Slf Realisation Share Discussion Threads

[2wild] 27/11/2023 19:15

Thanks chucko1. I last added to Cs back in early October at 4.0p and some more late October at 3.9p. Despite rising 15% from the recent low, I think GAVI is better value compared to SLFx.

GABI at 60.2p:
Dividend yield 10.5% paid quarterly. Discount to NAV 35%
No new loans for now.
Redemptions going into reducing Vank debt and buying back own shares.
Continuation vote in six months.
Lower risk.

[chucko1] 27/11/2023 12:11

Those Ords are nice sales. On the Cs, my most recent trades were buys!

[2wild] 27/11/2023 12:09

Sold 50,000 ords this morning with two trades at 3.311p and 3.411p. This leads me with 225,000 which will have a negative carrying value after next month's dividend payment. Plus 170, 000 Cs which already have a negative carrying value after previous dividends and trading profits.

[chucko1] 26/11/2023 14:41

I find that unlikely, as this would require a Board meeting - something likely requiring a number of a days to convene. And if a helicopter deal was close, I reckon they would not have announced anything on the Ords at t his stage.

But with SLFR/X, logic is not abundant. That said, therein has lay (lied?) the value.

[cousinit] 26/11/2023 10:51

I suspect from what I've seen in the reports that the glass loan has a 'soft' bullet in 24/25 and amortises meaningfully (when cash is available!) ahead of that.

It hasn't usually been the case, but with the ex-date for the ords still some weeks away, could the Cs still piggy back onto that if the chopper was to land?

[chucko1] 25/11/2023 19:20

It is borderline inexplicable. There may still be interest being paid on loans, but then how come nothing on the Cs? It has become a bit of a random capital generator, which, in the case of the Cs, has been fantastic. But intelligent analysis is now a thing of the past, although I still think there is a lot to be made on the Cs, if you can stomach the risk.

[2wild] 25/11/2023 17:11

What I find odd is how a 1.4 million pound realisation. Resulted in a further 3.9M Behind the sofa. They could have returned 1P weeks ago, about 40% of average share price over the previous month. With 0.5 p announced this week. Therefore, returning most of money in time for a probable Santa rally.

[cousinit] 25/11/2023 11:20

Conditions are difficult with interest rates having risen, cost pressures and pretty stagnant economies Europe wide. That does suggest that the intended time horizon will have slipped. Security in the original docs does seem like it is often more theoretical than tangible (certainly for the ords!).

The glass manufacturer seems to take two steps back soon after any steps forward. The £5m repayment does suggest decent amortisation did take place prior to the flooding given the Suniva amount of this is less than £2m.

For the helicopter - Euro medium term rates followed the US up but are back to levels of August (so before the accounts were released). Not sure if this has been an issue as finance offers are usually open for a period of months? The comment was that the new lender would only advance a certain quantum, so not rushing the completion may produce slightly higher proceeds? Alternatively, the delays for the glass manufacturer in the ords might have taken the time pressure to refinance from here if the overall winding up has slipped?

[chucko1] 24/11/2023 19:19

It seems to me that the benefits of running it still outweigh the costs. Suniva was a very good result (well, relative to the most recent paltry value assigned to it) given the previous management despair over the costs of getting anything out of it. It seems that patience is still being rewarded to an extent.

I am not sure how to analyse the Cs any more - I do not understand why they cannot get the helicopter sold in short order. It is a tangible and moveable asset which has a value known to a good degree of accuracy. But I sense they are only able to rely upon an income stream derived from its use. The collateral (asset) is not the helicopter, but the loan. I wonder if there was a deficiency in the original documentation, but that is little more than a wild guess.

Were they to sell the helicopter loan, then I think they could sell the other C loans at 70% to someone and at that stage, with just £3mn assets on the Cs, a final hit of £900k would be tolerable - especially considering the current share price and the fact that the wind down on the Cs had been way beyond expectations relative to the NAV of the portfolio upon commencement of wind down. They would leave with reputations enhanced.

But the complication is that there are a number of small loans still in the Ords portfolio and I cannot see a buyer for any of these. And certain fund costs are shared (in some undefined manner) between the Cs and the Ords. It ought to be in proportion to the NAV of each share class, but I am not sure it is.

Normally, a wind down such as this would result in a quick sale of the remaining odds and sods once the 90% barrier was breached. But this is a portfolio like few others! What might happen for other sorts of portfolios is that you could appoint a special administrator (servicer) who would merely manage flows, but NOT look to enhance value via extension or refinancing etc. This would result in far lower costs at the expense of realising any further potential. And this would also be far more relevant for an investment grade loan portfolio, or at least one which was not so distressed (as are the Ords).

