Silverdell Share Discussion Threads

[kimboy2] 04/7/2013 17:41

On the basis that they must be talking to other finance providers.

[kimboy2] 04/7/2013 17:31

I see the silence as positive.

[rg710] 04/7/2013 17:26

Very disappointed with SID silence. More disappointed with idle gossip and assumption.

[dasv] 04/7/2013 16:56

similar statements historically from vimio, game group, Alexon, powerhouse, central african gold, Erinaceous etc. etc.

I know Erinaceous went under completely - haven't researched the rest.

[roger-lawson] 04/7/2013 16:49

Yes the wording "pending clarification of the company's financial position" in any RNS announcement is one of these "code" phrases beloved by market professionals because to amateur investors and the company's staff and customers it can be seen as quite neutral, when most market professional know exactly what it means, i.e. usually very bad news.

It means either: 1) we don't know what the financial position is (not good news at all if you think about it as it tends to indicate something has come out of the woodwork); or 2) we are having discussions with our bankers about our cash flow and with our auditors/lawyers as to whether we can legally continue without more finance.

Regardless it's very bad news indeed. I have not calculated how many companies that make such announcement subsequently go bust, or into administration, but it must be a pretty high percentage. Certainly one of the key questions is whether the company has breached its banking mandates and the next sign of bad news might be if there is suddenly a change in the directors as the bankers put in their friendly "troubleshooters".

[m1das_touch] 04/7/2013 16:39

AdamB1978 "There is no suggestion that SID plc is in trouble" Seriously???!!! Sorry, but even by the standard of bulletin board analysis, that statement beggars belief.

Perhaps you need to re-read the company's own statement of 2 July:

"Silverdell has requested a suspension of its shares from trading pending clarification of the GROUP'S FINANCIAL POSITION" (Upper case added).

Whatever has happened, whoever is in administration, the simple fact is that in some way in which we don't yet fully understand, it's clearly threatening the financial solvency of the whole group.

As an aside, I find it completely staggering that there's been no additional clarifying statement from the company. Even if Silverdell Plc doesn't go bust, the longer the shares remain in suspension, the greater the reputational damage caused in the eyes of their suppliers and current/future customers.

[adamb1978] 04/7/2013 15:47

Roger - Your post suggests that lenders are going to take control of the company. There is no suggestion that SID plc is in trouble - clearly that COULD be possible if there has been some widespread fraud and all SID's financials have been a complete fabrication however that is by no means to most likely outcome. Leverage is under control, working cap outflows are what you would expect for the sector and growing top line and I would hope that, as they have a reputable auditor in KPMG, that the figures are what they say they are.

[kimboy2] 04/7/2013 15:29

Silverdell PLC is not in administration

[ganthorpe] 04/7/2013 15:21

A quick look at the June 2013 Balance Sheet shows debtors representing about four months sales , which is about par in the sector.Trade creditors look to be about the same , which may not please small subcontractors.
However what does stand out is that of £31 million Shareholders Funds , over £26 million is in Intangibles , leaving only a net £5 million of tangible assets , not something to reassure HSBC or any other bank.
Considering that most of their work is secured by competitive tender , one wonders how valuable the Goodwill is in gaining an advantage in getting work?
This what put me off , but it goes for most of the sector.
Also it is very unusual for a Company to emerge from Administration and resume it's quotation.
GAN

[hvs] 04/7/2013 15:11

And what was the mis managers doing ???

Getting BONUSES ???

[roger-lawson] 04/7/2013 15:08

The bankers to the company are no doubt calling the shots and probably dictating what is going to happen, as they always do in such situations. They will protect their interests to the prejudice of yours.

[hvs] 04/7/2013 14:37

Call SID its the bargain of the yeaR.

[hippo] 04/7/2013 14:05

^problem is waynesoton, we don't know who is calling the shots here, who is currently in control of determining the future. The facts shareholders have received no update, despite press reports of administration of part of the business is truly unbelievable.

No one saw this coming, it might have been a sell by the chart etc, but possible wipeout, and it is an appalling situation given recent news coming out the company that everything was rosy.

[adamb1978] 04/7/2013 14:00

They wont be using private equity cash to fund working capital!

