Science Share Discussion Threads

[johndoe23] 27/8/2021 11:52

More than likely. Has risen a lot past 12 months so some profit taking and topslicing understandable

[mammyoko] 27/8/2021 10:52

Holders selling on fear of placing?

[timojelly] 25/8/2021 15:50

TPG interims will soon shed light.

[shstt1] 25/8/2021 12:50

Agree mammy, sold here too
£50m + not an inconsequential amount if it’s such a mess they make out
SAG getting big ideas as the shr price reaches new highs, boss ego trip could be costly
Reckon dilution coming here with placing, I can’t see they’ll want to load up with more debt.

[larry laffer] 24/8/2021 14:51

mammyoko

Sensible decision.

I’m a long term TPG investor and as a company they have never served the PI very well. IMHO

Carthorse ran the company to suit himself and his pension fund. He treated any PI with complete contempt, he had history in that area. Going back to his days at Rangers football club.

It maybe SAG can extract some value from the assets. Good luck either way.

[mammyoko] 24/8/2021 13:48

As SAG have said that 6.5p is their final offer it now becomes the cap for any offer by them unless a competing offeror appears. That is according to 2.5.ii of the City Code here

hxxps://www.thetakeoverpanel.org.uk/wp-content/uploads/2021/08/567845_005_The-Take-Over_Bookmarked_02.08.21.pdf?v=28Jun2021

Consequently, I have sold my holding in TPG as I don't know enough about their market to know whether a competing offer is likely to appear. Their free cashflows don't, to me, appear to be attractive to PE and they are already saddled with more debt than I am comfortable with.

I have also top-sliced SAG on the basis that I think TPG may be a bigger can of worms than they anticipate and the turnaround may be, consequently, lengthier and more expensive than seems to have been the case with FST. I also think that an equity raise by SAG is almost inevitable and that that could be at least 10% dilution. I will continue to hold 50% of my holding in SAG, however, as I think that it is possible that they forge a reputation as purchasers of mismanaged businesses that they subsequently turnaround. Although, as with FST, that could start to make them look rather unfocused.

[hiddendepths] 24/8/2021 10:07

Well, as a shareholder of TPG and, for a week or so, SAG, I would welcome the opportunity to receive SAG shares instead of cash.

[mammyoko] 24/8/2021 09:42

SAG not ruling out an equity raise to fund offer for TPG - from today's RNS

Science Group intends to finance the acquisition from its own resources and third-party funding, which may include equity and/or debt.

[paulgo] 23/8/2021 16:11

TP Group plc

(the "Company", "TP Group", "TP" or the "Group")

Response to Science Group's Indicative Offer of 6.5 pence

On 20 August 2021, the TP Group plc Board ("Board") received a second proposal from Science Group plc ("SG") indicating that, subject to the same substantial pre-conditions, it would be willing to increase its indicative offer price to 6.5 pence per share.

The Board believes that the revised indicative offer continues to undervalue the Company and that TP Group is well placed to create shareholder value as an independent company as the new CEO implements the Company's revised strategic plan and a series of cost reduction measures .

The Board responded on 22 August 2021 to SG requesting that SG provides satisfactory confirmation and evidence as to the sources and availability of cash to SG to enable it to meet any offer that it may make, which would, in accordance with the Code, be required to be in cash or accompanied by a cash alternative at not less than the highest price paid being 6.5 pence per share.

On 23 August 2021 the Board received a further letter from SG with no such satisfactory confirmation. The letter again contained substantial pre-conditions.

Andrew McCree, Non-executive Chairman commented: "The Board of TP is acutely aware of its fiduciary responsibilities to all its stakeholders. As such, it will consider properly funded and constructed offers for the Company at an appropriate valuation. The Board is not currently in receipt of any such offers. In addition, the Board is aware of the manner of the takeover of Frontier Smart Technologies Group Limited by SG. Shareholders are urged to support the independent membership of the Board."

This announcement has been made without the agreement or approval of SG.

Publication on website

In accordance with Rule 26.1 of the Code, a copy of this announcement will be available at www.tpgroupglobal.com , by no later than 12 noon (London time) on 24 August 2021.

