Sdic Power Discussion Threads

[ydderf] 04/6/2010 18:40

scurbs, but we know that this never happens, the agency problem means that for the agents only fees and salaries are prioritised, what benefit is there to the agents to painstakingly unwind the portfolio?

i will be interested to hear of any intelligent analysis where existing shareholder interests become compelling....seriously

see iere where nav ps was 1.25 and the balance sheet much healthier than sdic, they didnt sell down props, instead they slaughtered the existing equity holders with a cataclysmic dilution benefitng a few placees

why?

fees my friend, fees

[scburbs] 04/6/2010 18:35

YdderF, What do you mean there is nothing to sell? They should sell the lot and the German residential market is in robust shape at the moment so it should easily be viable over a couple of years. The last thing they should do is attract new equity, they have failed and should accept it and return the substantial net value to shareholders.

[scburbs] 04/6/2010 18:33

Lagosboy,

Well the banks are on our side when it comes to payment for the management contract and I suspect they will be pushing for a very low payment. My trust level of the banks acting in shareholders interests on the contract in much higher than my trust in those entrusted with representing shareholders (admittedly this is only because our interests are aligned in this respect).

However, reference to negotiation of its termination and the acquisition of Goal certainly sounds like a pay off to me.

I also suspect that banks would offer covenant waivers if an orderly wind up was agreed. Too late to do anything else in my view.

[ydderf] 04/6/2010 18:31

they have to attract new equity but there is nothing there to sell, even if there were no existing equity what could they hope to offer new investors?

in these markets, how could an overgeared property investment company have any investment value?


1.4bn props
1.2bn loans

what is there to sell?

...and so on any scenario, existing shares must be worthless

if investors want german res, they can buy gagfah on a 60 per cent discount and 15 per cent yield - wake up and smell the coffee

[lagosboy] 04/6/2010 18:26

schrubs

Alas, it is no longer the shareholders interests that are paramount, it is the banks, and the breaches have handed them control. I suspect the banks share your view on how badly the company has been run, so right now they will not be feeling too comfortable especially with the uncertain economic outlook ahead.


I am sure the continued support of the banks is conditional upon both the management restructure and the fund raising being successful.

Why do you think SYG will get a pay off ?

[scburbs] 04/6/2010 18:23

Hmmm, substantial level of cost saving with an immediate impact? Conflict of interest over the last few years anyone? Massively excessive fees causing the ICR/DSCR to be breached? Hardly a surprise, more a further confirmation of board's incompetence. Wind it up, surely a no brainer if ever there was one (but don't pay to take on a redundancy cost!).

"The Internalisation is an important step towards achieving an overall funding solution as it is anticipated that it will enable the Company to realise a substantial level of cost saving, with an immediate impact on the level of monthly cash outflows. Full details of the Internalisation will be provided in due course once a final agreement has been reached with the relevant parties."

[scburbs] 04/6/2010 18:08

The management contract is worthless. They had better not dare pay off in anything other than paper dependant upon future performance. To make a cash pay off would be another example of a massive conflict of interest and the company being run for the benefit of SYG. Surely it is obvious to everyone that the contract is next to worthless as the company is on its knees.

"Following the one Debt Service Cover Ratio ("DSCR") covenant breach identified in previous announcements, the Board has undertaken a thorough review of the Company's financing position and it has become evident that the Company is likely to remain in breach of the DSCR covenant on the one loan facility and it is anticipated that the Interest Cover Ratio ("ICR") covenant on two other facilities is likely to be breached at the next calculation date which is 30 June 2010."

With the refurbishment programme being complete the ICR ratios should be improving not getting worse! This is because they are being run incompetently. To pay to acquire the contract would be ridiculous.

Surely their incompetence has reached the blatently obvious level that means that a wholesale disposal and wind down of the company is the only move that could be considered to be in shareholders interests. There is no reason to internalise management when a wind down is the only viable option. The management contract probably has a negative value due to the redundancy costs linked to the employees!

Is there a more obvious example of a company that should be wound up through an organised disposal over a couple of years? I certainly have never seen one as there is plenty of value in a staged wind up and next to no value in any otherscenario. A jobs for the boys equity issue would be lunacy.