There might be some solution to the rump which involves factoring or such like, but they would not want to say anything about that until it was a done deal for fear of damaging current refinancing negotiations.

With the Cs at 4p to buy and an NAV of 6.25p, even with this uncertainty I see it as a decent risk-reward. Other than the helicopter, the loans appear to be doing fine, paying amortisations and interest when "due" (one is rescheduled). Even if the helicopter loan was haircut by a further 40%, you would still be about breakeven.

All that said, their more recent statements have indicated this might take a while longer, and by the end of 2023 was not what I was expecting. More like end of 2024.

[gopher] 24/11/2023 18:21

Chucko - I think the management hoped to wind this up by the end of 2023, optimistic for the ordinaries but realistic for the C as the loan book gradually got smaller. What’s your view when this can all be wrapped up now Do you C going first, there is a question of costs incurred against value added imo?

[chucko1] 24/11/2023 16:45

It has now become a pure gamble on the Ords, but with great odds, I reckon.

The Cs can survive quite a lot of markdown on the Helicopter without causing big problems owing to the seemingly decent performance of the remaining three loans.

[2wild] 24/11/2023 16:27

Got some more at 2.98p. Effectively 1.48p for 5.1 p of NAV 70% discount. Obviously risky with the glass loan. As per Wednesday's announcement, they can also be substantial revisions to the upside.

[chucko1] 24/11/2023 15:59

I agree with this analysis. No capital for the Cs implies the chopper has not been sold - and may even have suffered a delay. This is the first time there has been a capital repayment NOT on both tranches simultaneously.

If a chopper sale was imminent, I would have thought a wait to return capital to the Ords to keep this record intact.

But this has always been able to surprise. Especially the half year report where the NAV on the Cs was lowered and then on the recent NAV update, raised again - suggesting a chopper "uplift" (ha-ha).

[cousinit] 24/11/2023 13:44

Spread is wide but I was working on £8m ish mcap before today for the ords, so similar to Chucko's 18%. Agree it's £5m so significantly more than the Suniva proceeds. It is potentially binary from here, although that's no longer due to ADs ;)

Any thoughts on the Cs? The helicopter was due to be refinanced in Q4 so that suggests a delay with this announcement being just for the ords. Appreciate refinancing conditions have been difficult.

[2wild] 24/11/2023 12:05

CousinIT They are not just returning the 1.8 million USD, announced Wednesday. They are returning over £5 million.

1.5p per share paid 28 December.
Ex Return date 14 December.

Residual amount after payment should be 5.1p ps.

[chucko1] 24/11/2023 11:52

No. MC at mid-market is around £10mn. The £1.8mn is therefore moderately material (being 18%). And the share price has moved up by the roughly 0.5pps that this repayment represents over the carrying value.

But I did not buy as so much of the remaining value depends upon the wildly oscillating prospects for the French gas manufacturer which is at the whim of inflation and French industrial relations. I can do without that randomness, even though I recognise the 50% discount to NAV.

[cousinit] 24/11/2023 11:02

Think it might be a bit more than 8%. The cash return next month is probably 2/3 of the market cap prior to the announcement.

[2wild] 22/11/2023 22:29

1.8 Million USD return to Ords. £1.1 million uplift to £334K book. About 8% of current market cap. Still some life in the old dog.

[2wild] 11/8/2023 13:39

Picked up 20000 Cs at 4.792p Tuesday, sold today at 5.2 P. Giving me a 7.65% profit in 3 days after dealing costs.

Not sure how much these are now worth. However, still possible to makes some money trading round the edges.

[spectoacc] 09/8/2023 08:40

Bit cheeky banging them out in 4 lots, but well done - the MMs miss these cash returns every time it seems!

[2wild] 09/8/2023 08:37

Sold 80,000 Cs this morning at 6.83p. 9.33p in old money. Made over50%in just over 4 weeks

[catabrit] 26/7/2023 11:24

It’s not MS. They’re just the prime broker for some Dutch investor who has acquired the shares. Anyway I don’t think we should be attributing much or anything to what other people are doing. In odds we trust!

[chucko1] 26/7/2023 11:05

Not really - they bought a similar amount (proportion) of the C shares.

[reddirish] 26/7/2023 10:48

Looks as if Morgan Stanley (10% holding on the ords) have a belief. A cheap option on the glass manufacturer?