Markets live chat transcript for the chat ending at 12:01 on 10 Jul 2009. Participants in this chat were: Paul Murphy, FT (PM) Neil Hume, FT (NH)
In conjunction with the Placing and Rights Issue, the Board today announces that it has reached agreement on new committed lending facilities (including amended loan notes) for the Group totaling £880 million.
Placing of £30.0 million through the issue of 50,000,000 Placing Shares at 60 pence per Placing Share, a 13% discount to the closing price on the London Stock Exchange of 68.75 pence per Ordinary Share on 9 July 2009 (being the last Business Day before the announcement of the terms of the Placing and Rights Issue);
10 for 1 fully underwritten Rights Issue to raise £84.4 million through the issue of 1,205,480,450 New Ordinary Shares at 7 pence per New Ordinary Share, a 41% discount to the theoretical ex-rights price, when calculated by reference to the Placing Price of 60 pence per Placing Share; and
NTG
Under the Note Amendment Agreement, with effect from the Effective Date, certain terms of the US Loan Notes are amended to ensure consistency with the New Lending Facilities, including the principal operational covenants and financial covenants, and the coupon on the US Loan Notes is to be increased. The Amended US Loan Notes will mature in accordance with the original maturity dates under the US Loan Notes provided that the New Lending Facilities are refinanced in accordance with certain parameters set out in the Note Amendment Agreement.
The total fees and expenses payable by the Group to the lenders and the holders of the US Loan Notes in connection with the refinancing and the renegotiation of the Existing Lending Facilities and the US Loan Notes are £31.3 million.
– so we could nudge her when she gets back from swanning around the Seychelles with david Beckham
Company Event Sector
Experian Group Q1 Sales General Industrial Services
Dunelm Group FY Trading Statement Retail
Tuesday, 14 July 2009
Company Event Sector
None
Main Economic Events: Eurozone Industrial Production ; German ZEW Survey ; UK Inflation
Wednesday, 15 July 2009
Company Event Sector
Rio Tinto Plc Q2 Production Results Mining & Metals
BT Group AGM Fixed-Line Communications
Sainsbury J AGM Food Retailers & Wholesalers
Land Securities Trading Statement Real Estate
Wetherspoon (JD) plc Q4 Trading Statement Leisure Goods & Services
Northern Foods Q1 Trading Statement Food
Blacks Leisure Group Trading Statement Retail
Main Economic Events: EMU HICP inflation
Thursday, 16 July 2009
Company Event Sector
Elan Corp. Shareholders Meeting Pharmaceuticals
FirstGroup Plc AGM Consumer Services
Ashmore Group Q4 AuM Investment Services
Mitchells & Butlers Trading Statement Leisure Goods & Services
Spectris H1 Trading Statement Electric Components & Equipment
Enterprise Inns Trading Statement Leisure Goods & Services
Mothercare plc Q1 Trading Statement Retail
BlueBay Asset Management Q4 AuM Diversified Financial
Sports Direct International plc Preliminary Results Retail
UK Contextual Diary 10 July 2009
UBS 7
Friday, 17 July 2009
Company Event Sector
Cable & Wireless AGM Fixed-Line Communications
Burberry Trading Statement Retail
Invensys Q1 Trading Statement Industrial Diversified
Electrocomponents AGM General Industrial Services
John Lewis Weekly Sales Data Retail
Q1 Sales
We expect group organic sales growth of 1% y/y vs 3% in fiscal Q4 09. BoE lending survey
still suggests a more cautious outlook in UK than US: UK lenders have gone from over
pessimistic last year to a little over optimistic this year. According to the latest BoE survey,
UK consumer credit availability has deteriorated more than lenders anticipated, and Q3 09
expectations have consequently become a little more muted, in contrast to the building
optimism (from a lower base) in US. On top of constrained supply, consumers’ demand for
credit has continued to worsen. Together with pricing pressure from consolidating lenders,
this points to a more cautious UK than US outlook for Experian. Experian recently suggested
US pre- screen could see H2 recovery: Lenders have not been at all focused on market share
of late, and some of the more aggressive historic pre-screening activities may be curtailed
under new US regulations. Still, we’ve noted a more optimistic tone from Experian
management with regard to US pre-screening activities within the Credit Services division
into fiscal H2 10. This could provide a meaningful inflexion point given how significant a
drag this area has been. At a group level, however, this is likely to be offset by slowdown in
US Consumer Direct on very tough y/y comparatives.
