Tricorn Share Discussion Threads

[markgahagan] 07/3/2013 17:31

I suspect that the difference between a good business and a solvent business may be the key here. Looking at Whitley, it had the business, which had good cash flows apparently, but it wasn't profitable because of excessive debt. If Tricorn can take over those contracts without the debt pile (which they can), rationalise Whitley's business in the US to one site supplemented by existing capacity in the UK then the good business becomes a profitable addition to Tricorn's stable. I am not suggesting anyone rely on my opinion, but it is one of the ways the deal could make sense.

[davydoo] 06/3/2013 19:24

Thanks rivaldo, really interesting insight into the deal and the desire of a third party, in the local authorities, to see it done.

[rivaldo] 06/3/2013 18:58

Cheers for that APAD. Some more local stories here. It seems that TCN played hardball over the price and also are in receipt of local grant aid to help facilitate the deal...and (as the RNS noted) TCN got $4m of property for its $3m of payment, plus the business itself:



Extract:

"Franklin alderman and Macon County commissioners voted on Feb. 28 to provide an economic incentive package worth $123,000 that would keep the facility running. Also, a One North Carolina Fund grant of $56,000 was awarded."



Extracts:

"For nearly $3 million, Tricorn Group bought Whitley's Franklin factory and equipment owned by the company, some of it located at another plant site in Indiana, according to a press release from Tricorn. The property was valued at more than $4 million and had been held by a third party receiver since January."

"Both the town and county government passed resolutions last week offering incentives to the buyer in the form of a forgivable loan and other incentives over a five-year period.

County Commission Chairman Kevin Corbin said the town and the county offered $67,000 in a forgivable loan toward the deal, split equally between the two. The receiver, which is charged with managing Whitley's assets, also agreed to forgive about $33,000 of the sale price, bringing the total offering to $100,000, Corbin said. That amount was enough to facilitate the purchase of the plant.

"They were only $100,000 short," said Corbin. "That's what separated the buyer and seller - but they were both willing to walk away from it.""

[electronica] 04/3/2013 09:36

Evidence that the Whitley closure was banker driven .........



"Whitley blamed a senior lender that refused to provide the finances needed to keep the plants running"

[electronica] 04/3/2013 09:31

APAD

It looks like Whitley was a private equity buy-out. My guess is that it was loaded with too much debt - but a lot more research is needed. I'll try to make it a priority.

2 site operation (plus a separate corporate HQ) will be slimmed down to 1 site - that (plus interest rate reductions) should be able to restore profitability if the best contracts are cherry picked & secured.

I wouldn't worry about a shift of heavy plant manufacturing to China - in fact the reverse seems to be happening. Manufacturing repatriation is a growing trend (& I speak as the private part owner of a global supplier to Caterpillar).

[apad] 04/3/2013 09:12

Correction (cherry picking):
"Under the terms of the deal, Tricorn will acquire Whitley's property at Franklin, North Carolina, US, fixed assets at the facility, all of the Franklin related inventory and certain plant and equipment from Whitley's other facility located at Plymouth, Indiana, US."
apad

[paleje] 04/3/2013 09:06

Anybody know why they went bust? It seems they closed very suddenly blaming finances which doesn't tell much of a story but if finances were so bad after a long history in the tubes business, why?

[apad] 04/3/2013 09:05

Well folks, we'd better hope that management have been duly diligent in spades. US manufacturers that use these products are moving to China and TCN has a facility next to them - good story. So, how does our tiddler buying three factories (one of which is bloody miles from the other two)in the US fit into the pattern?
Is the US a great place to make bent tubes? Why is it in Chapter 11?
More questions than answers.
apad

[rivaldo] 04/3/2013 08:24

Cheers Electronica, quite right. Hopefully the market will recognise the value and potential acquired here - the summary from your link says it all:

"Servicing its customers for over six decades, Whitley Products is the largest Tier Two supplier of precision tubular products to the diesel engine, agricultural equipment, off-highway, construction equipment and HVAC markets.

With its strong and highly capable engineering team, state-of-the-art manufacturing equipment and strategic US locations, Whitley enjoys the reputation of being the premier supplier of low-cost, top quality tubular products to Fortune 500 manufacturers of heavy equipment engines."

[daz] 04/3/2013 07:58

Agree, it does look like it could be transformational. A lot will depend on how much business they can secure from existing customers and how easy/difficult it is to to make further sales but there is no doubt that having a US operation will help to win orders there.

There will be a short term hit for losses and other business adjustments but the announcement does say they are targeting an 'increasing' contribution in H2 2014.

[electronica] 04/3/2013 07:51

Take a look at this ...........

[electronica] 04/3/2013 07:47

Rivaldo

It's a good acquisition - but you may be being a little too bullish in the short term ......

"will see some reduction in turnover in the short term, the Franklin facility will have installed capacity of around $20m (£13m)"

The other plant in Indiana is being closed & it looks to me that TCN may be cherrypicking the better (more profitable) contracts to consoldidate into a more efficient 1 site operation in North Carolina. This could be good & I will be pencilling in 12m quid @ 6% ptp in the year to end March 2014.

That is transformational for TCN.

Add China to that & it looks like TCN now has critical mass. Let's see how they manage the process of integration.

[rivaldo] 04/3/2013 07:30

Terrific acquisition news this morning:



For a cost of £1.95m cash, TCN have acquired out of receivership:

- £2.8m of assets at NBV
- around £20m of turnover
- a 60k sq ft American facility with over 100 employees
- an easy way in "to a global OEM customer base" and the US markets

It seems they've materially increased the size of the Group for basically peanuts.

[apad] 01/3/2013 13:46

RR
AVG much more of a mixed basket of offerings than TCN.

I'm more concerned about Caterpillar in China.
apad

[rogerrail] 01/3/2013 12:43

Recent interims from AVG indicate dissapointing sales to Cummins - they supply generator casings, potential carry across to TCN?
from the interim report HY ending November:

"...though business with Cummins significantly reduced in the first half, due to changes in their market conditions".

AVG tipped in IC today though, due to refocus on booming aerospace business.

[chinahere] 26/2/2013 18:14

I like Tricorn and have been buying a few recently. The EPS is high for 27p each and they seem to have kept going through recent rough times. Fingers crossed.

[rivaldo] 26/2/2013 16:09

Intriguing uptrend at present.

M/cap is only £8.7m, against around £1.1m net cash and £6.7m of net tangible assets.

Latest forecasts are for 3.1p EPS and a 0.3p divi this year to 31/3/13, with 3.9p EPS and a 0.4p divi next year.

I could easily have sold at lower levels but fortunately decided not to. The play here is that markets haven't weakened further beyond that already noted and that China takes the company to a new level.

[hyperboreus] 20/2/2013 11:27

Only possible to buy up to 1000 shares @ 25p at the moment, no problem to sell 10000+, eg price quoted 24.42p for 12,000 which is interesting as a trading update is due within the next week or so.

[alter ego] 13/2/2013 12:13

RR this is the TCN board. You can plug AVG on the AVG board.

[rogerrail] 13/2/2013 10:28

Further success for AVG , still largely under the radar, a good point to get onboard IMO :

[apad] 12/2/2013 10:41

Lots of articles about Caterpillar's difficulties in China. Could count against my positive view on TCN.
apad

[rogerrail] 28/1/2013 18:38

with interims due in Feb , now may be a good time to take a look at
AVG
refer my post :

[harry the haddock] 21/1/2013 15:29

thanks for that reassuring post apad. have kept avingtrans on my watch list so will be interesting to compare the 2