Stanley Gibbons Share Discussion Threads

[ltcm1] 13/3/2018 13:13

SG have debt at more than the market cap, so the shares are bound to be swingy. You are right imo in that the share price will improve rapidly if net profits appeared.

However how likely is that to happen given the interest they are paying plus their absurd cost base?

It is impossible to tell until Phoenix outline a plan for SG. However Phoenix seem to have made a horlicks of Hornby so it doesn't auger well for me.

[jasdan] 12/3/2018 22:42

Phoenix's investment:
It all depends what you include in this calculation. They are buying £6.2m of new SG shares. They are also taking over the £10m debt from Phoenix, and they are buying £3.25m of the Guernsey stock. That all obviously adds up to the £19.45m.

The other £7m debt is what confuses everyone but it no longer seems to be relevant as RBS have written down £4.25m of it, leaving £2.75m left which has been swapped for SG £1 shares on a one for one basis which are again assigned to Phoenix. So this other £7m is basically collaterised and no longer will apply on SG's balance sheet.

As SG move into the black I cannot see how the market capitalisation will remain at the current levels.

If the group is for example, running in the black by say £1 -£2m by say summer this year, and debt is £10m or £9m, then I cannot see the price for the whole group valuing SG at less than £25m. Clearly, if the current shareprice only gives a value of £7m then something is badly amiss here and a substantial rally would appear to be inevitable.

[jasdan] 12/3/2018 22:32

It all depends on Phoenix's approach. If they never intend to sell all or part of their stake, then actually all that will happen following Friday's EGM is that the shares will be even more illiquid than currently.

I think shareholders will vote for the deal, even though many may not fully understand it, and the price will rise this week accordingly, and then spike on Friday / Monday / Tuesday / Wednesday in relief. I do think SG's management were weak letting Phoenix buy so much of the company at such a discount. There was also no need to give away 58% of the stock. 51% was enough. The £17m debt deal is OK, but the interest rate via Phoenix on the remaining £10m is much higher than via RBS who let's face it, were clearly hardly concerned about covenant breach previously. It also presents a potential poison pill to any other predator looking to take over SG in the future. If RBS were that easy going and able to write off £4.25m as this deal suggests, then I do not know why this did not form part of SG's renewal banking facility that they could have negotiated easily enough with RBS directly, without needing Phoenix's involvement.

[jasdan] 12/3/2018 22:24

I do not think that SG is currently running at a profit. The losses are definitely down, it probably is trading at a narrow loss now of say -£2m to -£1m as there are no investment funds to guarantee anymore, the Marketplace is shut, etc etc, and trading is normalising. For some time previously I believe they lacked enough of the correct stock. That has been sorted out to some extent, and they now have larger Indian / Middle East / Far East stocks although I believe there is still probably an overhang of Caribbean material on their books. However, to be fair, I do not think the April figures were ever likely to put them fully in the black as there was so much pulling down the company previously. Most if not all of these distractions should be gone by the later update in October 2018 by which time they should properly be in the black.

My concern now is that Phoenix are grabbing this company at too cheap a price now just before SG moves into profit, when really it should be us shareholders benefitting from all the difficult decisions made previously by the share price then rising. Instead it looks like Phoenix will be gaining at our expense - they are being allowed to buy in at too cheap a price.

[penny black1] 12/3/2018 21:55

My concern is that as it will take some time for significant profits to arise when they appear to be approaching the company will be taken private for 2.5p per share.

[dsct] 12/3/2018 19:41

jasdan,

If Phoenix sell any meaningful part of their holding, it will have a pull-back on the share price until their overhang has cleared, unless they can do a large transfer to another (investment?) company, but even then it would most probably be at a discount to whatever the current share price is.