Dunelm Group (DNLM.L) Neutral, PT (p): 264 Retail
FY Trading Statement
FY 09 is a 53 week reporting period, but our forecasts are based on 52 weeks, with an
additional £2m PBT expected on top of our published forecasts from the extra week. We
forecast LFL sales growth for the year of -2.5%, with +0.5% for the second half (-5.6%
reported H109). At the interim results in April, Dunelm reported LFL sales of +2.3% for the
first 17 weeks of H2. This implies Dunelm needs to achieve -2.9% for weeks 44 to 52 against
a softening comp of -7% (from +6.5% weeks 27-43). We forecast gross margin of 45.6%,
+100bps y/y and PBT for 52 weeks of £49m, in line with consensus on £48.9m. We expect
the 53rd week to add an additional £2m to reported PBT. We already know that Dunelm has
added 6 store in FY 09, and we forecast 8 net new superstores in FY10e. Dunelm last
announced 7 stores signed up for opening in FY 2010e, well ahead of the position this time
last year. We believe 8 stores is a conservative FY10 forecast and, if the right opportunities
arise, Dunelm could comfortably deliver double this level of store growth. We are looking for
an indication of store roll out opportunities in the IMS on Monday.
Q2 Production Results
We expect to see improvements from Q1, but this is likely to be largely related to seasonality
following the inclement weather that occurred earlier in the year. We could see surprises in
iron ore and coal production and shipments given the very strong imports reported into China.
However, despite the recent improvement in demand, it is probably too early for management
to change their production guidance in any significant manner. Nonetheless, management are
likely to discuss the outlook for the remainder 2009, which may be a good gauge as the extent
of the recovery in commodity markets. The production report is expected to be released at
around market opening.
Land Securities (LAND.L) Neutral, PT (p): 525 Real Estate
Trading Statement
Investors will be looking for further clarity on the company’s strategy following a number of
recent asset sales and the departure of Mike Hussey (London managing director). The
company has sold over £500m of assets since the rights issue and this may be negative for
earnings in the short run – the company could provide some insight into the rationale for the
sales, the price achieved relative to book value and if they plan to make any acquisitions. The
market will be looking for details of the company’s debt position and where pro-forma LTV
stands if you put any cash outside of the security group into it. In addition investors will be
interested in the pre-letting progress at St. David’s 2 (Cardiff shopping centre) and any further
letting activity. The vacancy rate will also be of interest – it was 4.6% in March-09 but if you
include tenants in administration the pro-forma number is 8.3%.
Q4 Trading Statement
This has been a relatively quiet period for Wetherspoon. We expect like for like sales for the
10 weeks to July 5 to be +0.5%, and to be +1.0% for 49 weeks. Our sales expectations at
£956m for the year are in line with consensus. Operating margins have positively surprised
during the year and were down only 50bp at the half year. We may get some information
about full year margins at this stage. Our estimate is for a 9.7% operating margin, down 25bp
year-on-year. Again, our estimate for operating income at £93.1m is in line with consensus,
as is our £94.2m forecast for 2010. Our Sell rating is based on valuation, our concern over
the refinancing of the company’s bank debt, and a belief that capital expenditure is currently
unsustainably low.
Northern Foods (NFDS.L) Neutral, PT (p): 58.5 Food
Q1 Trading Statement
We anticipate organic sales growth of 5% (1.5% pricing and 3.5% volume), with a strong
performance from chilled (good BBQ weather) offset by a pedestrian biscuit performance
(difficult comparative). We expect mgt to reconfirm they are comfortable with consenus
expectations for the full year (Ebit of £54m (+2%)) and (courtesy of a higher cost of debt -
post refinancing) a small decline in adjusted PTP and EPS.
Northern Foods is a most preferred stock in the Food/ HPC/ Tobacco sector on a
relative basis within the Alpha Preferences System*.
11:13 10Jul09 RTRS-CALEDON RESOURCES
11:15 10Jul09 RTRS-Caledon in advanced talks with two suitors -source
* Caledon Resources talks to Indian, Chinese suitors -source
* Caledon hopes to strike deal by July 23 AGM -source
LONDON, July 10 (Reuters) – Caledon Resources Plc
Caledon hopes to agree a deal by July 23, when it holds its annual general meeting (AGM), the person added. Caledon produces and explores for coking coal, which is used in steelmaking, in the North East Australian state of Queensland.