[kaizenkid] 23/8/2021 12:33

Does anyone know if SAG will be able to make use of the off balance sheet tax losses at TPG "At the reporting date, the Group has approximately £18.6m (2019: £21.8m) of unrelieved tax losses for offset against
future taxable profit. There are no expiry dates on these unrelieved tax losses. No deferred tax asset has been
recognised in respect of these losses. TPG Design & Technology Limited created £18.1m (2019: £18.1m) of these losses
through a trade that is no longer being pursued. Losses can only be utilised against the same trade and management
do not expect there to be sufficient trade to recover these losses against future taxable profit."

[illiswilgig] 23/8/2021 11:01

timo - out of interest, what value would you put on the maritime division?

cheers

[timojelly] 23/8/2021 10:14

Offloading the Maritime division for 20mill is complete nuts.

[illiswilgig] 23/8/2021 10:12

Oregano - yes, good point, I failed to mention that.

cheers

[oregano] 23/8/2021 09:56

Don't forget the debt they have is secured on the property. nothing against the £15m of profit. 2x that gets them another £30m.

[illiswilgig] 23/8/2021 09:50

mammyoko - I agree with your figures. Except that I think it was $6m for the licence, rather than £6m?

However they are aiming to do this they will have already put in place the facility.

In the recent interims they specifically stated that they have a record of self-funding acquisitions:

'self-funding of acquisitions and share buy-back programme, this strong performance has been achieved without shareholder dilution.'

Seems strange that they would include this statement and then go straight for a relatively large dilution?

So perhaps debt is the way they intend to go. Raising £10m would be no problem I think. Raising half through debt would be possible as you say - but certainly starts to be a stretch? Except that they can pay it down quite fast by disposing of the bits they don't want to keep.

I think the most likely option is that they already have a partner in place for the Technology and Engineering manufacturing part of the business that they would be disposing of anyway leaving them with the software and consultancy. In which case the partner will likely be funding £20-25m of the deal. This is the way I have experienced this form of acquisition before.

Which would just about make the figures work if they can get it for 6.5p. Though I think they most likely have a little more left in the tank as they went to 6.5p pretty fast. Maybe 7p?

just my thoughts.

cheers

[mammyoko] 23/8/2021 09:07

Even at 6.5p, TPG is going to cost £50m plus transaction costs of, say, £3m. At 30/6 they had net cash of £13m and gross cash of £29m. On 1 July £6m went out to Imagination for the FST royalties. On a worst case basis and assuming they pay no more than 6.5p, they have £23m of gross cash and TPG would cost them £53m, leaving £30m to be funded. Paying 8p would increase the cash required to around £40m. That's before any turnaround cash costs that might be needed. If they raise £40m that would be around 9m shares or dilution of 22%.

Of course, they may well choose to fund the acquisition partly by debt. I would have thought that they would struggle to raise more than half of the cost through debt. So, perhaps, a £20m raise @ £4.2, a 9% discount to today's mid-market price?

Interested to hear other's views on how they are likely to fund this acqusition.

Disclosure: I hold SAG

[davr0s] 23/8/2021 08:46

Market doesn't suggest that at the moment

[mammyoko] 23/8/2021 08:04

Going to need a placing to buy TPG - up to 20% dilution?

[johndoe23] 20/8/2021 11:20

Yes, new ATH now. Still great value imho. 27.2p EPS forecast for this year ending, say 20% growth for FY'23 and 32p EPS could be achieved. That's a forward PE of around 15, 600-650p achievable.

[davr0s] 19/8/2021 19:21

New closing ATH on a rubbish market day. Nothing else needs saying

[toptrump1] 17/8/2021 11:46

The mkt doesn’t think it will succeed by the looks of it. If they fail to get hold of TPG it would affect Sag share price. Better for them to offer a realistic price now than to mess about?

[varies] 17/8/2021 10:40

I have held SAG shares since its takeover of FST and TPG shares for a few days.
It occurs to me that much of the value of TPG lies in its workforce of skilled consultants and that a prolonged and disagreable struggle between the two companies might affect the willingness of these consultants to work for SAG if it takes control.
So I hope that a compromise may be found at about 7p with an option for TPG to take SAG shares as part of the consideration.

[davr0s] 16/8/2021 19:52

Market doesn't seem remotely bothered by the whole episode atm

[secretsqu] 16/8/2021 19:50

5/6p won't cut it with existing shareholders.If SAG want TPG, they'll need to up the anti. Have they got enough cash to steamroller a hostile?Either that or offer current holders a SAG share split.Whichever way, dilution appears to be on the cards for SAG holders.

[tizo100] 16/8/2021 14:28

Interesting !