Bavaria in administration?

[jfm]

Re: Bavaria in administration

But there seem to be many failures where the PE co get there stake and a healthy return back while the company goes under and staff get nowt (not even their pensions).

Care to name one? I can't think of a single one, ever. This is Daily Mail level commentary Jez.

 

[savageseadog]

The sensible Mobo thread has been combined with the somewhat silly at times Yachting thread.

Bavaria Mobos don't have keels.................... but then neither do the yachts! Boom! Boom!

 

[Zing]

There’s a lot of wild speculation here without a factual basis. As far as I can tell there is nearly no information about what has happened or about profitability other than the backer withdrawing funding. Sales are good and we know nothing about underlying commercial issues. Funding is often withdrawn or refused for reasons not connected to the business’ viability.

One thing this reminds me of is that boat building is a very tough business. I wonder how many boat builders have been around for 40 years say, without having suffered a financial emergency?

 

[Just_sayin']

Bavaria Mobos don't have keels.................... but then neither do the yachts! Boom! Boom!

Your compassion for people who are probably sitting at home worried to death about their deposit money or soon to be delivered yacht or warranty work does you credit. You must feel very proud of yourself.

Speaking as someone who had a close friend involved in the Peters Opal debacle and who nearly lost more than money !!! I think the people who find this subject amusing should be ashamed of themselves.

 

[Tranona]

Your compassion for people who are probably sitting at home worried to death about their deposit money or soon to be delivered yacht or warranty work does you credit. You must feel very proud of yourself.

Speaking as someone who had a close friend involved in the Peters Opal debacle and who nearly lost more than money !!! I think the people who find this subject amusing should be ashamed of themselves.

Agree with your principles, however in this case there is no suggestion that any consumer is going to lose anything as it is not bankruptcy but a "technical" administration. The announcement says that all boats in build will be completed. The only people who are likely to lose are the financiers and banks, although of course, ultimately it is passive investors through pension funds etc whose money it is. That is just a fact of life when investing in risky businesses, although the underlying investors do not feel it directly as their investments are usually diversified to reduce their overall risk, so all this loss will do is maybe reduce the overall level of return they get by a tiny fraction.

 

[JumbleDuck]

There’s a lot of wild speculation here without a factual basis. As far as I can tell there is nearly no information about what has happened or about profitability other than the backer withdrawing funding. Sales are good and we know nothing about underlying commercial issues.

See Post 20, and in particular

Auch intern gab es erkennbar Probleme. Insider berichteten schon im Vorjahr von schwerwiegenden Produktions- und Lieferproblemen, nachdem die bewährte Fließbandmethode modifiziert worden war. Auch hat die Werft zu lange mit der Erneuerung der Flotte gewartet und statt dessen mit großen Rabattaktionen versucht, Bestandsmodelle zu verkaufen.​

 

[MapisM]

Re: Bavaria in administration

Another victim of scum venture capitalists who care not for workers or suppliers.
Over leveraging business means their money is returned quickly at the expense of company longevity.

I'm a capitalist at heart but what has been going on in the past 10 years should be illegal

Actually it is, J.
Financial assistance - which is the essence on which the whole game stands - is in principle prohibited in most civilized Countries, since more time than I can remember.
Trouble is, we are not talking of petty thieves here.
When you can pay the best lawyers of the planet, finding acceptable ways to mask the essence of these transaction with something formally different is not that complicated.
It's not like you can find them selling drug to students in front of primary schools, you know...

 

[MapisM]

Re: Bavaria in administration

But there seem to be many failures where the PE co get there stake and a healthy return back while the company goes under and staff get nowt (not even their pensions).

Care to name one? I can't think of a single one, ever.

LOL, would you prefer a list in alphabetical or in historical order, J?
Btw, I don't think to be wrong in remembering (among other N cases I'd rather discuss over a beer, but this one was debated here in the asylum) that right before going under, FL granted some sort of privilege on their shareholders loans, or am I?
Talk about one hand ordering the other what to sign... :ambivalence:

 

[jfm]

Re: Bavaria in administration

Actually it is, J.
Financial assistance - which is the essence on which the whole game stands - is in principle prohibited in most civilized Countries, since more time than I can remember.
Trouble is, we are not talking of petty thieves here.
When you can pay the best lawyers of the planet, finding acceptable ways to mask the essence of these transaction with something formally different is not that complicated.
It's not like you can find them selling drug to students in front of primary schools, you know...

mapism if you can name an LBO where the lenders invoked their financial assistance and took the trading company's assets, I'd be interested to hear. It has happened, but it is extremely rare. I bet you can't name one.