[lagosboy] 04/6/2010 17:07

Well done kibes, you were spot on, just glad I only had a nibble.

Who is going to run this company now ?

[envirovision] 04/6/2010 16:42

ydderf

Your quick sherlock. I never got involved in this, though theres clearly a few here who are, good luck what ever happens.

[envirovision] 04/6/2010 16:36

Yes guess your right, the banks are really in capital damage limitation mode now, a cash rich suitor would be warmly welcomed by the bank. The last thing they need is a fire sale.

[ydderf] 04/6/2010 16:33

there is nothing here for existing holders, who are now staring into the abyss - nobody is going to buy until terms are set, meanwhile there will only be sellers.......the price will fall to a market cf a couple of million possibly, surely there is no reason to hold in these circs?

[lagosboy] 04/6/2010 16:32

envirovision

With the almighty mess that the incumbent management have made, surely SDIC must be a target now, and the banks which are still way over leveraged will welcome any cash rich suitor with open arms.

Sounds as though the initial breach has spread somewhat.

I think the new loan terms are dependant upon the equity funding and the new internalisation and not the other way round. The Banks call the shots now so wheels should be put into motion fairly quickly and indeed Heads of Terms with SYG have already been agreed.

[crawford] 04/6/2010 16:29

Management should be sacked for their incompetence.

[envirovision] 04/6/2010 16:29

Yes its possible but it could mean five billion new shares priced at 4 cents. That ought to do it.

[kibes] 04/6/2010 16:25

Well the internalisation of GOAL is excellent news but the equity fundraising?? How are they going to raise any cash from shareholders with the shares at their current level? £100-£200 million which is probably what they need looks out of the question to me. Debt for equity swap perhaps? But who would want that either?

[envirovision] 04/6/2010 16:19

This is all going to take time, they cant work out the fund raising required till the banks breaches and new loan terms agreed, in turn this cant be done till the Internalisation has been completed.

During all of this, there share price is going to get smashed further, there must be some value here, but at what level, 3,4,5 cents ?

[lagosboy] 04/6/2010 16:17

Scburbs

Good afternoon, looks as though I was a little premature in buying back in, but my view that there would need to be equity fundraising along with a restructuring of management with SYG, as you wished, seems to be finally happening.


Speymill Deutsche Immobilien Company plc

("SDIC" or "the Company")



Update on Bank Facilities and Internalisation of Management



Further to the announcement of the Company's interim results for the period ended 31 December 2009 on 30 March 2010, the Board of SDIC, together with the Company's advisors, have continued discussions with representatives of its lenders in relation to negotiating a long term reorganisation of its banking facilities.



Following the one Debt Service Cover Ratio ("DSCR") covenant breach identified in previous announcements, the Board has undertaken a thorough review of the Company's financing position and it has become evident that the Company is likely to remain in breach of the DSCR covenant on the one loan facility and it is anticipated that the Interest Cover Ratio ("ICR") covenant on two other facilities is likely to be breached at the next calculation date which is 30 June 2010.



Further, the Company's current cash forecasts indicate that it will not be in a position to meet its amortisation payments on three of the five financing packages for which amortisation is payable. The Company is applying for a deferral of these payments with its lenders as negotiations on a revised, long term funding solution are progressed.



As indicated in the "Outlook" section of the Chairman's statement included in the interim results announcement in March 2010, a long term solution is anticipated to include a recapitalisation of the Company through an equity fundraising and the internalisation of the management, investment advisory and property management functions ("Internalisation").



In relation to the Internalisation, the Board is pleased to announce that it has reached an advanced stage in negotiating heads of terms with Speymill plc ("Heads of Terms") in relation to the termination of the Investment Management Agreement and the acquisition of the Company's investment adviser, GOAL service GmbH ("GOAL"). The Company has commenced the process of consulting with the various relevant stakeholders prior to the Heads of Terms being formally agreed.



The Internalisation is an important step towards achieving an overall funding solution as it is anticipated that it will enable the Company to realise a substantial level of cost saving, with an immediate impact on the level of monthly cash outflows. Full details of the Internalisation will be provided in due course once a final agreement has been reached with the relevant parties.



