schwee
29 Mar 2018
Re: It's bust I hope the Directors, however undeserved, have got watertight legal advice that they are not trading whilst insolvent.As for potential purchasers of parts of the business, I would have thought they would have preferred to pick the pieces up from the administrator, as less risky when it come to potential liabilities which clearly the current Board have no clue as to what they are.
Meanbugger
29 Mar 2018
Re: It's bust Although to be fair to Investec , they need the Directors to keep them in touch with the company's financial situation. Investec have no access to the company's books and can't see the pile of unopened final demands in accounts payable. I know Investec have worked their socks off in the last few weeks trying to bring in new investors. Most existing shareholders only wanted to meet the management team to berate them. IHT relief shareholders were just pig sick with what had happened and had no interest in throwing good money after bad. Despite all this I think they managed to get about half way to the £125 million they needed.If you think AIM regulation is poor, bear in mind small fully listed companies have no-one keeping an eye on whether or not they comply with the Listing Rules - apart from me if I'm a shareholder and even then I may only find out months later about something they should have announced to the market.
megaloss
29 Mar 2018
Re: It's bust there has to be wrongful trading here, in mitigation I suppose the Board might claim they were too thick to realise it at the time. Disqualification as directors should follow, surely???A real black mark against the auditors, and Investec the NOMAD, I lost more than a few grand on this, but mea culpa, the rest of my portfilio is well balanced. But I AM spitting blood (previous poster’s comment) and will avoid AIM in future, at all costs, have serious doubts about this market’s regulation...
Hugh Betcher
28 Mar 2018
It's bust "The Board believe that shareholders in the Company will receive little-to-nil value"What a scam/farce/farrago. Time for the police to take a look?
Meanbugger
28 Mar 2018
Re: THEY ONLY CANCELLED THE DIVIDEND The question is should the directors have been aware rather earlier that the company was insolvent and unable to pay its debts as they fell due. This is something the eventual administrator/liquidator will look at. PwC probably already have a view having looked closely at the company's accounts. If they should have known the company was insolvent, the directors could possibly be guilty of wrongful trading. The FCA will take an interest too in the timeliness and accuracy of the RNS announcements made by the company. The auditors KPMG will also be in for some questioning over their audit certificate. Quite a few reputations are at risk.Now the vultures will pick over the carcass and try and grab any good bits before the administrator is appointed. One question is what happens to the franchisees? I guess if someone were to acquire the Bargain Booze franchise operation the franchisees may be unaffected. Bargain Booze could appeal to one of the Asian run cash and carry groups. I think there will be great opportunities for those with the money and the business acumen.
Courtier1
28 Mar 2018
Re: Erk - well looks like I was wrong. Suppliers deserting the ship and sinking the lifeboat fundraiser. Not good. Sorry for anyone invested here. The scale of the raise was the key problem I guess, going from £30m to £125m in the matter of a couple of days!!!
Emerald Carrots
28 Mar 2018
THEY ONLY CANCELLED THE DIVIDEND on 14th March. Just two weeks ago. Were their accounts run by humans, or some other form of life? A scandall or what! I presume some people are going to get banged up for this, assuming they have not left the country already.No, I have never had a position with this Company. If I did hold shares in this Company I would be spitting blood. From paying a dividend to what looks like bust in 2 weeks is frankly beyond unbelievable. No english can describe what happened here.I feel sorry for those who held.All IMHO.
mem73
28 Mar 2018
Re: Administration? Sadly, looks as if its game up.Lots to be worried about in the UK at the moment, but this looks to down to the Board.I hope no-one on here has anymore than a toe in this.
Bill1703
28 Mar 2018
"Bargain Booze heads for administration" According to Sky News... hot off the "presses". Full text below.Meetings with shareholders didn't go well, then.... shocking indeed. Serious questions will be asked of many - directors, advisers, and probably a few others besides... "More than 2,500 jobs are at risk as the owner of Bargain Booze heads for administration after failing to raise £135m from an emergency cash call.Sky News has learnt that Conviviality, which stunned investors earlier this month when it revealed a £30m tax bill, is expected to announce later on Wednesday that it has been unable to secure sufficient new funds.The development is likely to lead to PricewaterhouseCoopers being appointed as administrator on Thursday, according to insiders. It comes just days after Conviviality confirmed the departure of Diana Hunter, its chief executive, and said it would seek to raise £125m from investors through a placing of new shares.A number of suppliers are understood to have deserted the company, which supplies drinks to thousands of pubs, undermining Investec's efforts to raise the new funding.Conviviality's shares were suspended after the tax bill was disclosed to the stock market, leaving it with a market value of just £185m.The company, which also owns the Wine Rack chain and the drinks wholesaler Matthew Clark, is a big player in the UK's beverages industry. It supplies more than 700 off licences and 23,000 pubs and restaurants across the country, and employs more than 2,600 people. The brewing giant AB InBev has urged shareholders to back the fundraising, underlining Conviviality's importance as a distribution channel for its products.Administration will mean the company becomes the latest retail sector failure following the collapse of Toys R Us UK and Maplin.Conviviality declined to comment."