 

[jfm]

Re: Bavaria in administration

LOL, would you prefer a list in alphabetical or in historical order, J?
Btw, I don't think to be wrong in remembering (among other N cases I'd rather discuss over a beer, but this one was debated here in the asylum) that right before going under, FL granted some sort of privilege on their shareholders loans, or am I?
Talk about one hand ordering the other what to sign... :ambivalence:

Either order will do; in fact just write them down randomly in the order that you think of them. TBH, no need to list more than ten; you will have made the point.
There was indeed something odd about the FL situation- discussed on here at the time. But that does not prove or evidence the "daily mail" point being made. There is no way that the turnaround fund owner of FL got back its money + healthy return. They merely got some of their investment back but made a loss overall

 

[davidej]

Yes interesting, I wonder if that’s because multihulls don’t have keels so much less for the design team to have to worry about?

I can't believe how often a jokey post like this is taken seriously and provokes so many indignant replies.

Irony recognition failure syndrome.

 

[Zing]

See Post 20, and in particular

Auch intern gab es erkennbar Probleme. Insider berichteten schon im Vorjahr von schwerwiegenden Produktions- und Lieferproblemen, nachdem die bewährte Fließbandmethode modifiziert worden war. Auch hat die Werft zu lange mit der Erneuerung der Flotte gewartet und statt dessen mit großen Rabattaktionen versucht, Bestandsmodelle zu verkaufen.​

Just ongoing mundane industrial issues. Those things are not going to bring down a long established business. Something more is clearly behind this.

 

[JumbleDuck]

Just ongoing mundane industrial issues. Those things are not going to bring down a long established business. Something more is clearly behind this.

The outdated model line-up being sold at huge discounts doesn't sound too financially clever, but your suggestion is intriguing. I love a good conspiracy theory.

 

[MapisM]

Re: Bavaria in administration

mapism if you can name an LBO where the lenders invoked their financial assistance and took the trading company's assets, I'd be interested to hear. It has happened, but it is extremely rare. I bet you can't name one.

Perleease... Of course I can't name any case where some PE firm were so silly to formally infringe FA rules.
I wasn't even aware that this ever happened. Care to name and shame those folks? Mickey Mouse & Associates maybe?
My point was that in ANY leveraged buyout the target company assets are exploited as collateral for financing the whole transaction - which ultimately means financing the shareholders' interests.
And this is what the SUBSTANCE (as opposed to how these transactions are FORMALLY engineered) of FA is all about.
Btw, I feel in a sort of surrealistic situation while writing this, because not only I'm teaching grandma to suck eggs, but I'm doing it because asked by grandma herself...

Ref. your other challenge to name 10 cases where PE shareholders left companies (and their employees, suppliers, etc.) on their knees while they managed to get away with just a few superficial scars (if that), you'd better not bet that I can't. But as I already said, that's something I'd happily debate over a beer, rather than here.
Otoh, I appreciate your recognition that in the only example I made (just because already discussed here), there was "something odd"...
And you know perfectly that the point made by Jez remains valid regardless of whether those crooks managed to get an healthy return or just a reduction of their losses, when the latter is achieved to the detriment of other stakeholders rights - staff and suppliers particularly.

Anyhow, I have a funny feeling that you will struggle to convince anyone that this is just a "Daily Mail point" aimed at selling more copies without caring a lot about direct evidence, regardless of my willingness to post other examples.
The fairy tale of financial investors capable to turn around Blue Star Airlines and the likes, making the world economy grow faster and everybody happy in the process, is well past its due date by now... :ambivalence:

 

[shaunksb]

Re: Bavaria in administration

LOL, would you prefer a list in alphabetical or in historical order, J?

You are so busted...


________________________

 

[Zing]

The outdated model line-up being sold at huge discounts doesn't sound too financially clever, but your suggestion is intriguing. I love a good conspiracy theory.

Flogging old stock and stock prior to a new model is not an explanation for anything. It is normal business practice, especially at Bavaria. Saying that the explanation must be something else does not imply a conspiracy theory. There is no logic to support that. There obviously is another explanation. That’s my simple point.

In the absence of no good explanation and unless one emerges then the usual explanation is the most probable, which is that the backers just got tired and lost confidence in the prospect of success. .

 

[Zing]

Re: Bavaria in administration

Perleease... Of course I can't name any case where some PE firm were so silly to formally infringe FA rules.
I wasn't even aware that this ever happened. Care to name and shame those folks? Mickey Mouse & Associates maybe?
My point was that in ANY leveraged buyout the target company assets are exploited as collateral for financing the whole transaction - which ultimately means financing the shareholders' interests.
And this is what the SUBSTANCE (as opposed to how these transactions are FORMALLY engineered) of FA is all about.
Btw, I feel in a sort of surrealistic situation while writing this, because not only I'm teaching grandma to suck eggs, but I'm doing it because asked by grandma herself...

