Accrol Group Holdings Forum

I give up... Let's see what happens over the next few days

Part 2: Not sure why this system sometimes cuts off messages midway through. Anyway as I was saying /

Perhaps someone is cooking a bid. To your earlier point, the company is a bargain if (and I appreciate a big if) you believe the worst is behind them. Net debt at the interims was £29.3m. Let's assume it will peak at £40m before the rot stops and cash flow inflects. Market cap, even after today's stellar rise, is just short of £20m. Say you lob in a bid of 25p, a generous premium to today's close and even more so when compared to the bottom, and more importantly something that will be just enough to save face for LT holders / allow board backing (given the outstanding risks). It goes without saying that this a slam dunk for the bottom feeders who have churned in since the final big drop. So let's assume £32m for the equity. That makes for a de facto Enterprise Value for our buyer of c. £72m or 0.5x 2017 sales /

[link]

Nb: Not one of mine but SGI is an example of a business that seems to have cheated insolvency multiple times in recent years. Again. Let's see...

Another Jacko - It doesn't look great I grant you. They are clearly hanging on by a thread. BUT there is a scenario where they get a covenant waiver from the banks (not impossible as banks ultimately don't want any business to go bust and have to take a full write down), pulp prices stabilise, FX hedges roll off, and they agree sustainable prices with their customers. Perhaps far fetched but not impossible. Today's RNS just underlined for me that the decisions taken by the original mgmt team were obviously of the highest orders of incompetence. When coupled with spiking pulp prices the result was toxic. But new management team is clearly doing all it can in difficult circumstances and will go down fighting. Also if some of the aforementioned indicators start moving in their favour and they need a cash bridge there is always the scope for them to try a rescue rights issue before they throw in the towel. As always time will tell. But they are not completely done yet...

Nice signal. Exec Chairman has bought 215,168 share in the last 2 days (7/8 Feb) taking his total holding to 0.32% of the company. Famous last words but with input prices peaking and GBP's recent strength against the USD perhaps we really are though the worst. One can hope...

PIE-EATER. With the greatest respect I couldn't disagree more. What did you expect - a miracle? Sadly this isn't Fevertree but a low-margin, own-label tissue producer. There is only so much that can be done in the ST, particularly around topics such as the forward FX contracts. That being said and taking into accounts all the limitations of the business model I think the CEO gave comfort that the ship is being steered in the right direction. IMHO anyone who stayed the course so far would be mad to sell at this point. Barring any further exogenous calamities (GBP collapsing, reel prices rocketing further) there is some significant upside risk here. Bear in mind the business that EBITDA in the previous 2 years was c. £15m. At the current level the business is trading around 3x that figure. Assuming a mid-term recovery back to this level would make the current valuation a bargain. Is it high risk - absolutely. But we know that. Has today's announcement increased the level of risk. Absolutely not...

I suspect (hope) what will happen is that a placing will get done but just at 35p instead of 50p. This obviously means more dilution for existing shareholders. But at this point the aim must surely be just to get the raising done irrespective of the dilution. X% or Y% of nothing is still nothing. A raising seems to be the only way to steady the ship in the ST and give the company (and all stakeholders) a fighting chance. Sadly I think the idea that the brothers or the LLP take a hit is fantasy. I have to say what I find most troubling about this saga is the brothers' refusal to put money to work in the latest RNS. I strongly feel that this more than anything spooked the market and undermined the 50p placing in the first place. Which in turn undermined the value of the brothers' residual stake. The message seems to be loud and clear - we are not throwing money into a lost cause. I am no Corbyn supporter but frankly this total disregard for stakeholders (and I'm thinking above of all about employees) is shocking. In summary whilst I echo the sentiment of deep disgust with owners / management, let's hope that they can get this placing away...

With all the fear Kim and Donald's actions should be engendering, demand for toilet rolls should be surging..