JoeQ
Well-Known Member
Shares now at 1.6p
Looks like Raymarine are about to fold
- Thread starter JoeQ
- Start date
crazy4557
Well-Known Member
Raymarine
Could be a fantastic punt if you're a brave man...or maybe not, but it would be great shame to see them go. IMHO they are the benchmark of modern navigation equipment for the likes of us.
Could be a fantastic punt if you're a brave man...or maybe not, but it would be great shame to see them go. IMHO they are the benchmark of modern navigation equipment for the likes of us.
jfm
Well-Known Member
They wont go. The share price merely reflects the equity value of the holding company with the LBO debt plus the underlying Raym business. The underlying business without the debt is a ~£50m enterprise value business and, in the final analysis, will be sold by the banks not wound up. There's no way, absolutely no way, the underlying Raymarine manufacturer will disappear a la Woolworths. So don't worry, and keep using and buying their gear. I'm just about to put my money where my mouth is and order 3x E series wides
I wouldn't buy any shares though - at 1.6p they're overpriced imho!
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oceanfroggie
Well-Known Member
Agree with jfm, companies come and go but well established brands never die, they just change hands.
Powersalt
Well-Known Member
Against all dealer advice I went for Raymarine c series gear. Havent even used it yet and I see they are so close to going under, that I think my decision was not a good one.
Trouble is when you are in trouble peeps dont buy your gear and that compounds the problem. Not sure about them keep going , the debt is so huge it might need a business closure and then a buyout from the receiver in order to be viable.
E series is great but not out when I ordered mine and I think they have a software problem on the firsat batch ( only from what I hear)
Trouble is when you are in trouble peeps dont buy your gear and that compounds the problem. Not sure about them keep going , the debt is so huge it might need a business closure and then a buyout from the receiver in order to be viable.
E series is great but not out when I ordered mine and I think they have a software problem on the firsat batch ( only from what I hear)
BlueSkyNick
Well-Known Member
Raymarine seem to have the competitive edge on digital radar, so will be hoping to get some return on their investment and development. Maybe they will get some traction after LIBS.
Hurricane
Well-Known Member
Just add my three pennyworth
I'd still rather have Raymarine kit on board than any other.
It's by far the best.
Anyone can use it and its fast.
Good luck Raymarine.
I'd still rather have Raymarine kit on board than any other.
It's by far the best.
Anyone can use it and its fast.
Good luck Raymarine.
jfm
Well-Known Member
Aaargh! They're not going under! The parent has a mountain of LBO debt, hence the near-zero share price. There's no equity in the company and it's pretty much owned by its banks. The banks are NOT going to shut the business - it's worth praps £50m and the continuity of the business is the ONLY way for the banks to get some of their money back
Raymarine is like a house with a too-big mortgage, and zero or negative equity. Owner does a runner, bank reposesses the house. Do you think the bank would then demolish the house? Of course not - the house survives and will be sold and work perfectly well as a house for many years more. The debt and the zero share price are not reasons not to buy Raym gear
[2068]
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But continuity in what form?
Refinancing and keep on the current management?
Refinancing and install a bank-approved management team?
Takeover? If so, by who?
It's all very well saying that they are "not going under", but that could be considered a subtle distinction to the small investor that invested in shares in 2007 at £5, now worth 1.x pence:
- "No darling, my investment did not go under: it merely reduced in value by a factor of 500"
Refinancing and keep on the current management?
Refinancing and install a bank-approved management team?
Takeover? If so, by who?
It's all very well saying that they are "not going under", but that could be considered a subtle distinction to the small investor that invested in shares in 2007 at £5, now worth 1.x pence:
- "No darling, my investment did not go under: it merely reduced in value by a factor of 500"
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jfm
Well-Known Member
But continuity in what form?
Refinancing and keep on the current management?
Refinancing and install a bank-approved management team?
Takeover? If so, by who?
It's all very well saying that they are "not going under", but that could be considered a subtle distinction to the small investor that invested in shares in 2007 at £5, now worth 1.x pence:
- "No darling, my investment did not go under: it merely reduced in value by a factor of 500"
The business and the bank debt are 2 different things. A perfectly likely next step is for the banks to demand that the business is sold, in order to raise cash for their debt to be (partially, probably) refunded. Bit like a repossession. Business (aka repo house) will be sold to highest bidder, which could be anyone from an industrial buyer to a private equity investor. The business/house itself is fine and will continue. New owner doesn't care that previous owner over-borrowed and got repo-ed. Whether existing management survive this change depends on lots of factors; I can't predict. But the products and business all carry on as before, so no effect on users/customers like us
As for your £5 -> 1p investor, that's a completely different matter. He invested in the company's common shaores so he stands behind the debt in the queue. Hence his equity is now zero. As he sees things, the company has indeed "gone under" but my statement that Raym is not folding was not written from the pov of a shareholder in it. Rather it was written from the pov of a user of their products and potential buyers of their products, which was the direction taken by the poster to whom I was replying. Two very different pov's! But to be clear, yes you're right that the £5 shareholder has lost his fiver and he wont benefit from the continuing trading (in new ownership) of the Raym business
Hurricane
Well-Known Member
I agree but surely there must be a limit to what you say.