They DID NOT invest £19.45m in SGI, as has been mentioned on numerous occasions. If they can/could/would sell their £6.2m shareholding in SGI for more than they paid, then they'd still be owed the £10m loan plus interest for the next 5 years. Let alone what they've already made by buying the £10m loan from RBS at a discounted rate. If an individual person runs out of money before payday, and asks the bank for a loan, it's not classed as the bank investing in them ! :o)

I can't see SGI's cashflow being such over the next two years, that they'd be able to repay/reduce much (or any) of their debt(s).

As an exercise, what do you imagine the next P&L and/or Balance sheet to look like ? If you post your calculations, I will do likewise and we can discuss the differences (if there are any).

[augustusgloop] 12/3/2018 15:57

jasdan,

do you think that SGI are presently losing money?

[jasdan] 12/3/2018 13:48

Seems odd there is not more trading in this stock - you would have thought the Phoenix bid was good news for shareholders.

For Phoenix, the deal only works if the price rises materially over what they are buying in at, and given the cut in bank debt afterwards, and the soft financing terms available from Phoenix, if required, I cannot see why this won't be trading a lot higher soon.

I do not understand though why such a complex deal was thought necessary, but perhaps this will become clearer on Friday?

[penny black1] 11/3/2018 21:26

2.5p might be the price!!!!!!

[augustusgloop] 11/3/2018 21:14

There are rules against that.

As, I remember, they have to offer at least the highest price that they paid for any shares in the last year.

If they had wanted to do that - they would have been better buying all of the loans from RBS and demanding immediate repayment. They could then have taken all the assets that were given as security. The share price would then have collapsed and they could have bought the name on the cheap.

[penny black1] 11/3/2018 18:58

Could someone please explain to me what prevents Phoenix buying the remainder of the shares at a knockdown price using their majority vote by proposing a motion that will allow them to swallow up the minority.

[jasdan] 09/3/2018 17:13

Augustus, a valiant effort, but you are still wrong. The £19.45m assumes £17m debt only, whereas your calculation is based upon debt of £17.5m [which would in turn mean the Phoenix deal was worth £19.95m].

As I say, does anyone know what how to work this out?

[augustusgloop] 09/3/2018 17:05

jasdan,

Investment by Pheonix accounted as:

£6.2m for shares
£10m for loan Pheonix to SGI (transfer of RBS loan)
£2.75m for rights over SGI Guernsey
£0.5m for possible extra to RBS if outstanding amount increases in next few weeks.

Total investment claimed = £19.45m

Accountancy lies because they only paid £4m for the RBS loan -- but it was worth £10m for the nano-second that was taken to transfer it into a Pheonix - SGI loan.

If SGI went completely bust the day after the transaction, Pheonix would lose £12.95m

[Or you could say that they lost £18.95m on that day, but made £6m profit on the loan the day before.]

[jasdan] 09/3/2018 17:03

2magpies, I cannot see why Phoenix would be deemed desperate to do the deal in such a complex manner? They are supposed to be a cash rich operation???

To be frank, I cannot see the benefit either to SG or the need for such a complex deal when as I say, Phoenix could merely have directly negotiated directly with RBS and concluded a deal to take over the RBS debt, less the haircut, on the basis that they then took over majority of SG. What exactly is the point of SGF and why was this needed?

Equally, can you advise how this deal adds up to £19.45m?

[2magpies] 09/3/2018 16:59

jasdan

"I do wonder such complexity was necessary" ?

1. desperation

2. 'mounted' & 'used'

[jasdan] 09/3/2018 16:50

Augustus, you are still wrong. Phoenix are buying the debt off of RBS. The SGF debt is assigned to them.

So RBS are receiving £10m for the £10m plus it looks like £2.75m for the other £7m.

It seems clear that RBS have taken a £4.25m hit in the process. The other £2.75m is changed into £1 shares according to the prospectus and held with SGF but assigned to Phoenix. There seems to be no explanation as to what these other 2.75m shares are, or what rights they give to their shareholders. Perhaps they are the first to be paid dividends on?

