Silverdell Share Discussion Threads

[muckshifter] 06/11/2013 14:43

Don't forget though, that there are two sides to the equation. The "assets" include money "owed" by clients, but in the first place you need to know how genuine that value is, and secondly, in the hands of a receiver that value would soon be gone.

Silverdell, in buying the old subsidiary back from the receiver, may well have saved the debtor value from decimation by the receiver, but the true value attributable to those debtor figures may still come as a surprise to them if the old management of the subsidiary were cooking the books.
Regards.

[17paddy] 06/11/2013 10:42

This time I do agree with you Kimboy, if you dont have to pay £10m to creditors in due course it does help cash flow. The new creditors will be delighted !!! from all accounts they are experiencing great difficulty again in getting paid on a timely basis.

[kimboy2] 05/11/2013 06:16

Don't worry about not agreeing with me. I am just throwing up ideas for discussion so that I can better understand the situation.

On the creditors there is no doubt they got a bum deal. However there was only one realistic purchaser of the assets so a sale was simply a negotiation.

I wonder if those who started the administration process now wish they hadn't as presumably they got 23p/£ at best.

We can of course have no idea on past accounts, or whether there are write offs etc.

My point is that, ceteris paribus, the administration should have significantly improved the cash situation as time goes on perhaps lessening the need for a fundraising.

We will no doubt see.

[kimboy2] 04/11/2013 19:52

Won't that depend on how they value what they have bought ? They have paid £8m for assets with a book value over £18m.

The morality of all this is of course a different question and I would have some questions as to the difference between the last accounts and the administrators report.

[17paddy] 04/11/2013 19:51

Well the full asset value of Kitsons would be on SID's balance sheet and have to be written down plus of course the goodwill which I havn't looked up it's value but would be considerable

[kimboy2] 04/11/2013 19:20

Well on cash they had £6.4m at the interims. Since then they have lost £4.4m in Kitsons and paid £3m cash to buy Kitsons back.

That is cash of -£1m, which is tight.

The acquisition was on 24th July. I can imagine all sorts of issues which may delay the collection of the receivables. Subbies demanding payment from the customer in lieu of SID for a start.

In the end it should work through and add to cash though.

As for write-offs why should anything be written off at Kitsons ? They have bought it lock, stock and barrel but without the debts.

[17paddy] 04/11/2013 18:38

Kimboy

I've tried a couple of times to do an updated balance sheet but there are too many unknowns at this stage. However whichever way I do it I cant envisage an improvement an improvement in SID's balance sheet .
They will undoubtedly get huge cash benefits from dumping £10m+ of creditors
but they still have huge write offs.
The big worry is why they are still desperately short of cash, this really does raise intersting questions which will need to be answered in due course.

[kimboy2] 04/11/2013 12:17

I didn't understand your previous post.

Why haven't they bought the receivables ? They are among the items listed in the administrators report of the assets of the company to a total value of £7.57m.

The administrator says;

The assets included in the sale are the Company's freehold property, business name, business rights, customer contracts, book debts, goodwill, intellectual property, plant and machinery, fixtures and fittings supply contracts and the books and records.

Everything except the bills it seems to me.

[4selwyn6] 04/11/2013 12:08

They have not bought the receivables
That is the whole point of my previous
Email
Regards

[kimboy2] 04/11/2013 11:53

Thanks very much scburbs I think you are probably right with regard to HSBC and the net bank position is pretty much unchanged.

However that still leaves £13.3m from the creditors. They have bought the receivables but dumped the payables.

Is there any reason why this is not in effect a cash injection into SID, or at least it will be when they collect the invoices ?

[scburbs] 04/11/2013 11:13

Kimboy2,

My understanding is that HSBC has a floating charge over all the assets of the group. Therefore, the amount of £10.9m you see in the administrators accounts is the total amount owed to HSBC by the group (I do not believe this amount was owed by Kitsons Environmental itself).

This is one of the reasons why the full £17.5m deficit will not boost the SID balance sheet. There may be a boost to the balance sheet if creditors have made a loss, but it won't be anything like £17.5m and the latest set of accounts will not have the adverse movements which created the large deficits. I doubt the net result is a boost to the balance sheet, but the losses sustained by Kitson Enivronmental creditors should ease the losses to the wider group.

HSBC do not appear to have taken a hit from the administration process (so far). They took £4.4m of cash out of Kitsons Environmental and then basically agreed to allow the group to borrow this money back to fund buying the business from the administrator (i.e. the group is in essence buying the business with its own cash!).

[kimboy2] 04/11/2013 09:17

I am afraid I don't understand your point.