On Thursday Caledon’s shares leapt almost 16 percent to 54-1/2 pence a share. The Financial Times said the move was driven by hopes an offer at about 80p a share could soon emerge.
Caledon was not immediately available for comment.
*UBS CAN’T COMPLY WITH IRS SUMMONS, GRUEBEL TELLS EMPLOYEES
By Lisa Urquhart
Published: October 11 2005 03:00 | Last updated: October 11 2005 03:00
Northgate yesterday confirmed that it had received an indicative £12-a-share offer that values the van rental company at £1.12bn, including £400m of debt.
While the company refused to name the suitor, it is widely known that entrepreneur Guy Hands and his private equity group Terra Firma are behind the bid.
The news of the approach sent shares in Northgate, whose customers include Parcelforce and TNT, up 45p to £11.20.
Northgate, which is believed to have received a letter outlining the potential bid last week, said that it was considering the terms of the offer and was holding talks with its principal shareholders.
Let’s uae the hour to follow in the lines of Lemmy’s “ML” comment:
“Lemmy Jul 9 11:15 Years ago I recall someone dialling mobile voicemail and retrieving the messages to get news of M&A deals, exploiting that people’s PIN were 1234 etc”
You dial into all your bandit numbers and try using the 1234 PIN and tell us what RAW you hear…
can we do bonds instead of equities one day a week? just a thought…not saying
Two for the Small Cap junkies:
International Personal Finance (IPF). Goldman Sachs initiated coverage the other day with a Buy and 105p target. Some reckon it is a goner and others a recovery play.
PV Crystalox (PVCS). Nearly all the solar analysts are positive but Gordon Johnson of Bank Hapolim in the States is uber bearish on PV Crystalline pricing. Consenus could be wrong on PVCS.
IPF released a short trading statement for the period since its last profit warning on 8 May 2009 trading has been in line with management’s expectation. Since its profit warning on 8 May, share price has fallen by 54% and is now trading at a 30% discount to book value. The key thing to watch now is whether IPF will breach its covenants? In the analyst conference call on 8 May, management accepted that the headroom in their interest covenants in only £15m. Today’s statement suggests that the situation has not changed materially from there. We would argue that the risk of covenant breach is still high due to:
2) Management does not have a clear handle on borrower’s financial situation and are not fully aware why a borrower needs a loan.
3) We estimate that impairments as a % of revenues have increased from 23% at the end of FY09 to 32% now. It just needs another 3% increase before it breaches the covenants.
If it breaches the covenants bankers will take shareholders for a ride and as highlighted above we think that the risk of that happening is still high. Given that IPF has a short dated loan book, generates cross cycle RoE of c.20% and is trading at a significant discount to book value, there can be significant value for shareholders if it can avoid the covenant breach (table 1). Also, there are serious question marks around the ability of the management team and hence this significantly increases execution risks and therefore the Group’s real cost of capital (20% might not be unreasonable suggesting a valuation of 65p).Therefore, we would recommend investors to stay from this stock until the clarity on covenants emerges.
We initiate on IPF with a Buy rating. Our 6-month target price of 105p implies 46% upside. The company has grown at a compound rate of 38% since 2000, and we believe it remains well positioned to expand further in its current markets as the global economy improves. IPF is exposed to several Eastern European economies that have been hurt disproportionately by the global economic crisis, particularly Hungary. However, we believe the stock’s current valuation is too aggressive in light of expected future loss rates. We expect the shares to rerate as results improve following management’s tightening of underwriting standards and an increased focus on
payment collections.
earnings, with a stronger book of business in place by 2010. We forecast an impairment rate of 30% of sales in 2009 and 29% in 2010; we estimate the stock’s current price implies impairments of 36% in the next two years.