Ref. your other challenge to name 10 cases where PE shareholders left companies (and their employees, suppliers, etc.) on their knees while they managed to get away with just a few superficial scars (if that), you'd better not bet that I can't. But as I already said, that's something I'd happily debate over a beer, rather than here.
Otoh, I appreciate your recognition that in the only example I made (just because already discussed here), there was "something odd"...
And you know perfectly that the point made by Jez remains valid regardless of whether those crooks managed to get an healthy return or just a reduction of their losses, when the latter is achieved to the detriment of other stakeholders rights - staff and suppliers particularly.

Anyhow, I have a funny feeling that you will struggle to convince anyone that this is just a "Daily Mail point" aimed at selling more copies without caring a lot about direct evidence, regardless of my willingness to post other examples.
The fairy tale of financial investors capable to turn around Blue Star Airlines and the likes, making the world economy grow faster and everybody happy in the process, is well past its due date by now... :ambivalence:

I don’t think you addressed the direct question. I can give examples, but not in public. I do agree with the essence of your arguments about PE.

PE and LBOs rely on converting the former business owner’s equity in the business into loans so as to fund the purchase with a minimum of PE capital. That weakens the business as without equity to fall back on, it is vulnerable in a down turn as the reserves are gone, plus more likely to struggle in general as it is burdened with extra interest costs. It is a high risk, high reward, get rich quick strategy and it is not how you run a business you plan to own for decades. The other stake holders are then exposed to the extra risks without much choice. It is game played with institutional money, done in a big way especially prior to 2008, so for that a more dubious practice as it depends on the funder’s stupidity.

I’m not saying it shouldn’t happen, just there are Wild West, gunslinging aspects to it that are a little unsavoury.

 

[Blue Sunray]

The sensible Mobo thread has been combined with the somewhat silly at times Yachting thread.

It's a pity the combined thread didn't end up it the Mobo forum, it might have stayed more constructive and less juvenile.

 

[dom]

Re: Bavaria in administration

.
....My point was that in ANY leveraged buyout the target company assets are exploited as collateral for financing the whole transaction - which ultimately means financing the shareholders' interests.
And this is what the SUBSTANCE (as opposed to how these transactions are FORMALLY engineered) of FA is all about.

Largely true, but is that wrong?

I’m on the topiary side of the business where, as for everyone else, investing boils down to projecting and risk-adjusting future cashflows. Part of this is devising legally sound, if sometimes edgy, transactions to steal a march on other investors. The ‘winner’ may still suffer a loss in the event of a bankruptcy, just a smaller one than he wld have, thereby skewing the odds in his favour to the extent they could be calculated ex ante ....the same as every footballer, rugby player and UK ISA investor is trying to do.

Businesses are of course financed by many competing constituencies, each with their own mandate, legal framework, and reg restrictions. Banks for example issue common stock, CoCos, sub-debt, senior-secured, senior-unsecured, etc. All has a price, and it’s up to the market to discover it. ‘Cov-lite’, ‘asset stripping’, ‘leveraged loans’ sound dodgy, but they’re intermediated and sometimes repacked into things like CLOs by the banks, then distributed to other professional investors: mutual funds, ETFs, institutions, etc. Such is the appetite for them that banks routinely snuggle-up to PE Cos to get first crack at their loan pipeline.

At the moment risky debt is cheap for many reasons ranging from excess liquidity, zero lower bound dynamics, requirement for specified actuarial yield hurdles, a long credit cycle, elevated zombie Co. survival rtaes, consumer credit growth, etc. PE Co.s are issuing, but so are a ton of other low-grade borrowers to capture the eye wateringly tight spreads. My personal view is that many of these buyers will suffer a bad day out, but they think otherwise and it’s a free market – a good thing?

Pension funds are invested in almost every one of the capital/debt providers, so the charge that pensioners lose out falls there. Same applies to many institutions. The PE/hedge fund community often gets stick, but over that beer you mention we cld also read the ‘Dodgy and Nasty Bank Practices Scroll’, chronicling how they routinely screw small businesses :ambivalence:

Where I, however, think your point scores a heavy win is in relation to the trade creditors and staff who find themselves increasingly losing to more sophisticated players. I would think increased protection for them is the priority right now, rather than getting distracted by a few obvious meedja fall guys?

 

[Bobc]

Re: Bavaria in administration

Word coming out is that there has been a bust-up between the CEO and the board, and that there is resistance from the Hedge Fund owners to putting more money into the business to fund the expansion that it needs (new factory etc.) to build the increasing range and increasing order book.

Not gone bust, just put itself into a "technical administration" in order to sort it's finances and future out.