I do wonder such complexity was necessary. Why was SGF set up at all? If RBS was willing to forgo £4.25m of the debt, this could have just been negotiated directly with Phoenix, why the smoke and mirrors?

Augustus, are you able yet to explain how the deal adds up exactly to £19.45m?

[augustusgloop] 09/3/2018 15:05

Jasdan,

Pheonix are buying £10m of the RBS debt.

The other £7m is being bought by SGF (a subsidiary of SGI) for £2.75m


""SGF" Stanley Gibbons Finance Limited, a wholly owned subsidiary of the Company incorporated solely for the purposes of giving effect to the Debt Restructuring, incorporated in England and Wales with company number 11180645 "

£2.75m of the money raised by the sale of shares to Pheonix is immediately transferred into SGF and used to purchase the £7m debt from RBS. {at just under 40% of face value}


RBS have written off £10.25m of the £17m outstanding debt as part of the transaction - receiving £4m from Pheonix and £2.75m from SGI.

[jasdan] 09/3/2018 14:52

Augustus, you cannot be right on this. After all, Phoenix are buying all the RBS debt, not just £10m of it, so that makes £17m of debt.

Admittedly £10m is now being refinanced by Phoenix instead of RBS, but as for the other £7m, it looks to me like that now is split between a write down from RBS and a new share issue for a subsidiary company.

Not quite sure how all this adds up to £19.45m but hopefully somebody has a clue?

[jasdan] 09/3/2018 14:51

Augustus, you cannot be right on this. After all, Phoenix are buying all the RBS debt, not just £10m of it, so that makes £17m of debt.

Admittedly £10m is now being refinanced by Phoenix instead of RBS, but as for the other £7m, it looks to me like that now is split between a write down from RBS and a new share issue for a subsidiary company.

Not quite sure how all this adds up to £19.45m but hopefully somebody has a clue?

[augustusgloop] 08/3/2018 17:23

They aren't spending £19.4m

They are buying £10m of SGI debt from RBS for £4m - then lending SGI £10m (on different terms) to buy back the RBS debt.

So they make an immediate £6m profit on the debt - transforming £10m of RBS debt into £10m of Pheonix debt. [But the RBS debt only cost Pheonix £4m.]

The RNS and set up is so complicated - just to make it look like Pheonix were putting in £19.45m - when in fact they are putting in much less.

[jasdan] 08/3/2018 11:56

I very much doubt anyone other than Phoenix will get a chance to buy this at 2.5p or below.

However, with the £19.45m deal on the table, it seems a bit odd that the price now is only 4p so valuing SGI at around £7m - barely more than the value of the extra shares Phoenix is supposed to be buying next week for £6.2m. If we assume that the current price takes into account the Phoenix offer, then surely we are not saying the rest of SGI is only worth £0.8m???

And why would Phoenix be willing to spend £19.45m on a company who's market cap is only £7m afterwards?

There are mysteries here, perhaps anyone out there can explain the current share price? It should surely be much higher than it is currently?

[superiorshares] 06/3/2018 18:17

Jasdan .. whats my entry point ?.. im thinking 2 - 2.5p area.

[superiorshares] 28/2/2018 17:46

Sikhthetech.. exactly . people who have two thumbs stuck to their I phone 24/7 , think everybody does :-). Lincoln has two Train/model shops and a stamp shop that I know off. As far as I know thay have been their for years.. Digitrains may be relatively new ? but the other two have been their for years . They are trading as retail shops because they don't make any money and like paying their rates every year to the council, for the fun of it.

[sikhthetech] 28/2/2018 11:51

SS,

good post..

Even the 'bricks and mortars' retailers adapted and are now online as well... a lot of customers go to the shops, check out the goods and then buy on line.. The retailers are not stupid, they are aware of this...

The comment made suggesting that collecting is dead and youngsters don't show any interest is rubbish... I know a lot of youngsters who still collect stamps, coins, trains..
Some of these will become serious collectors, some won't...
Collecting and trading of collectibles is still a huge market...