15225 replies to this topic

[Dell]

Sens out...

 

 

On 28 March 2019, the Company and LSW agreed that the Application be dismissed on consensual terms. The parties accordingly filed with the court a Consent Order giving effect (if and when approved by the court) to that agreement.

[JK001]

Hi JK001,

 

I purposely ignored the possibility that assets will reduce in value to the same amount as debt would be impaired.  This would lead as you correctly state to an unchanged NAV.

 

However, I took a worst case situation that Steinhoff would act like a high maintenance girlfriend and spend the proceeds on consumption and expenses.  This would see a decrease in assets and a drop in NAV.  I love to build in fat margins of safety in all my calculations.

 

Is there anyone online able to field Polly's question on what is the Steinhoff current debt?  The value I used is 6 months old and he is correct that this could be different by now.

 

Best Regards

Captainfrom82

Thanks Captain,

 

As usual your are correct.  I was hoping that the asset sales would be to cover debt, as you correctly posted in one of your earlier posts is the disappointment that it was not explained by SNH how it would be applied.  If it is for debt, happy, if it is for operating expenses even once off it would have a negative impact on the NAV.

 

best regards

[DayTraderDad]

Today at 1700 London time is the closing time for letter of consent to extension of stop date for the CVA. Looks like court hearing for LSW onow week commencing 1st April see in update page 1: https://www.lucid-is...9/03/CVASUP.pdf

[DayTraderDad]

 Hey Andi222 and DTD,

 

I'd be speculating without any evidence.  I just do not have a feel for the value of Unitrans.  I do note that they have E22m Goodwill (no Intangibles) on their books for Automotive.  But that would only be the excess paid over the actual asset value.

 

The value of the automotive assets on the Steinhoff books  is E492.  So a figure of E514m would see full recovery of assets.  The revenue is quite large but as discussed previously the EBIDTA is quite poor - 3.5% operating margin. 

 

Also, is this a fire-sale or can Steinhoff sit it out and wait for a suiter with deeper pockets.  My gut tells me this is a fire sale.  The other businesses sold by Steinhoff sold for around 50%  - that would see a price of around E250m

 

I just don't know buddy.  Sorry.

 

Regards

Captainfrom82

Last year around October (if my memory serve me well ) there was someone that mention that Automotive would be sold. So it could be negotiations musts have been started.

[Captainfrom82]

Agree 100% with DtD post.  Let's be a bit more transparent in our posts and let me explain:

 

you can post:  in my opinion SNH is bankrupt because I think SNH Debt exceed potential income and combined potential liquidated asset value.

 

you cannot post: SNH bank account empty (unless you are the treasurer or CFO of SNH) or work for a bank where SNH bank (In which case you can pack your bags because that would be immediate dismissal - confidentially breach and all those pretty things).  If not, then you are just speculating and making a Troll of yourself and setting yourself up for a hammering.  If you have the serious desire to just waffle, that is what facebook is for.

 

So here it goes: In my opinion KAP is not core to SNH business and strategically SNH made a handsome profit on it.  Just like most of us that own a share and see that this share is not performing as desired for whatever reason is going to give us lower returns than when applied elsewhere we sell it.  Not so easy to go into your trade tool and put 600 million shares up for sale. NAV did not reduce as the value is now just a different general ledger entry. You are not going to get the growth rate in KAP  (based on share performance for last few months) than for example using the R 4.8 billion to expand Pepco in Europe or to payoff a claimed creditor that is blocking progress.  Current management in SNH has proven to me (again an opinion), that they are more than capable to navigate rough seas.  They appointed the best of the best turnaround SMEs. I expect to see more non-core and lagging operations being sold of for better use stabilizing/reducing debt and expanding the core profitable business. When this team succeed SNH will be second only to IKEA.

 

Following is fact: I have not seen any retailer in SA doing as well as Pepkor did in 2018, happy to be educated if different evidence comes to light.

 

Hi JK001,

 

I purposely ignored the possibility that assets will reduce in value to the same amount as debt would be impaired.  This would lead as you correctly state to an unchanged NAV.

 

However, I took a worst case situation that Steinhoff would act like a high maintenance girlfriend and spend the proceeds on consumption and expenses.  This would see a decrease in assets and a drop in NAV.  I love to build in fat margins of safety in all my calculations.

 

Is there anyone online able to field Polly's question on what is the Steinhoff current debt?  The value I used is 6 months old and he is correct that this could be different by now.

