Uil Share Discussion Threads

[vacendak] 10/4/2021 09:46

The 2026 quorum was probably skewed, UIL Ltd holds a lot of them in pseudo-treasury.

Assuming these go back to a small premium, they could be offloaded to soak up the 2022s that mature next year.

I only voted on my 2022 "paper". I did not bother to ask my ISA provider for a voting form for my other ZDPs, assuming it was possible at all, because I hold them as DIs (Depository Interest).

[morton2011] 09/4/2021 17:51

For CC2014 there always has only been 1 rollover but they can try again next year if they want.

@v Not much enthusiasm from the 2022 or 2024 holders either way as less than 1/3 of the holders voted at all. So their resolutions did not get passed and they get another week and then its up to those who can be bothered to vote. Suggests not many of the 2022 will have elected to roll over as if they did want to do that they would have presumably voted for.

[vacendak] 09/4/2021 17:28

As expected, UIL Ltd democratic results are overwhelming, the "against" were at most 0.34% of the votes!

I did not want to be beaten up, so voted with the big guys. :)

[cc2014] 07/4/2021 13:19

Thanks. I was not aware there was only one rollover per ZDP tranche.

[vacendak] 07/4/2021 12:04

No you will not. There is only one call to rollover per ZDP tranche.

They do it generally way ahead of the maturity date (end of October) to assess how much cash - or accounting wizardry - they need for the redemption.

What may happen, assuming they want to spread out the debt a bit more (add an extra two years) is that they would issue some 2030s around, but before, October 2022 to smooth out the 2022s redemption. The 2022s are a big chunk of the debt load. You may be right that these would offer a higher yield. This however remains a hypothetical.

The next round of expected rollover activity would be mid-2023 for the 2024s redemption/continuation into 2030s or 2032s (if they lengthen the life).

I have accepted the rollover and punted a bit more on the placing. I know, I could get a better return over six years on Scottish Mortgage or whatnot, but I consider a bit of fixed interest in the portfolio as necessary ballast.

[cc2014] 07/4/2021 09:40

I have decided not to convert my 22's. 5.75% doesn't do it for me on a risk/reward basis for 7.5 years

I expect I will have the chance to convert them to 30's in a years time.

[vacendak] 30/3/2021 16:05

The Resolute story:




Considering China is involved, everything is possible, like a bribe to close the mine so as to lower the price to pay. Resolute seems to have been mightily screwed on that one. Good luck with "legal advice" in that part of Africa.

[cc2014] 26/3/2021 16:11

Also in passing PCF Bank has got dispensation from AIM to get an extra 3 months to file it's accounts, presumably after not being able to do it's own books properly (not by very much, only a £1m). It's shares are up though on the trading update.

[vacendak] 26/3/2021 15:39

In passing, Resolute (RSG) is not looking good at all at the moment.
See the dedicated thread.

[vacendak] 25/3/2021 09:22

They had to change some wording saying that the 52.8% fall was over the life of the 2028s and not per annum. This is under the section "Final Capital Entitlement is not guaranteed" when they warn that the 2028 would not be repaid in that case.

Oddly enough they had it right in other sections of the prospectus. To be fair, the prospectus is more like a litany, things are repeated ad nauseum across it for legal reasons I assume.

Still a bit sloppy for the masters of the jargon at ICM. :)

[morton2011] 24/3/2021 11:48

I admire the financial engineering and am just jealous I cannot get paid to manage my own investments and the way the cash is distributed.

The shares have just about doubled since 2005. So better than inflation but not by much. There have been dividends which I assume are better return than the ZDP but would not suspect by much.
So Mr Saville cannot be particularly pleased with his 70% investment for its income or its capital return although he always has the option of trying to realise the NAV which the other shareholders cannot force.

Aha I forgot the fees that gush out to his 100% owned manager ICM. £ 17 million from UIL along in the last 3 years (page 5 of the prospectus) is ridiculously high for investing in the same platforms and investments. Then there are all the fees from the platforms as well which go direct to ICM no 'see through' in the prospectus for them.

I will keep howling at the moon and keep an eye out for when Mr Saville decides he wants to cash out and thus the share price closes the gap to the NAV. Loading up with more debt suggests its not going to happen soon.

I do agree the higher up the debt profile ZDP's offer good protection so have added some 2024 recently, > 5% yield which the 2028 issue will make even more comfortable for the credit risk.

[vacendak] 24/3/2021 09:00

Resolute is dropping like a stone again.

At least they have a new CEO now.

[morton2011] 23/3/2021 20:28

@vace
Those cover numbers can be expressed in different ways.
Does 'if the assets fall by 11.8 per cent per annum you lose all your money' sound different to the comfort of 2.12x cover
"
Based on the Assumptions, if UIL’s Gross Assets were to fall by more than 52.8 per
cent., or by more than 9.5 per cent. per annum, during the period from 23 April 2021 (the anticipated date of Initial Admission) to the 2028 ZDP Repayment Date, this would result in a Final Capital Entitlement per 2028 ZDP Share of less than the 152.29p entitlement per 2028 ZDP Share due on the 2028 ZDP Repayment Date. A fall in UIL’s Gross Assets of 61.0 per cent. or by more than 11.8 per cent. per annum during this period and based on the Assumptions, would result in no payment being made to the 2028 ZDP Shareholders.
"
while 4.56x cover means:
"
based on the Assumptions, the Final Capital Entitlement of the 2022 ZDP Shares would have ZDP Cover of approximately 4.56x following completion of the Rollover Offer and the Initial Issue. Based on the Assumptions, if UIL’s Gross Assets were to fall by more than 78.1per cent., or by more than 63.1 per cent. per annum, during the period from 23 April 2021 (the anticipated date of Initial Admission) to the 2022 ZDP Repayment Date, this would result in a Final Capital Entitlement per 2022 ZDP Share of less than the 146.99p entitlement per 2022 ZDP Share due on the 2022 ZDP Repayment Date. A fall in UIL’s Gross Assets of 90.5 per cent. or by more than 78.6 per cent. per annum during this period and based on the Assumptions, would result in no payment being made to the 2022 ZDP Shareholders;
"

[rik shaw] 23/3/2021 17:32

Yes AIC seem to use a strange calc for cover which seems to defy logic. The covers you note make a lot more sense.