Our 6-month target price of 105p is based on 8x P/E applied to our 12-month forward earnings estimate. This represents a 37% discount to the stock’s historical average P/E multiple of 11.0x. However, IPF has a very limited trading history as a separate company and we believe the risks inherent in the company’s less mature markets make its historical multiples less useful as comparables. Instead, we incorporate both IPF and comparable lending companies in the US; PFG
is trading at 10.0x our 2010 estimate and the payday lending companies are trading on average at 8.3x 2010 estimates versus IPF currently at 4.7x. Our target price also reflects a 1x multiple of our 2010 book value estimate.
early in 2010. Indeed we expect a rush of orders for new installation capacity – the size and
specification of the current fleet appears entirely inadequate in meeting the medium and long term
demand outlook (see figure 1 below). While the EU is targeting to promote the expansion of
renewable energy in Europe, the lack of installation capacity is a major obstacle. The most recent
(and very clear) indication of the severity of this situation was the announcement by Dong Energy
(25 June) that it had bought A2SEA – a market leading supplier of installation vessels for the
construction of offshore wind farms – for DKK 700m ($130m). It appears that all of the other
utility companies (SSE, Airtricity, EDF, Iberdrola, Vattenfall, etc) will face a similar dilemma of how
to secure operating capability in the coming years. Both Seajacks (as vessel owner) and Lamprell
(as vessel builder) appear well positioned as early entrants to benefit from this crunch
Kollerro wants to know about a Redburn Partners report on Spanish Banking.
Apart from the eponymous Mr Bolton – I have heard absolutely nothing about Fidelity. Now I know they are a private company and very opaque but can’t you dig some dirt on them. I can’t believe they have been untouched by the financial crisis. And it’s just too quiet for my liking.
I’m fascinated by the idea of a global reserve currency – how would that work? surely too many egos would get in the way of it actually happening?
I would liketo know whether you can start adding sound effects to ML. I like the idea of the music for ‘The Gallery’ in Tony Hart’s old show for RAW corner. Also comedy sound effects every time the Crockor Mike Ashley is mention. Perhaps march of the Emperor from Starwars everytime Goldman Sachs is mentioned. Honestly the possibilities are virtually limitless. And lets face it ML is an entertainment blog as much asa financial blog.
A box of mangos arrived this morning for James Lamont from the President of xxx, care of the High Commission. As he is in India, James has generously donated the mangos to his colleagues at OSB. They are here with the editorial assistants on the first floor.
Do come and help yourselves.
Ehwotay Jul 10 10:23
Can we get Tracy, S-M I and Izzy more involved in ML?
TheHoof Jul 10 10:41
some digging into Short interest is good shout
Peugeot’s share price has rallied 27% over the last three months, despite a series of setbacks. The company recently warned that its losses this year could top Euros 2 billion due to falling volumes, especially in the higher margin product lines. Peugeot’s outlook is further clouded by the possible phasing out of the car scrappage schemes which have so far provided tacit Government support to automakers. It is now looking to developing economies to take up the slack, entering the Indian market before the end of the year, and is tapping the convertible bond market to reduce debt costs.
Peugeot’s short base has fallen 22% over the last 3 months. Volkswagen (1.4%), Fiat (7.1%) and BMW (4.1%) are all following similar trends.
Minerva, the listed London developer, has reached an agreement in principle with its main lenders to restructure its £600m-plus debt pile.
Property Week has learnt that within the next two months the London developer is expected to announce it has extended the maturity date for its investment loans for up to two years.
It will also reveal amended terms on all its non-recourse development loans, extending repayment dates, waiving and changing some covenants and removing some operational guarantees altogether.
As a developer with virtually no income-producing properties, it is regarded as more exposed to the banking credit crunch than others, and speculation about its survival has been rife.
The mangos have now all gone Sorry everyone.
William Gregory
So here’s how I’m reinvesting my winnings – well some of it!
1:30 Sovereign Remedy back to distance more suitable than last
outing at York. Nicely priced at 6/1 but expect that’ll shorten.
2:00 Toss up between Big Audio 3/1 and Emperor Claudius 5/2 going
head to head again. With Johnny Murtagh back from suspension and on board
I’m hoping Emperor Claudius will reverse last time’s encounter.
2:35 The favourite Captain Brilliance looks superior in this field
and significantly Murtagh booked to ride so could be a double for
him. But unusually, I’m betting against him with Giganticus 8/1
after his convincing win at Ascot last month.
3:00 The big one today Darley July Cup over 6f. Hard to look past
the Aussie Scenic Blast 7/4 fav after his win last month in the
King’s Stand. But I’m conflicted here because one of my regulars
Paco Boy is also a contender but 6f might be just too short for him.
9/2 so head following heart on this one!
4:20 My slightly off-the-wall pick for today quoted at 7/1, Jehu.
Survived a Thirsk auction maiden by winning narrowly and can still
improve on this track. Covered it EW.
Fingers crossed!