Meanbugger
28 Mar 2018
Re: rights issue price!! Many companies also choose their financial year end to show the balance sheet in the best light. For example French Connection have a January year end so they can have the cash from the January sales. Cash therefore at the balance sheet date is a peak rather than an average. Most of the time the company will be operating with a nil cash balance and keeping a careful eye on it.Conviviality has a very stretched balance sheet after making acquisitions and it also has large swings in its peak cash requirements. To cope it either needs extensive bank facilities or a cash buffer in the balance sheet. Or it should be part of a group where the seasonal cash demands can be met out of group bank facilities. It has been crippled by massive working capital demands which have been underestimated as they built up the company. It's not been the only wine merchant/ off-licence group to suffer the same problems. This is almost an exact re-rerun of First Quench Retailing (the owner of Threshers and Wine Rack then) which went into administration in 2009.
frusset
28 Mar 2018
Re: rights issue price!! "Every company I know does their best to make the balance sheet and cash position look as respectable as they can for that snapshot."Headlam Group plc, a flooring distributor, had a 2016 interim presentation with a chart that traced net debt over about three years. Each balance sheet date showed a big swing from net debt to net cash, which was reversed, though more gently. It was a rare glimpse into a practice that's often described but without anything quantitative. A recent comment under HEAD claims "No debt.". I can't blame the commenter, I've made plenty of statements about debt based on balance sheet figures, because I can't use unknown facts, or ignore the figures entirely, and I don't want to mention management's control of current debt every time I mention debt.
pyueck
28 Mar 2018
Re: Not worth saving Good post this morning. Personally as an investor if I was asked to put more money into this I would ask myself a big three questions: 1) Based on the breakdown of the control environment how can I have any assurance that the numbers provided to me are correct2) How will the business transform it's control environment to prevent further control faliures3) What will make this business turn from one that is burning through cash to one that is generating cashI think 2 can be solved, but 1 and 3 I think will be the major sticking points. I would say as an investor without having some confidence in the answers to these it would be reckless to throw in any more money. For that reason I believe the fundraising will fail.You may be right, potentially customers may want to help to stop disruption, but can't see it happening. Yes Weatherspoon's may use them a lot and yes it may cause a bit of disruption, but they will sort it.
Meanbugger
28 Mar 2018
Re: rights issue price!! Bill, you have touched on the important lesson to be learnt here. The balance sheet at the end of the accounting period is a snapshot taken on that day. Every company I know does their best to make the balance sheet and cash position look as respectable as they can for that snapshot. Often this means delaying paying bills by a week or two and chasing invoices for payment before the end of the month. The effect can be very significant.I was at an AGM last year and some small shareholder asked the company what they planned to do with their cash pile. The chairman replied what cash pile? 90% of the time the company was relying on its overdraft facility to survive but when its large customers finally paid their bills it looked as if the company was flush. Sadly this is the way of the world but if investors begin to understand balance sheets better and how they can be 'massaged' then it's been a valuable lesson.
Meanbugger
28 Mar 2018
Re: Not worth saving There is a dearth of news in the press so I will update with what I think is happening. The pitch to institutions as expected has been a Herculean struggle. There are many reasons for this but it is important to understand the institutions who are invested in CVR. If you look at the top ten holdings on the Conviviality website, I would only regard Fidelity as a deep-pocketed leading institutional investor. They also have a long history of doing their own thing. Most of the other institutions are much smaller and some have invested in CVR through their inheritance tax planning portfolios. They therefore are not going to have the appetite for putting more money into a failed investment. There is also the mindset of the institutional investor. If CVR survives, it will continue to feature as a failed investment in their portfolios at a big loss on book cost for the foreseeable future. Portfolio investors often prefer to bite the bullet and take the loss just to remove the embarrassment. As a consequence, Investec have been trying to attract the recovery and special situations investors with little or no previous exposure to CVR. There has been some interest from these.However what this sorry episode has brought into sharp focus is who cares about CVR surviving. Inbev have said institutions should support the fundraising. Tim Martin at the Wetherspoons results meeting said that he hoped it would survive. It is actually the suppliers and the customers together with the banks who would lose most from this point should CVR go into administration. I think the focus has shifted to seeing what help all these parties can contribute. Inbev (according to suggestions) do £200 million of sales annually through CVR and would face tremendous upheaval should it collapse. Why don't they chip in with £20 million of trade credit? Wetherspoons are very profitable. Why can't they agree to pre-pay £10 million of invoices without expecting a discount in return? Banks are there to lend money. Wouldn't they be better offering facilities to help CVR through this cash crunch even at higher rates of interest?The CVR institutional investors have had a lot of moral pressure to stump up the money to save CVR when I suspect most would rather write off the investment and move on. I think CVR can still be saved but it needs those who care more about its survival to play their part.
frusset
24 Mar 2018
Re: Not worth saving ShareSoc said a few things about CVR recently [link] I don't think anything ShareSoc want would help CVR shareholders, but there might be some lessons to be learned. One point is "Manifest spotted the problems. Why did institutions not listen to them?". I'd never heard of Manifest. They say they help investors "fulfill their stewardship responsibilities by delivering objective, conflict-free corporate governance insights, and customised vote guidance". I expect they have big investors in mind, like funds, who can exert an influence on management. They're here [link] . They do a free newsletter. You have to enter Company/Organisation, I put in "private", and got an email with a confirmation link. I don't know if any red flags about CVR were communicated in the free newsletter, I haven't seen one yet and it might have tons of dull detail about governance. I don't know if I'll get much or any marketing stuff emailed from Manifest, or if they'll start blocking investors with no qualifying "Company/Organisation".In Friday's Evening Standard [link] City Editor thinks CVR's big shareholders might support a fundraising because it looks bad when a fund invests in a company that goes bust. Obviously a fundraising wouldn't stop small shareholders from having their shareholdings massively diluted.