[waynesoton] 04/7/2013 14:00

I personally feel that Sid should be ok as even if HSBC was to withdraw all funding based on the group funding it shouldn't be too difficult for them to get either a new banker or to get finance from the private sector or private equity investment as long term the prospects are very good but either way its going to mean Sid paying more out or giving away more to private equity investors as they will want a bigger slice of the pie.Or this could just simply be that everything is ok but just that Sid is holding off so that they can give a statement with the administrators approval that everything is fine but there were major admin errors and that all business are fine and kitsons will not be staying in administration as the administrators are happy the company is still fully funded and no longer needs to be in the administration process.

[briangeeee] 04/7/2013 13:14

It appears that Silverdell PLC own Kitsons Group Ltd, which in turn owns Kitsons Environmental Europe Ltd. The petition was taken against Kitsons Environmental Europe, but it appears to me the bank put Kitsons Group Ltd into administration, which would tie up with 'the group' being mentioned in court.

[adamb1978] 04/7/2013 12:48

Kimboy2 - I agree with you; there's also probably cross-default provisions in all of the facilities and therefore the others become repayable. What I slightly stuggle with is why they wouldnt have been able to raise an overdraft from another bank quickly and repay HSBC and also why something which should have become very solve-able has blown up into this fiasco

I cant see that this should be the end of SID unless there has been some widespread fraud - its a profitable, growing company which does make cash and should be fine once replacement banking facilities have been put in place

[dasv] 04/7/2013 11:50

NB that's in current assets not cash flow statement and remember that's cash and cash equivalents rather than pure cash.

[kimboy2] 04/7/2013 11:45

Yes it has all the symptoms of ending in litigation.

I am not sure about pre pack though. The relationship with HSBC has clearly broken down. However they only have Kitsons in administration and not the whole group.

If HSBC jumped the gun on Kitsons then I feel sure they would want the whole group in administration to cover their tracks as much as possible. The fact they haven't, so far, would suggest to me they can't because the rest of the company is complying with the loan covenants.

Overdrafts are of course callable on demand and I suspect that their overdraft funding has been withdrawn and this is causing a cash problem.

At the end of March SID had £6.4m in cash and an overdraft of £2.8m and bank loans of £10.5m. It may be that all the rumours has strained this position further though the payables didn't look problematic.

An interesting situation. I just wish I was looking at it from the sidelines.

[roger-lawson] 04/7/2013 11:16

If I was a shareholder in Silverdell (I am not), I would be forming a "Shareholder Action Group" and pronto because it seems quite likely to me that the bankers will put this company through a pre-pack administration soon - leaving shareholders with nothing. Contact ShareSoc if you want advice on this.

[stegrego] 04/7/2013 11:02

You can be sure someone will be making money out of this. Just not us shareholders.....

[dasv] 04/7/2013 10:57

Kimboy2 - Kitsons makes up approx 30% of group revenue. The half year report mentioned significant under utilisation of UK work force.

The issue is cash at hand available to kitsons to pay creditors. We know as a group there is > £3m as of March 2013, but how much is available to Kitsons?

Their assets no doubt cover their liabilities but I suspect these assets are too illiquid to be converted to cash in the correct time frame.

[davr0s] 04/7/2013 10:40

If that is the case then this is a monumental screwup by management and destruction of shareholder value on a stupid scale. Btw if kitsons is going into administration I can see the kitson directors having its hands tied as to what it can say, but I would have thought the restriction doesn't extend to the group and they have a duty to inform shareholders what is going on. The fact we haven't heard may suggest a combination of figuring out what the actual trading position now is plus quite what to say - maybe case of rabbit in headlights. And who knows what HSBC is saying. If we learn company has inadvertently allowed a big chunk of its business to go pear shaped unnecessarily its hard to see how CEO/CFO can survive so I suspect discussions going on in that area too.

[kimboy2] 04/7/2013 10:31

dasv
The last Kitson's accounts looked OK. They didn't have any bank debt and said;

The company only requires borrowings at certain times. The short term flexibility is achieved through overdrafts

The company paid £37k in interest which would imply an average overdraft of about £0.5m during the year.

This is in the context of a company which had a post tax profit of £1m in 2011-12.

No wonder the administrators think it will be resolved quickly.