EDS is owned by SID. For an outlay of £8m, (£5m debt and £3m cash), they acquired (amongst other things) £10.3m of trade debtors and £3.1m of stock and work in progress.

Unless something goes very wrong this must be a large cash injection into SID, and its subsidiaries over the months following the acquisition.

My basic point is that the administrator is showing a £17.5m deficit in Kitsons after the payment for Kitsons by SID. Is there any reason why this isn't a straightforward benefit to SID.

Some of that benefit is in the form of a cash benefit and some in the form of reduced debt.

The effect on business is still to be determined but the fact that most of the business is in the form of long term contracts should help to mitigate the damage.

I am just wondering what anyone else thinks of that argument, or whether I am talking rubbish.

[4selwyn6] 04/11/2013 08:20

Kimboy

they did not get the cash...

Pursuant to the acquisition, the majority of the owned assets of the Kitsons Business will be transferred to EDS, including the intellectual property, plant, equipment and vehicles and the business rights of the Kitsons Business. Furthermore, all Kitsons' employees will transfer to EDS. The Health & Safety Executive has supported the business transfer from Kitsons to EDS and transitional arrangements are ongoing.

I stand by previous note...

[waynesoton] 04/11/2013 07:50

I feel that everyone should just relax and wait, yes it could be bad but it could equally be good for Sid.After all it could well be that letting kitsons go in to administration May well have provided better security for the rest of the group as going by the amount of debt and and money due there wasn't a massive shortfall which leaves me to think there may well have been bigger benefits to the rest of the group otherwise they would have just paid the debts that caused the administration as not all the debts were due But either way all this negativity is not going to help so just calm down relax and see what happens.

[pyemckay] 03/11/2013 08:04

what about the downturn in business, its inevitable i feel. I have wrote this off but anywhere near 5p open will do me fine. obviously the fundraising will see to that.

[kimboy2] 03/11/2013 07:26

There are a couple of things I said in the other place which nobody has commented on which probably means they are complete bull dust. Perhaps someone here could point out why I am wrong.

Firstly the deficit on Kitsons administration appears to be £18m. Give or take a bit is there any reason why this isn't a direct benefit to the SID balance sheet as last reported to March. They have in effect given away a shed load of net liabilities.

Secondly they have bought the assets of Kistsons for £8m through a £5m bank loan and £3m cash.

Included in these assets is £10.3m of trade receivables. They have obviously left the payables which generated these invoices with the administrator.

Is there any reason, assuming they are collectable, that this shouldn't be seen as a £7.3m cash injection into SID ?

[nurdin] 02/11/2013 13:09

Excellent write up Kimboy...:o)

[bookbroker] 02/11/2013 10:23

Selwyn, what makes you think that administrators are running this co., Kitsons was bought out of admin. by EDS, administrators are playing no role in this business, although the co. is under suspension, it does not mean to say that it is not running normally albeit being re-organised in the meantime. Too much speculation here at the moment, however frustrating it may be for shareholders wishing to know the final outcome.

[briangeeee] 02/11/2013 09:22

4selwyn6, are you suggesting that the Administrators' fees will be eating into the £600k set aside for unsecured creditors under the SoA? If so, I'm sure we agree, but this impacts on Kitson's unsecured creditors, not directly on EDS or Silverdell.

When you talk about the Administrators selling the best bit, it sounds like you're confused. The agreement to sell the Kitson's assets to EDS has already been announced some time ago. Unless you're suggesting one of the other Silverdell divisions is going to enter Administration, then you probably need to familiarise yourself with the current situation. Reading the Administrator's proposals that someone posted some time ago is probably the best place to start.

[4selwyn6] 02/11/2013 07:06

The legal costs and ongoing administrators fees will be running at £50-75,000 per week.
The bank will make no comment, it never does and it's lawyers who will be part of the ongoing increased costs would not allow it.
If and only if there are no inter group charges this may have a chance.
Impairment reviews will take place against all assets and there could be write downs of many millions.
Repairing the balance sheet and cash flow are priorities but what usually happens is the management work their socks off to keep it going and the bank eventually pulls the plug and the administrators sell the best bit to clear the bank and their fees.
Probably an MBO is my best bet.
Shareholders get zip!

[pj 1] 29/10/2013 11:04

The irony

EDS Decom ‏@EDSDecom 3m
EDS Team – dedicated to the promotion of best practice in Asbestos Removal

Shame they didn't follow the best Accounting practice

[17paddy] 28/10/2013 14:14

I think we are at crossed purposes, I accept that Kitsons is in administration but my comments were re Silverdell plc