 

Best Regards

Captainfrom82

[DayTraderDad]

Hi DTD,

 

Pepkor Europe is the entity to be listed (not PepCo).  The two large businesses in this stable is PepCo and Poundland.

 

Regarding the valuation, at Business School one of the formulae that we used was : 

 V = (1-t){(Ebit2018)(1-g/ROCE)/(WACC-g)}    

 

There are multiple other formulae but they all have their pluses and minuses.

 

Steinhoff's rather high (temporarily) WACC will skew this calc.  Also, the very high growth rate that Pepkor Europe is enjoying will not be sustained (PepCo grew 1Q18 vs 1Q19 at 37% in CCG - the muted growth of only 1% in Poundland [probably your Brexit issue] muted Pepkor Europe overall growth to only 15%).

 

To some extent you may be able to use Pepkor South Africa as a test case/base for the Pepkor Europe valuation.  They both a quite similar - both enjoy EBIDTA margins of aroundf 9.2%. 

 

Obviously South Africa has its own unique challenges that you guys probably know better.  A big concern is the slow growth of the SA economy - constantly being rated down; another is the Moodys rating due later; unemployment; crime and all the other social ills. 

 

But using SA as a base will build in a pretty fat margin of safety in your calculation. 

 

Pepkor Europe is now almost as big as Pepkor SA (measured in revenue terms it is 83% of Pepkor SA).  The large growth rate, in a growth area of the world economy with a significantly wealthier populace will see Pepkor Europe surpass Pepkor SA pretty soon.

 

I am not sure if you invest internationally.  I have set aside a sum to ensure that when the IPO takes place that I have the funds to participate.  I am pretty sure the lenders will be the largest shareholders.  But the general population will be able to get in quite soon.  The listing is expected to be in London.

 

These type of business growth rate is staggering.  And its almost all cash sales, so very little default or bad debts.Pep Stores SA grew at a staggering 28% CAGR over 19 years - that means you would have seen a 100x return.  Had you bought $10000 shares, you would have around $1m

 

Disclaimer: I am NOT a Guru.  All of the above is my opinion.  I hold Steinhoff shares and I am long on Steinhoff.

 

Apologies for the long post.  I bet You Know Who's fingers must be itching to post a "Guru" insult.

 

Best Regards

Captainfrom82

 

Ps.  Lots of speculation in Germany that Steinhoff and Seifert are going to settle. 

 

Pps.  Court case was scheduled for 2 days this week.  Apparently Steinhoff wanted a greater number of days allocated, but the English Courts are extremely busy with M & A activity due to the possible Brexit impact on businesses. 

 

Ppps. Steinhoff has asked that the Court session be held in camera and that the Court papers and Record of Decision be sealed.

Thank you for the great explanation we must just ignore these Trolls give them a chance to learn.

 

So my estimate of E1.5 bil is not too far out.

 

Yes I will certainly buy if Pepkor Europe lists I trade in Europe and SA.

[Captainfrom82]

I may be wrong but think book value of Automotive is E475 mil but had added additional dealerships after that book value.

 Hey Andi222 and DTD,

 

I'd be speculating without any evidence.  I just do not have a feel for the value of Unitrans.  I do note that they have E22m Goodwill (no Intangibles) on their books for Automotive.  But that would only be the excess paid over the actual asset value.

 

The value of the automotive assets on the Steinhoff books  is E492.  So a figure of E514m would see full recovery of assets.  The revenue is quite large but as discussed previously the EBIDTA is quite poor - 3.5% operating margin. 

 

Also, is this a fire-sale or can Steinhoff sit it out and wait for a suiter with deeper pockets.  My gut tells me this is a fire sale.  The other businesses sold by Steinhoff sold for around 50%  - that would see a price of around E250m

 

I just don't know buddy.  Sorry.

 

Regards

Captainfrom82

[DayTraderDad]

So what price range would you see? 

 

200 Million euro?

I may be wrong but think book value of Automotive is E475 mil but had added additional dealerships after that book value.

[Captainfrom82]

Hi Captain,

 

Thank you yes glad you mention because I was thinking the same was just not sure if they here still thinking that but I think if they do that will a excellent ideas. What do you think is the value of PEPCO Europe? My estimate that I have for my model is they should get about E 1.5 bil for the sale of 49%?

 

Hi DTD,

 

Pepkor Europe is the entity to be listed (not PepCo).  The two large businesses in this stable is PepCo and Poundland.

