pearlsasinger
15 Feb 2018
placing or rights issue I - incorrectly- presumed that it would be a placing.I apologise re same.(read slower when angry!)For the record the RNS stated:"Galliford Try plc ("Galliford Try" or "the Group"
today announces that it proposes to raise £150m of new equity capital (the "Capital Raising" from its shareholders in the coming weeks and is also providing an update on Galliford Try's dividend policy. Galliford Try today has separately announced its Half Year Results for the six months to 31 December 2017. ----"(Unless of course - it is limited to a select group of larger shareholders)
kapita
15 Feb 2018
Rights Issue or Placing [link] looks to me like a Rights Issue, in which case we will all get an offer, or do you think it is an institutional Placing?
PIE-EATER
15 Feb 2018
Re: placing!!!!!!!!!!!!! but they also say, imply (sorry haven't got time before leaving to check) that the £150m is purely for the construction division so they don't have to withdraw operating cash from the other 2 divisions which are performing well.Also, I didn't notice anything about the claims they have against Aberdeen for failure to divert traffic as they should have....could be included in the £150m or not mentioned so will be a bonus if/when arrives?Don't forget the valuations Tony Yarrow highlighted if the construction side were to just "GO".....Yes, I got my timing completely wrong and so payback will be slower / longer but have to say a near 200p fall seemed extreme......expected 50-100p....but what do I know?GLAPE
Damp Seaweed
15 Feb 2018
Re: placing!!!!!!!!!!!!! wheebz,I quote from the fund raising RNS;''However, the compulsory liquidation of Carillion plc ("Carillion" has placed additional financial obligations on the Group arising principally from the joint venture with Carillion and Balfour Beatty plc on the Aberdeen Western Peripheral Route contract ("AWPR".The over-run costs on AWPR, compounded by the compulsory liquidation of Carillion have increased the Group's total cash commitments on the project by in excess of £150m.''It seems to be that they had massive cost overruns on the Aberdeen bypass before CLLN rolled over. I think the current estimate is for a net 10% loss on a project that they now have an even bigger stake in.I really hope they have learnt their lesson. Though a reference to the strengthening of the balance sheet enabling them to take on more/ bigger projects fills me with a great deal of trepidation
wheebz
15 Feb 2018
Re: placing!!!!!!!!!!!!! My interpretation is that the additional £150m is to strengthen the balance sheet, in order to allow further investment in the other growth areas of the business where margins and opportunities for increased profit contribution remain positive. The new capital isn’t purely required to cover obligations on the Scottish project. The SP fall has been overdone as the fundamentals and mid term outlook for GFRD remain extremely positive. Sheep mentality as is the norm in the City has chased it down with an over reaction, and it will drive it back up again as smart money recognise a divi potential.
Damp Seaweed
15 Feb 2018
Re: placing!!!!!!!!!!!!! Numberbiter,I have to admit that on reflection GFRD claim to need an additional £150m to meet the additional obligation caused by CLLN on a £800m (total cost) project that is due to finish in 6 months time makes no sense at all. Don’t forget BBY are also on the hook with a similar obligation.It certainly doesn’t smell quite right.......IMHO
II Editor
14 Feb 2018
NEW ARTICLE: Trends and Targets for 15/02/2018 " Galliford Try (LSE:GFRD) We received a few plaintive emails asking us to look at this lot from our Trend perspective as ideally everyone wants to know where bottom might be. The answer(s), given the days 19% reversal, are probably not ..."[link]
schwee
14 Feb 2018
Re: placing!!!!!!!!!!!!! Numberbiter,It is just not the Aberdeen shambles that is still unquantified, but clearly others as well. The RNS mentions other contracts where collections of cash are problematical.To my mind the CEO is on borrowed time, and when the new guy arrives he will kitchen sink the construction half of the business.
BlackPrince
14 Feb 2018
Re: placing!!!!!!!!!!!!! I guess you've sold out then!!!!!!
numberbiter
14 Feb 2018
Re: placing!!!!!!!!!!!!! It should be obvious what is going on. This poor company seems to have contractual liabilities of £150 million thanks to the collapse of Carillion. But it could be a lot more; £150 million is just the best estimate at the moment. This is made worse because the Carillion/GT joint venture was ckearly a fixed price contract deal. The company says it has learnt its lesson and will no longer bid for fixed price contracts.Compared to similar companies GT has a relatively strong Balance Sheet with manageable debt and well within banking covenants, so why does it need to raise equity? The only possible explanation is that the amount of the hit is unknown and that the risk is that in the worse case scenario banking covenents might be breached. So the company is playing safe. holding the dividend the company is offering investors a carrot to invest in the rights issue. The gets the underwriting banks off the hook, but the share price will undoubtedly fall if the cost of fixed price contract(s) is greater than £150 million. As stated in other messages, when a company need a rights issue to be comfortable financially, it means that shareholders are effectively paying for the dividend out of their own money.There is clearly a great deal of uncertainty here; get out while the going is good. In any event averaging down is a flawed strategy.
Damp Seaweed
14 Feb 2018
Re: placing!!!!!!!!!!!!! Actually, in my somewhat random example, the offer would need to be more like 3 for 7
Damp Seaweed
14 Feb 2018
Re: placing!!!!!!!!!!!!! I expect that the underwriting is along the lines of; The RI price will be (10%,15%,20% ??) below the closing price on a specified day after the release of this news.So for example;If we hang onto 800p until Friday night. Then the RI might be released on Monday with an offer of 2 for 7 @ 675p. And the underwriters will cover the 675
malj1
14 Feb 2018
Re: placing!!!!!!!!!!!!! Yes. The note on dy carries the implication that new shares will not be eligible. Also that the placing may not complete until after the register trip date. I'm assuming they increase shares ca +25%, say to ca 104m. This would put them on the cusp of having to cut the dy, though they might just get away without. That said I've never before seen an IMS on an emergency rights/placing, claiming to be already underwritten, with no info on no. shares & price, & net/gross receipt (ie underwriting costs). In the round this leads me to believe the problem(s) has not been fully unravelled/valued & thus the extent of the placing is still uncertain, as is its timing. So I'll wait for the other shoe to drop. The housing component is interesting, but dwarfed by the construction arm which is high risk, poorly managed & then some, & largely a waste of space. But as ever we shall see!
BlackPrince
14 Feb 2018
Re: placing!!!!!!!!!!!!! And with all this going on Peel Hunt and Liberum are still posting 'BUY' recs with target prices of £15-£16.What's happening!?
Damp Seaweed
14 Feb 2018
Re: placing!!!!!!!!!!!!! They have actually cut the dividend from 32p to 28p.this is payable to shareholders on the books on 16th March''Planned increase in dividend cover to 2.0x pre-exceptional earnings brought forward and effective immediately. Interim dividend of 28.0p declared.''I'm assuming that the Capital raising and new shares will not qualify for this dividend ????However if the current Market Cap is £663M (800p * 82.89) and we need an extra £150M. Then as a minimum we will end up with 101M shares (more likely 110M.....IMHO). So not surprisingly the next divi will be smaller. ie reduced by ~25% in order to maintain divi cover. This is a very rough pari passu guess. It would give a yield of ~7.5%...........which is still quite decent........IMHO