The Board is fully engaged in regular constructive discussions with the lending banks and progressing these with a view to ensuring that a long term funding solution is agreed with its lenders and this, together with operational improvements that continue to be realised, is anticipated to secure the Company's future to the advantage of all stakeholders. Further updates will be provided to the market, as appropriate.

[nickcduk] 04/6/2010 15:58

Hopefully the pay off won't be any more than 5m. If they tried going for more I would threaten them with legal action on mismanagement of the assets. The fund raising needs to be made available to existing holders. As long as they can guarantee that I don't think too many shareholder will be complaining about today's turn of events.

[davebowler] 04/6/2010 15:54

In relation to the Internalisation, the Board is pleased to announce that it has
reached an advanced stage in negotiating heads of terms with Speymill plc
("Heads of Terms") in relation to the termination of the Investment Management
Agreement and the acquisition of the Company's investment adviser, GOAL service
GmbH ("GOAL"). The Company has commenced the process of consulting with the
various relevant stakeholders prior to the Heads of Terms being formally agreed.

[lagosboy] 03/6/2010 10:25

kibes

I agree price looking interesting, but take opposite view, that no news means the breach is more likely than not under control and being resolved so remain hopeful of a jump from these levels of at least 50% when news is eventually forthcoming.

With the huge discount to bricks and mortar NAV seems a decent risk reward investment now.

[kibes] 03/6/2010 10:07

Price now looking quite interesting as it seems to be stabilising around the 0.1 euro level. But still no news on their possible covenant breach issue prevents me from buying in.

[lagosboy] 02/6/2010 09:52

scburbs

It is an interesting stock. It should be debt free in about 3 years from the end of this accounting period, maybe a little sooner.

If you look at the enterprise value

Equity Capital + debt -cash balances, it is circa $138 million. If you divide that by last years EBITDA of $38 million that is just 3.6x which is a very attractive multiple.

Compare for example with SDIC.

The core business is in secular decline as landline usage is being moved to mobile, I don't think there is any doubt about that. Hovever it will decline over say 12 to 15 years, well after the debt is exstinguished so BILL should produce very nice free cash flows for dividend payments over that period. Well above its current share price even after being discounted.


The real value to unlock is to leverage on the 100 million landline customers it has, and with BILL2Phone they have in my view the perfect product to do just that. It is beautifully simple but the infrastruture to facilitate it is complex and has been time consuming to put in place.

Lst year BILL di $1.8 million in EBITDA which menas it processed some $30 million of gross transactions thru Bill2Phone. That is the start and gives me confidence that the product has efficacy and hopefully will grow. The company has recently head hunted 4 slaes managers for the Bill2Phone product and beefed up the efforts all round in that area.

I don't need to tell you not to buy on my views as I know you would never be so stupid, but others may be reading this, and so to anyone who does please DYOR.

[scburbs] 01/6/2010 20:50

Lagosboy,

BILL has been on my watchlist for a while, but never dipped in to date. My only experience with the JM stable is SDIC so being from the JM stable is a negative from my perspective. The recent outlook statement was fairly downbeat explaining the fall after results. However, I am interested in investing at some point and was very impressed how they used their strong cashflow to take out debt at a discount during the worst moments of the downturn and their cashflow remained very strong throughout.

[lagosboy] 01/6/2010 20:18

scburbs

It has a banking licence....very valuable and look at the RNS announcements over last 6 months....something in the pipeline but its a small holding for me.

BILL from the JM stable is still my preferred stock and beginning to rise again.

Checkout wwww.undervaluedshares.com

Filter the hype but the reality is 100 million landline customers to market digital purchases to. Itunes for one must be a possibilty.

10% take up with just a $20 spend per month against limit of $100 to $200 yields $1.2 million per month of EBITDA at just 1% conversion.

Core business alone worth 25 pence plus. Its a cash cow, complete opposite to SDIC wgich just sucks up cash.

I have my own model, would be happy to share, but I don't need to say to you....DYOR.