Silverdell Share Discussion Threads

[erb2008] 04/7/2013 21:46

who says they have not got the cash - their credit rating (kitsons) as a result of this situation is now 1 - so they may need some short term cash as a result until they can appease Experian/D&B - but don't assume they (kitsons) were not cash positive on Monday

[cockneyrebel] 04/7/2013 21:44

If cash was tight what were they doing paying a maiden divi in March? The chart turned with that and the Investor day. To me, for a stock to dive after an investor day signals something got said that set alarm bells ringing imo. Something unexpected, or hidden from the non-execs too if one was buying 150k in June imo.

CR

[kimboy2] 04/7/2013 21:41

I don't think it will be a pre pack. The purpose of the administration will be to pay the creditors, presumably the bank and possibly HMRC. I don't think they will need to sell the company to do that as not particularly large sums are involved.

What will need to happen is SID come up with the cash to do this. It could be from increased borrowing from somewhere else but will most likely be a fund raising from the brokers mates at a derisory price.

The only good thing is that the share price will generally fall to the placing price allowing anyone in at the same price.

[erb2008] 04/7/2013 21:34

So am I dasv.

[dasv] 04/7/2013 21:32

ERB I am referring to state of play at Kitsons environmental rather than silverdell as a whole.

[erb2008] 04/7/2013 21:30

dasv - no it has not been on the cards for a while - bit easier/ good starting point for ZC if bank balance exceeds purchase ledger/to 10 supplier statements - doesn't take a lot of auditing really

[hastings] 04/7/2013 21:17

Surely not another pre-pack!

[dasv] 04/7/2013 21:17

CR - yes - re: ZC it's like it's been on the cards for a while for them to say that?

[erb2008] 04/7/2013 21:09

Loverat the senior management have put a fair bit of time communicating with PIs - so I would be surprised if that was the case.

[loverat] 04/7/2013 20:58

I continue to be amazed at what goes on in this market. If all this is some plan to gain at the expense of shareholders it will represent the biggest scandal on this market for a while.

[erb2008] 04/7/2013 20:53

THey will have a quarters worth of VAT in the bank due in a few weeks - and they couldn't pay less than £100k - assuming they didn't pay it of course.

[cockneyrebel] 04/7/2013 20:51

"ZC set to unveil turnaround plan" - got that together a bit quick then, can't even had time to go through the books yet imo.

CR

[cockneyrebel] 04/7/2013 20:49

A sceptic might think this was allowed to happen so ZC could pic them up out of admin.

Just doesn't ring true imo.

CR

[cockneyrebel] 04/7/2013 20:35

Something doesn't smell right here imo.

The CEO and FD hold nearly £1m worth of shares. Have they really let this mess happen for £25k? Surely they could have injected that in or double that to prevent this and maintain the co status and their own share value in the co.

CR

[dasv] 04/7/2013 20:32

this is not analogous but I once held MXP (Max Petroleum) and the shares got suspended. The day the suspension was lifted the shares bounced hard upwards. since then MXP have continued to fall year after year. That was a different type of case though - if I remember correctly relating to conflicts of interest on the board.

[erb2008] 04/7/2013 20:00

they could not reasonably avoid suspension as the court issued a winding up order on one of the subsidiary companies - they could not avoid this company going into administration for the same reason.You are assuming that Kitsons was/is cash -ve - not an unreasonable assumption but still an assumption.

[roger-lawson] 04/7/2013 19:40

AdamB1978: there do seem to be some folks on this board who lack experience of such situations, which is perhaps why they appear to be so optimistic. I am just trying to disillusion them. The best I can see is some moderate refinancing. That might well include a placing which will dilute minority holders, but if the shares are ever removed from suspension the price is likely to fall substantially because the information available may be limited and nobody likes that situation. That's maybe the best scenario, but there are lots worse ones.

It's also worth pointing out that most companies avoid share price suspensions whenever they can, so matters must be pretty serious. For example, Northern Rock shares were not suspended when they were clearly in dire financial difficulties and the outcome undercertain - they were only delisted months later when they were nationalised.

