Meanbugger
18 Mar 2018
Re: so much capital destroyed The problem is the business never had any capital or tangible assets. The company was essentially an exercise in financial engineering which fell apart. It has a huge turnover which leads to a crisis when debtor days lengthen and suppliers want to be paid up front.I think about £120 million will be needed to recapitalise the business. This can only be done with shareholder approval which means a circular, general meeting and probably an offer to all shareholders as part of the fundraising.
valeite
17 Mar 2018
so much capital destroyed this used to be a great business where the franchisees shouldered a lot of the risk .a simple business in the franchising of off license/convenience stores .a formula that worked for everyone and tremendous support from customers we should have stuck to the model(it worked) .
schwee
17 Mar 2018
Placing I am not sure they can get away with a placing. Under the rools, there ia double hurdle to jump. Firstly a company can only raise a max 10 pc of its equity value, though the EU allows 20pc if a company wishes to push its luck. So in CVR's case that would be up to 20pc of diidly squat. Secondly the price of the new shares has to be set at at a minimum of 90 pc of the existing share price, and CVR does not have one of these any longer.Companies have got round this by keeping within the rools on a placing, but complemented by an open offer where anything goes basically.
peddlar
17 Mar 2018
rights Issue??? Sounds like There will be a rights issue next week.Is that throwing good money after bad...I think sell,and move on.i am out but have lost out on the divi,which is a blessing.How can they over look a tax bill and miscalculate by 20 percent.re profits.
meisterx
17 Mar 2018
Re: Last Orders for Bargain Booze boss? Bunch of fools running a company that can't count god knows who their accountant is. My sympathies to shareholders that's why l tend to avoid AIM shares most run by puppets.I'm guessing anything up to £30m at up to 40% discount. Anything more and you all know the company hasn't been honest with it's shareholders and things are worse than they are.
Bill1703
17 Mar 2018
Re: Last Orders for Bargain Booze boss? "A raise of £100m at such a discounted level of 10p is just bizarre unless there are other cash flow problems.... as a placing and not allowing existing smaller shareholders their rights.... Don’t like that at all... The fact that trade insurance for suppliers has been cut does mean likely further deterioration of trading in my book."Yes, both bizarre and begs many questions. I think we are back to the issue of the significant margin weakness they're now seeing - in that context, the "forecasting error" and HMRC bill are almost red herrings. The outlook for next year could be dramatically different than we thought - and suppliers and customers are unlikely to give any benefit of doubt.I am not entirely clear on how they can get away without a full rights issue... I know we've seen it before, so presumably there is a legal justification somewhere along the line, but I agree - it stinks.
Courtier1
17 Mar 2018
Re: Last Orders for Bargain Booze boss? Further disaster for existing shareholders if anywhere near true. The CEO going (and maybe the FD) is obvious.A raise of £100m at such a discounted level of 10p is just bizarre unless there are other cash flow problems. They only need £20m plus some buffer and if you cut the final dividend this year you get another £10m+ in cash flow this year. Doing this all as a placing and not allowing existing smaller shareholders their rights is tantamount to hair-cutting them by 90% whilst offering institutions the ability to average down significantly. Don’t like that at all. The fact that trade insurance for suppliers has been cut does mean likely further deterioration of trading in my book.I hope for the sake of holders that this story is a bit wide of the mark. I have to say I was tempted around 90p though unhappy with level of debt and passed on it. breathing a sigh of relief personally.
Bill1703
17 Mar 2018
Last Orders for Bargain Booze boss? According to an article recently posted on Sky News... full text below.Hardly a shock that the institutions are demanding the CEO's head - but the prospect of raising £100m at 10p might be. Not sure exactly why they need £100m, but perhaps shows how quickly a downward cash and credit (and credibility) spiral can set in - and it certainly shows how the big investors lick to extract their pound of flesh, while paying only a few pennies for it!********** *******"The chief executive of Conviviality is expected to lose her job next week as investors demand boardroom accountability in return for providing more than £100m to rescue the company. Sky News has learnt that Diana Hunter's tenure at the helm of the Bargain Booze owner is hanging by a thread following a savage profit warning prompted partly by a previously undisclosed £30m tax liability.Sources said on Friday evening that Ms Hunter was likely to leave Conviviality in the coming ýdays as the company scrambles to raise sufficient funds from investors. David Adams, the chairman, is expected to step into an executive role on a temporary basis.The cash call, which is expected to come in the form of a placing of new shares rather than a rights issue, may exceed £100m as the company tries to allay City concerns about its future. Conviviality's shares were suspended this week after the tax bill was disclosed to the stock market.A number of leading institutional shareholders are understood to have expressed a willingness to back the capital-raising, but only if Ms Hunter is no longer at the helm."This is a fundamentally good business, and there's plenty of appetite to back it - but at the right price," said one investor. Her Majesty's Revenue and Customs is said to be receptive to the prospect of a deferral of the £30m tax payment until Conviviality has raised its emergency funding.Conviviality, 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. The company employs more than 2600 people.Sources said that Conviviality's lenders - Barclays, HSBC and Royal Bank of Scotland - had been asked on Friday to provide millions of pounds of bridge-fundingý to see the company through its capital-raising exercise. A number of trade credit insurers, including Euler Hermes, have axed cover to some Conviviality suppliers, while some of those suppliers are now demanding up-front payment amid fears for its future.The company's shares were suspended on Wednesday at 101p, but investors speculated that the emergency placing could be undertaken at as little as 10p.A share sale at that level would effectively wipe out much of the existing equity.PricewaterhouseCoopers has been brought in to carry out a review of Conviviality's balance sheet and operations. The company has cancelled its interirm dividend, saving it more than £8m, although it has said it is not in danger of breaching its banking covenants. Conviviality, which is listed on London's junior AIM market, declined to comment."