 

Regarding the valuation, at Business School one of the formulae that we used was : 

 V = (1-t){(Ebit2018)(1-g/ROCE)/(WACC-g)}    

 

There are multiple other formulae but they all have their pluses and minuses.

 

Steinhoff's rather high (temporarily) WACC will skew this calc.  Also, the very high growth rate that Pepkor Europe is enjoying will not be sustained (PepCo grew 1Q18 vs 1Q19 at 37% in CCG - the muted growth of only 1% in Poundland [probably your Brexit issue] muted Pepkor Europe overall growth to only 15%).

 

To some extent you may be able to use Pepkor South Africa as a test case/base for the Pepkor Europe valuation.  They both a quite similar - both enjoy EBIDTA margins of aroundf 9.2%. 

 

Obviously South Africa has its own unique challenges that you guys probably know better.  A big concern is the slow growth of the SA economy - constantly being rated down; another is the Moodys rating due later; unemployment; crime and all the other social ills. 

 

But using SA as a base will build in a pretty fat margin of safety in your calculation. 

 

Pepkor Europe is now almost as big as Pepkor SA (measured in revenue terms it is 83% of Pepkor SA).  The large growth rate, in a growth area of the world economy with a significantly wealthier populace will see Pepkor Europe surpass Pepkor SA pretty soon.

 

I am not sure if you invest internationally.  I have set aside a sum to ensure that when the IPO takes place that I have the funds to participate.  I am pretty sure the lenders will be the largest shareholders.  But the general population will be able to get in quite soon.  The listing is expected to be in London.

 

These type of business growth rate is staggering.  And its almost all cash sales, so very little default or bad debts.Pep Stores SA grew at a staggering 28% CAGR over 19 years - that means you would have seen a 100x return.  Had you bought $10000 shares, you would have around $1m

 

Disclaimer: I am NOT a Guru.  All of the above is my opinion.  I hold Steinhoff shares and I am long on Steinhoff.

 

Apologies for the long post.  I bet You Know Who's fingers must be itching to post a "Guru" insult.

 

Best Regards

Captainfrom82

 

Ps.  Lots of speculation in Germany that Steinhoff and Seifert are going to settle. 

 

Pps.  Court case was scheduled for 2 days this week.  Apparently Steinhoff wanted a greater number of days allocated, but the English Courts are extremely busy with M & A activity due to the possible Brexit impact on businesses. 

 

Ppps. Steinhoff has asked that the Court session be held in camera and that the Court papers and Record of Decision be sealed.

[andi222]

Cannot really see too much of a price here.  Especially as this business is also linked to South Africa's ailing economy with a potential downgrade by Moodys still to come.  Also, the cash conversion rate is nowhere as good as it could be.

 

Unitrans produces roughly 1/3 the revenue of Star/Pepkor by only 1/8 of the ebidta

 

REVENUE: Unitrans 1H = €m 766  vs Pepkor €m 2147

EBIDTA: Unitrans €m 27  vs Pepkor €m 212

 

Can see the Steinhoff brass's thinking.

 

Best Regards

Captainfrom82

 

So what price range would you see? 

 

200 Million euro?

[DayTraderDad]

Hi DTD,

 

You have left out Pepkor Europe.  There are advanced plans to have an IPO for Pepkor Europe.  This would be very similar to the STAR / Pepkor SA arrangement which Steinhoff were/are very happy with.  Steinhoff would hold a sufficiently large enough position to control the company, but will sell enough of the company to allow them to pair the debt. 

 

All of the above has been broadly agreed with the lenders.

 

Best Regards

Captainfrom82

Hi Captain,

 

Thank you yes glad you mention because I was thinking the same was just not sure if they here still thinking that but I think if they do that will a excellent ideas. What do you think is the value of PEPCO Europe? My estimate that I have for my model is they should get about E 1.5 bil for the sale of 49%?

[DayTraderDad]

DTD,, sold kap 7.16 trying go in again lower..

 

Haha no I want 7.30 but think you have a good plan

[Midas1]

DTD,, sold kap 7.16 trying go in again lower..

[Captainfrom82]

Does anyone know for what price they want to sell the Unitrans business? They produces close to 800 million euro revenue.

 

Cannot really see too much of a price here.  Especially as this business is also linked to South Africa's ailing economy with a potential downgrade by Moodys still to come.  Also, the cash conversion rate is nowhere as good as it could be.