Of course there are companies that come back from suspension. Avia Informatics requested a suspension "pending clarification of its financial position" in August 2011, it was later reinstated, suspended again for late filing of accounts, and recently suspended for a third time, again "pending clarification it its financial position" - although a bit more information was supplied then and within 24 hours, it looks questionable whether it can survive without substantial refinancing. So that is a typical story of "suspension".

But there are aspects of the situation in Silverdell that are particularly toxic: one is the adminstration of a subsidiary, and two is the involvement of banks with possibly onerous covenants.

Thankfully the one benefit of the delisting is that nobody can trade on my opinions because the shares are in suspension and trading halted. But I will of course be pleased to be proved wrong.

[penpont] 04/7/2013 18:59

From the constructionenquirer article, what does anyone make of the following statement:

'The administration is not believed to affect the Silverdell plc holding company which is why no update has been made to the Stock Exchange since Monday's share suspension.'......?

[kieranf] 04/7/2013 18:19

Article below references a statement from the Administrators - however cannot see any reference to this on Zolfo Cooper website, or elsewhere.

Assume there would have to be a RNS before the weekend ??

hxxp://www.constructionenquirer.com/2013/07/04/administrators-in-at-silverdell/

[adamb1978] 04/7/2013 18:13

Kimboy - that wording suggests to me that their financing facilities would have contained something which referred to all 'material subsidiaries' or 'operating subsidiaries' being solvent etc...and if not then the overdraft and loan facilities all become repayable.

Its obviously consistent with the subsid going into administration and them now having to renegotiate or replace all their financing agreements. Can imagine that HSBC said 'fine, but the fees are all x%' higher and they're now running around trying to get them at a more sensible rate

Utterly ridiculous for a company to be in this situation

[kimboy2] 04/7/2013 18:05

The Group's bank overdraft and loan facilities are secured by debentures over the assets of the Group

Which makes it surprising to me that they are not in on the company as a whole.

[bernard1] 04/7/2013 18:04

has anyone or any company come out of share suspension and been a complete winner?

[adamb1978] 04/7/2013 17:49

M1das Touch - we'll have to agree to disagree. It could well be threatening the solvency of teh group from a technical perspective (e.g. via cross-default provisions which are common in certain financing facilities and have been included in numerous which I've put in place for clients) but not from a true perspective ie a breach of an agreement by a subsid could cause all facilities to become repayable, despite the company not being overly levered.

It might of course not be this but its not 'CLEARLY' threatening the solvency of the whole group. It might, but it might not. We dont know. The scenario I mentioned above is one of the 'might not' cases - they would just need to replace the RCF, overdraft facilities etc with other similar ones from other banks, which could potentially take a few days to get the paperwork done. If there's something else going on, e.g. some Enron-esque fraud or other scenario where debt levels are far higher than previously reported, then yes it might be threatening the company

Roger - it may not have been intended in such as way however I read your post as being quite condascending (and am restraining myself from being more punchy!). Appreciate you are a seasoned investor but that done not mean that everyone else is an idiot with no professional or investing experience!

There are other scenarios other than than 1) and 2) you suggested. Clearly its a not good news but does not necessarily mean the cmopany is toast. As I've mentioned before, leverage of the company was at moderate levels and working cap outflows (and levels) were not untypical for a company in this industry and which is growing the top line. Clearly if there's been some widespread fraud then the true equity value is likely to be zero however, in the scenario I mentioned above, the company could well emerge intact, albeit minus a CFO and needing some governance improvements. The question then becomes whether they will win high profile contracts or not as a result of this and how much of a multiple discount the company will trade on as a result.

Hopefully tmrw morning will bring an RNS and clarify some of this!

[roger-lawson] 04/7/2013 17:47

Some of the companies mentioned by dasv are definitely no longer listed, and erinaceous appointed administrators in 2008.