oilovlam
17 Mar 2018
Re: Finding requirements "However the third bullet point:" · PwC are undertaking a review of the business and its future finding requirements and this work stream is progressing well;"would suggest that there is a pot, a kettle and probably a frying pan involved."========== ========== ========== ========== ========== ========== ====SeaDoc, so you're suggesting PwC is some sort of 'Pot kettle black' scenario? I don't really get it......more like 'Thief Catch Thief'.....shirley!!
seadoc
16 Mar 2018
Re: Finding requirements oilovlam,If you read the RNS as published on the company website:[link] title refers to funding:"Further to the update announcement on 14 March 2018, the Company has been actively engaging with its stakeholders while it continues to work through its funding requirements:"However the third bullet point:" · PwC are undertaking a review of the business and its future finding requirements and this work stream is progressing well;"would suggest that there is a pot, a kettle and probably a frying pan involved.Regards, Seadoc
Courtier1
16 Mar 2018
Re: jokers I would be surprised if the institutions aren’t prepared to back it as most of the business units are ok/ viable if run well. The net debt dictates the price imo. All this can be done quickly but much depends on either HMRC agreeing a deferral of payment terms or short term bridge finance being available. I think the former is probably reasonably likely assuming they can pay £10 -15m on time. With deferral of dividend I think that’s likely.My read on this is that the business will be rescued assuming there are no other nasties in the accounts. Expect all funding and HMRC goodwill to be dependant on that as well as no material downturn in current trading.I still think 50p range for equity is most obvious price point but I see some people/analysts arguing higher.
schwee
16 Mar 2018
Re: trading again? There is no chance of a RI under the current Board. Any new Board will take weeks to get its feet under the table to consider its options. Far more likely is a fire sale, and the only question is whether this will be executed while the shares remain suspended, or under an Administrator.
oilovlam
16 Mar 2018
Re: Finding requirements "funding requirements perhaps?..........pot kettle black?"========== ========== ========== ========== ========== ==Seadoc, perhaps!!!!!!!!!!!! Of course it's 'funding' and not 'finding'. It's not a difficult puzzle to crack but it does make you wonder that no one seems to have checked the RNS for mistakes (definitely for spelling & perhaps factual content). Could be that 'the management' is under quite a bit of pressure and are showing the strain. But it is symptomatic of their trouble isn't it?...missing a huge tax liability. OK 'finding requirements' isn't so serious but it's very shoddy.....'You cannot get the staff'.
Meanbugger
16 Mar 2018
Re: trading again? The shares cannot return from suspension until PwC can sign off a working capital statement saying that with the additional capital the company has sufficient working capital for the foreseeable future. I.e the next 18 months.I'd expect Investec to have indications of potential institutional support within a few days and can put a plan together by early next week. Depending on the need for a shareholder circular, I'd expect a return from suspension on publication of the circular or the announcement of the planned refinancing containing PwC's opinion that the money raised will be sufficient. In other words the price of the initial fund-raising will be set while the shares are still suspended maybe followed by a second stage equity raise open to all shareholders once the shares have resumed trading.
Bill1703
16 Mar 2018
Re: trading again? "... does anybody have any perception as to when shares might start trading again? other than pure speculation i mean.... what price would the rights issue be at as its usually a discount to market price but noone knows what that market price is?... or would they just privately off the new shares to a couple of financial institutions leaving the PIs to nurse heavy losses as usual? "CB - I think they have to price and underwrite the rights issue before trading can resume. If they can... as I posited previously, it may not be possible. Not sure how long this takes... not days, not months. A few weeks, perhaps? Not in time to pay the tax bill, as due, we can be certain... but it doesn't sound like this is necessarily critical? I don't believe they can just place new shares privately - normally, this is limited to 10% of the existing capital, and that clearly doesn't cut the mustard here. We've seen exceptions, but I'm not sure what the justification for such would be here. And I see their best chance of raising a meaningful amount of equity in a broad "appeal" to all shareholders, who have a vested interest in salvaging something of their investment. As to what the price will be... that will be determined by the consensus of existing major holders, on a "book-build" basis, who will presumably be made "insiders" and given a reasonable amount of insight as to the thoughts and findings of PwC and those directors who end up surviving this process (may not be many of them).