 

Unitrans produces roughly 1/3 the revenue of Star/Pepkor by only 1/8 of the ebidta

 

REVENUE: Unitrans 1H = €m 766  vs Pepkor €m 2147

EBIDTA: Unitrans €m 27  vs Pepkor €m 212

 

Can see the Steinhoff brass's thinking.

 

Best Regards

Captainfrom82

[andi222]

Does anyone know for what price they want to sell the Unitrans business? They produces close to 800 million euro revenue.

[Captainfrom82]

So while we all talking SNH Management has been busy getting the restructure done for me the few steps to go: 1 - Sale of Hemisphere properties 2 - Sale of Conforama properties 3 - Sale or restructure conforama my guess is they will sell 49% of the business 4 - Sell General Merchandise business of Grennlit Brands 5 - IPO of Greenlit brands 6- Then the last job sue the MJ club for damages. The shareholder litigation will be a 15 year affair which will diminish as the share price recovers. Anyway my 5 cts of today

 

Hi DTD,

 

You have left out Pepkor Europe.  There are advanced plans to have an IPO for Pepkor Europe.  This would be very similar to the STAR / Pepkor SA arrangement which Steinhoff were/are very happy with.  Steinhoff would hold a sufficiently large enough position to control the company, but will sell enough of the company to allow them to pair the debt. 

 

All of the above has been broadly agreed with the lenders.

 

Best Regards

Captainfrom82

[Captainfrom82]

Hi Tom,

 

 I disagree with the words "bankrupt Steinhoff". 

 

Again, (this is now the third time that I have explained this to you), a business could be deemed insolvent when (1) the net assets are less than current net liabilities, or (2) when it is unable to pay its debts when they fall due. If a company takes steps to legally delay paying its debt and this is in agreement with the creditor(s) such a company is NOT deemed to be insolvent. 

 

Bankruptcy follows insolvency. It is a legal term where a business files for bankruptcy when they are unable to pay off their debts. 

 

Regarding Steinhoff, are you aware of anyone making claims in respect of the above Insolvency definition or Bankruptcy definition?  Please submit your proof.

 

I also believe that your assessment of the Seifert/LSW and Steinhoff is factually incorrect.

 

Seifert's matter that is before the courts, is that he does not see himself as a creditor but rather an owner of a business under dispute.  Steinhoff viewed him as a creditor and treated him as such under the LUA and CVA.

 

He is challenging Steinhoff's action.

 

Regards

Captainfrom82

 

I need to correct what I typed here.  My apologies -  I mixed up the POCO dispute which had been settled with this. I have just checked with a few  "friends" with a knowledge of this matter. 

 

Seifert's dispute with Steinhoff SEAG and AIH relates to €300m funding that he alleges he provided in 2011.  Steinhoff oppose this position.  It is a lot more complicated than this, but ultimately Seifert feels Steinhoff owes him €249m plus interest (and costs will be awarded as well if he wins in Court).

 

Matters then really get complicated.  Does Steinhoff then include him in the list of creditors in the LUA and CVA?

 

As Tom pointed out, If Seifert's case is upheld, Steinhoff may have to cough up the dough.  Tom speculated that it seems that Seifert may not want to be part of the LUA and CVA. 

 

Having said that, I am not sure if he has a legal right to stop teh LUA and CVA if the majority of the creditors approve it.  Five creditors representing €59.2m voted against the CVA but had to accept the decision.  I think that Steinhoff are comfortably above the margin where they would need to get him on board to effect the CVA

 

But he is an immensely wealthy man. He may challenge this position in Court which may bring further delays.  It may be why Steinhoff are preparing the cash.

 

My apologies to all for the error.

 

Best Regards

Captainfrom82

[DayTraderDad]

So while we all talking SNH Management has been busy getting the restructure done for me the few steps to go: 1 - Sale of Hemisphere properties 2 - Sale of Conforama properties 3 - Sale or restructure conforama my guess is they will sell 49% of the business 4 - Sell General Merchandise business of Grennlit Brands 5 - IPO of Greenlit brands 6- Then the last job sue the MJ club for damages. The shareholder litigation will be a 15 year affair which will diminish as the share price recovers. Anyway my 5 cts of today

[DayTraderDad]

Dtd...kap behaving well..more upside i think...but jusy mo...

Haha yes I am going to sit tight this should get back to where was trading before the sale of the shares. 

[Midas1]

Dtd...kap behaving well..more upside i think...but jusy mo...