Re: Share price fall Pyueck, I agree with your comment that the 17 Bovember statement is open to interpretation; I took 'with their support' to mean just that, but I accept that it is not necessarily the case.,I believe it would be possible for the company to do an 'RBS' and give shareholders 1 new share for every 10 old shares. This would value the shares at (based on today's price) at 164p. Banks could put new money, buying new shares, thereby diluting shareholder further. Such a scenario would constitute a 'wipe out' in my view.As I have said many times I believe Carillion is too big to fail, so it will be interesting to see how it pans out, I also agree with you that if something significant happens that could materially affect the share price, they should be suspended. I don't know, but it could happen anytime.
Should they just suspend? Honestly what is the point of going on like this. It's getting hammered every day. If the company hoped initially waiting a while before fundraising would allow the market to have some more confidence in the company well it hasn't worked.Going on like this is a ride to ruin. I say suspend the share first thing Monday morning and keep it suspended until deal with bondholders is done. Say to bondholders, we are not going to unsuspend shares and will put company into administration if we can't agree decent deal by end of January.It's a high risk approach, but the current one is destroying shareholder value every day.
Re: Question Thanks - this is exactly what a bulletin board should do, i.e. help other members rather than like some simply post ramps or deramps, or other nonsense.Thanks again!
Re: Question Letko, Brosseau & Associates Inc. have been aggressively reducing a large position. On the 23 Nov they had circa 11.9m shares left (sub 3% threshold).Further sales by Letko, Brosseau & Associates Inc. are the likely force behind today's falls and bulk of this weeks collapse post RNS on 17th Nov.The question is... who's buying the stock?Whoever that is must think there is some hope for Carillion. Assuming the seller dries up today (which looks likely), the sp might be in for a bounce. The question is... how much weight have Letko, Brosseau & Associates Inc. built into the offload on the short side? A combined hedge could see some shorts reduced come next week as their 'free coat tail ride' on the seller evapourates.This one is as risky as playing with hot coals. But at today's levels and assuming the main seller is almost done, there's a play here to be had. Shortlived or sustained is anyones guess but I doubt the traders waiting on the sidelines will be too concerned about that on a daily basis.Surprised it hasn't retested 16p levels. Could be a sign that 17.5p is the offer price for Letko, Brosseau & Associates Inc's remaining stock.HUB
Re: Share price fall HUB totally agree. A huge equity dilution for existing shareholders of say 85%, based on current shareprice, could mean its a strong buy if the resulting company becomes worth £2bn (not impossible with number of contracts won).With a debt for equity deal its not possible that existing shareholders will get nothing, shareholders would never vote for that. Lenders are over a barrel too here, and likely to lose everything unless heads are banged together. The order of creditors doesn't mean much when you have the square root of zero to distribute in the event of collapse.
Re: Share price fall Yes - but the question on every ones lips is what % of the recapitalised company will shareholders have?100% down to 10% falls into the 'wiped out' category. Perhaps 5% of equity post d4e is the ultimate 'wipe out'?But be sure of one thing, if debt holders want all their debt back, they will need to keep shareholders on board to some degree otherwise the shareholders could just put it into admin.That's play here.You need to be more specific with your 'wiped out' scenario.As an example, what would 10% equity look like in a recapitalised Carillion? £90m cap or £200m cap?I'll leave the rest to your imagination.HUB
Re: Share price fall Number, when did they say lenders had agreed? The update last Friday said 'Following discussions with its principal lenders and with their support, the Board has concluded that it is necessary to amend the relevant agreements to defer the test date for both its financial covenants from 31 December 2017 to 30 April 2018 (based on EBITDA for the 12 months to that date), by which time it expects to be implementing its recapitalisation plan. Carillion has now commenced a process to seek the consents necessary to make this amendment.'Last sentence is a big one. Look at Premier Oil, getting consents to changing covenants is not easy or painless even when lenders are supporting.
Re: Share price fall Pyueck, The company has already announced that their lenders have agreed to next review the covenants on 31 March 2018. . The company has said they will likely be in breach on 31 December 2017, but that in itself will not matter.It is unlikely that negotiations with the banks will start before 2018, because the banks will want to know to what extent the covenants were breached at 31 December 2017. I still think the most likely outcome will be that the company will survive, but existing shareholders will be wiped out.
Share price fall I think one of the reasons for the constant falling is that the 31st December is not that long a way away. Every day that passes without an update on whether the lenders agree to change covenants is a day closer to oblivion.Agreeing with lenders to change covenants is not easy! Especially if there are a few all wanting to get a good deal and ensure nobody does better out of it than them.If they came out to the market and said they have agreed with lenders to halt the covenants until after refinancing agreed I think a large rise would result. Until that time the clock is ticking...
Re: Effectively bust "How can they keep winning contracts if they are effectively bust?" The answer is that Carillion not only employs thousands of people, but is also heavily involved in government contracts. So, the government cannot afford the company to go bust; secret negotiations no doubt are already going on. But this will not help existing shareholders who will likely be wiped out. Somebody must know something, I am guessing, as the price is consistently dribbling down. This is what happens when a large holder is selling out; tranches of sales go out daily. If they tried to sell their holding all at once the price would crash. It cannot be shorters buying to complete their short, as such transactions would put the price up.So we are now.in the position that a major shareholder is slowly getting out. What will be interesting will be at what point the shorters will blink and start buying, causing the price to stabalise or temporarily go up. This game is very interesting if you are not involved.
Re: Effectively bust How can they keep winning/signing contracts when they are effectively bust?
Re: Effectively bust Kenj2, Thanks for sending me the link. It confirms my view that shorting is a high risk strategy, it appears that if a company goes bust before the short trade is complete, then it could take several months, if not years, for the Shorter to get his money back and all the time he will be paying interest on his loan. If you are shorting, it still makes sense to close the deal before the company goes bust.Carillion's share price is drifting down day by day, which is not surprising as it is effectively bust. However, as it is unlikely Carillion will actually go bust (due to its size and involvement in government contracts) what is going to happen from now is highly speculative. So I am no longer recommending selling (or buying or holding for that matter) as at this lower level it is impossible to predict what might happen in the future.
Re: Question Think you misread it, they have been selling up.
Question Who are Letko, Brosseau & Associates Inc. and why are they buying (as it seems they are) shares each day for the last 3 days? I'm possibly wrong, but have they purchased almost 15% over that period?
Re: Effectively bust Numberbiter,Like you I have never shorted a share, so I am hardly an expert, but this subject has cropped up on various bulletin boards. The general consensus is that bankruptcy is a shorter's dream. If the shares are suspended then a shorter is in limbo, like the shareholders. If the company then collapses the shares become worthless, so what is the point in returning them?The link I posted on my earlier post explains the mechanics of shorting and bankruptcy..[link]