to take long..

I could make it drop 40 per cent just by selling my holding....

[deanroberthunt] 24/11/2014 09:37

as sure as eggs is eggs.

[ironstorm] 21/11/2014 14:55

No-one can disagree they do have a lot of debt. But that is likely to be covered at 4x FCF and repayment is not due until 2020. So whilst I agree that is the issue I think it is well over played.

On the Trading Update - If you compare to the RNS from the summer it said exactly the same as that really. So I wonder / hope it is just badly worded because as it is we will see some good progress as well as a further reduction in interest payments as the new financing continues.

And our most profitable arm is in the US so if the $ continues to improve then that will flatter too.

Anyway time will tell and I will watch out for 2.5p unless MacLean continues to build.

[deanroberthunt] 21/11/2014 14:32

...and for no just reason...

apart from swimming in debt and a weak recent update...

[ironstorm] 21/11/2014 14:25

Nope not me unfortunately - I have low single %.

I think someone suggested MacLean is MD at Deutsche - so hopefully well connected and in the know.

[rumbers2] 21/11/2014 14:08

Iron you're not the Maclean character in the RNS who has amassed 6.65% of the shares by any chance?
I see Webb continues to offload. His fund no longer lists R4E among its top ten holdings.The sooner that jinx is gone the better.
God forbid this sinks to 2.5p. As you previously said this has already fallen more than a third (40% more like) and for no just reason.

[deanroberthunt] 21/11/2014 12:13

2.5p keep an eye out.

[deanroberthunt] 21/11/2014 12:13

as predicted the bored make like a shepherd....

and since there's such a lull between updates, we will test the low imo...

[ironstorm] 18/11/2014 09:04

The position with R4E is exactly as laid out in the interim RNS, when it was flagged that the second half would be evenly weighted.

Now if the shareprice was a lot higher the reaction could be better understood but the price has already fallen by 1/3.

Still potential to surprise on the upside here with interest payments expected to drop a bit more and dollar strengthening enhancing those SpotCo profits.

Someone mentioned analysts forecast of well over 1p per share. As it is I suspect we are on a PER of 4.

hxxp://ironstorminvesting.blogspot.co.uk/

[deanroberthunt] 17/11/2014 10:58

sells under 4p now, as the bored make like a shepherd

[bigbigdave] 14/11/2014 12:55

Suspect that in a raging bull market this would be flying kinda like BLUR and WAND did last year and the debt would be irrelevant.
Wrong year and market for R4E.

[stewy_18] 14/11/2014 12:46

It is not about getting bored deanroberthunt, it is about evaluating why you bought in the first place, and if that position has changed. It has. Best of luck.

[deanroberthunt] 14/11/2014 11:52

the bored got bored quicker than even I expected.

[dan de lion] 14/11/2014 11:44

"Trading has continued to be solid and the Directors remain confident that the Group will meet market expectations for the full financial year."

Current Broker forecast for this year is an EPS of 1.4p.

[stewy_18] 14/11/2014 10:03

I'm out at a 20% loss. It was a small position for me, but this can only work if you are in a raging bull market and the results were spectacular. We were in a raging bull market and that is why I bought them. High risk strategy and it didn't work. I held on because of the Chairmans outlook statement in the last results. Interims were great so I was hoping for spectacular year end results that would push up the shareprice and hopefully they could get away a placing at a significantly higher price. Now that is not on, I can't see any reason for holding them.

The only exit route I can see for the company is if they sell off a part of the business to pay down the debt, but they do not seem keen to do that. With the debt haging over it, it is only ever going to be treading water IMO.

Good luck to all who stay in.

Best

Stuart

[mortimer7] 14/11/2014 09:44

Interims to 30/6 stated the only loan repayment due in next year is £200k in April 2015. Cashflow generated for 6 months to 30/6 was £1890k.

[deanroberthunt] 14/11/2014 09:28

Cautious Outlook = No growth

How they gonna pay off that debt that is nearly 7x mcap

[deanroberthunt] 14/11/2014 09:22

punters will get bored of waiting can see this retesting the lows as the bored sell.

[deanroberthunt] 14/11/2014 09:21

that's why the per is 3.

[stegrego] 14/11/2014 09:20

Aren't they allowed to be underwhelming on 3x???
I could understand if they were on 15x...

Also, even though they are struggling a bit in some parts they still meet expectations. So when those areas perk up...