[vacendak] 23/3/2021 16:32

@rik

Yes, if you hold the ZDP 2022 you get two notices, one for the rollover and one for the placing, i.e. buying "on top" of the rollover at 100p per share.

It is possible that the 2028 will go straight to discount, i.e. better off buying on the market than at nominal price. This is unlikely though as they will be covered at 1.35x minimum (or they scale back the offer, i.e. borrow less than £25M). Also as per the "illustrative financial effect" the covers will be 4.56x, 3.24x, 2.56x and 2.12x for, respectively, the 2022 (those left to mature), 2024, 2026 and 2028.

Looking at my archives, the 2024 (rollover of 2018) had only a 1.61x cover mentioned in the "illustrative financial effect" section at the time.
So, due to the fact that £25M is far less than the present value of the 2022s in circulation, the 2028 will be less risky at listing time than the 2024 were in their days.

In passing I do not understand the cover numbers from the AIC link. The 2022 should be more covered than the 2026 as they are ahead in the ranking in case of liquidation.

In other words, if one wants in for the 2028s, it is highly likely they would be better off with the rollover/subscription than buying them on the market a few days after listing. Also, if one buys, they pay the fees/commission, if they subscribe, UIL Finance Ltd pays the fees.

[rik shaw] 23/3/2021 15:59

Got a corporate action notice for the 2028 issue today.
5.75% being offered on the 2028 sits where I would expect when compared against the current GRY on the other issues i.e. 2022 c.4.45%, 2024 c5.11% and 2026 c5.19%

source:

(I'm intrigued by the discussion above as the nominal yields on existing issues don't represent what you would get if you bought today in the market)

Personally I am not tempted by the slightly better yield on the 2028 at this time.

[vacendak] 23/3/2021 13:27

Yes indeed, I should have rephrased about the 2.6% adjustment.
I had forgotten that the 2022 were nominally higher yielding. The lowest yield being the 2024 at 4.75%.

In the "good old days" we had genuine loyalty bonuses for the rollover offers: 2012 and 2014 if I remember right.

[morton2011] 23/3/2021 12:40

Its not a 2.6% bonus as the 2022 are at a 6.25 % rate; you only get 5.75% after rollover instead of the 6.25% until October 2022 and lose the difference - lets call it 2% 'bonus'. The credit risk is much higher in the 2028 as you have a pretty safe note with the 2022 high up the debt profile and then go rollovering to the bottom and a lot more risk.

[vacendak] 23/3/2021 11:40

@SpectoAcc +1

:)

I cannot remember where I read it, but "China will be old before it is dominant. The USA are here to stay."

[spectoacc] 23/3/2021 10:44

Agree interest rates are going nowhere, but more due to financial repression. Govnts can't afford rising rates, they'll (are already) buy their own bonds, work on yield curve control (Japan, soon the Fed), and end up owning most of their own debt.

But inflation is coming. Only question is how sustained. Money supply has risen hugely, and will continue to.

More stagflation than hyper-inflation. China now ageing (& considerably less popular), we've had the best of exporting deflation I fear.

Protectionism on the rise too.

[vacendak] 23/3/2021 10:30

I do not see hyper-inflation or even 1970s stagflation coming into play.
The inflation from yesteryear was mostly linked to wage increases due to strong (unionised) manufacturing sector. As long as The West is happy with having 90+% of its physical stuff being produced by slaves in China, there will still be a big source of deflation (slaves in China) to compensate for whatever effect the pandemic spending will have.

So the 5.75% on offer for the ZDP 2028s and the one off 2.60% bonus at rollover are unlikely to be threatened by 6% returns on an instant access savings account at Barclays/Lloyds/HSBC.

[cc2014] 22/3/2021 10:31

I am sort of vaguely familiar with Somers as I used to hold shares in PCF Bank in which Somers are about a 60% shareholder from memory. I did some research then and was comfortable enough with them.

Perhaps I shoud add in my decision process I currently hold 22's and 26's.

I can't help but shake this feeling that interest rates will be going up whatever the Fed, ECB and BOE are saying. Russia put it's rate up on Friday.

[vacendak] 22/3/2021 09:40

The rollover offer prospectus has also hit my mailbox hard.
Interesting tidbit in it: Duncan Saville commands 73.9% of UIL Ltd shares, through one vehicle or another.

No other shareholder is above 5% of ownership. 5% "being the threshold for notification under the Disclosure Guidance and Transparency Rules."

[vacendak] 19/3/2021 21:11

I got my letter, as a ZDP 2024 paper holder, to vote on the changes to allow Somers to reach 50% today. The votes for the ZDPs will be added to the vote of ordinary shareholders, so it is already in the bag, whatever I or others say.

Best make it a Soviet vote and try for 99% then. :)