The company will also need cash to continue trading and if the banks are turning the screws, there will be a slow down in money available for production and stock - even development.
Having said that I have not seen any shortage in supplies and Raymarine have just released exciting new products thus keeping their place in the market. This must be a clasic case for refinancing - but IMO it should be done sooner than later before any lack of funds create trading problems.
MapisM
Well-Known Member
Seconded.
And on top of the good reasons you mention, there's also another very important one why saying that "The business and the bank debt are 2 different things" is true only in theory.
A mountain of LBO debt has many operational implications on the way the business is run, and on the management behaviour.
In the not so long run, the top management develops an attitude to focus on showing nice quarterly figures, rather than on customer needs and strategic business development. And this can and often does create a deadly vicious circle, where the business is not properly managed, thus worsening the financial situation, thus concentrating further on creative accounting, and so forth.
Unfortunately, we've seen it happening so often in LBOed companies that it can hardly be considered just a coincidence.
That said - and in spite of the fact that I'm a Furuno fan - I do wish them all the very best for their future.
jfm
Well-Known Member
Not with LBO debt. The business was being run for cash, with cash sweeps by the banks, from the moment the debt was drawn, prior to the recent consumer downturn. Turning of the screws by LBO banks isn't discretionary, whereby they are nice when times are good and nasty when times are bad - remember these banks are fronting banks for syndicates, so they don't have the freedom to be nice cos it isn't their money. The loans are just operated in accordance with their terms
jfm
Well-Known Member
Hang on Mapis. My "The business and the bank debt are 2 different things" was (quite clearly from the context) a comment on a specific bankruptcy or near bankrupcy situation. I was merely making the point that just becuase the equity is out of the money, and the business is worth less than its debt, it doesn't mean the business itself will stop. The business -so long as it is a good one, and Raym is- will continue. It's the same logic that says a home loan lender doesn't demolish a house when the borrower can't pay the loan - the lender's interests are best served by keeping the house ok and selling it. I wasn't at all saying (and you know I wasn't) that having a large pile of LBO debt doesn't have an impact on management behaviour in the general, non bankrupcy, case
Just on that point though, and it's massive thread drift so I'll be brief, you are out of touch with modern Anglo-Saxon world financing. Sure there are individual exceptions, but in general no-one manages a private business for quarterly figures or uses creative accounting. That's what happens in the world of publicly traded companies. Private businesses with LBO debt are run for cash, and all the creative accounting in the world doesn't alter cash. You cannot make interest or amortisation payments on a loan with anything other than real cash. The most that "creative accounting" will let you do is manage your covenant headroom if the terms of the covenants allow, and that's as it should be in a bilaterally negotiated private loan between two parties. So, if the vicious circle you describe happens, it is a structural fault in the publicly traded markets (where Raymarine now sits) rather than of the private/private equity markets, where your vicious circle never occurs. Where you say you've seen the vicious circle happen "so often" in LBO companies, I think you mean publicy traded companies, not privately owned companies. Some of them migh have "left over" LBO debt but you're stretching things to assert a causal link with the previous LBO transaction. Of course, I can give you zillions of examples of your "creative accounting" vicious circle in publicly traded companies, many of which never went thru an LBO, as you know. I suggest you cant give me any significant number of examples involving LBO companies in private ownership
All that said, LBO loans do alter management behaviour, fortunately! But that's a whole nuther subject!
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rafiki_
Well-Known Member
I agree that the brand will be sustainable, however the challenge will be their ability to maintain investment in R&D. Digi Nav is a fast moving world in this day and age, and iff you cannot invest in new tech and innovation, then long term sustainability is questionable.
lw395
Well-Known Member
Fundamentals
Leaving aside the mass of debt, their operating profit fell from £20M in 08 to £1.35M in the first 6 months of 09.
That's before interest.
Not a good trajectory.
I suspect a likely outcome is some sort of break up/asset strip/pared down operation will be sold as a going concern when the PLC fails.
The value of the company is largely its intangibles such as designs and IP, which tend to have short 'best before' dates in electronics.
A great shame as although I don't like some of their kit, it is OK and at least cheaper than B&G.
Leaving aside the mass of debt, their operating profit fell from £20M in 08 to £1.35M in the first 6 months of 09.
That's before interest.
Not a good trajectory.
I suspect a likely outcome is some sort of break up/asset strip/pared down operation will be sold as a going concern when the PLC fails.
The value of the company is largely its intangibles such as designs and IP, which tend to have short 'best before' dates in electronics.
A great shame as although I don't like some of their kit, it is OK and at least cheaper than B&G.
gjgm
Well-Known Member
Indeed, and the common interest in the syndicate is in recovering their money.. or as much of it as they can. That might lead to very strict implementation of the terms. This is the point where companies start bleating about the banks being unfair. somewhat forgeting they ve just lost £00millions of the banks' money !
Your house analogy is fine.. as long as someone thinks the house is actually worth anything. Might be the land is worth more than the house...
MapisM
Well-Known Member
Mmmm.... Are you sure it isn't the modern Anglo-Saxon world financing that got out of touch with the reality, lately?
At the end of the day, businesses have always been run for cash, one way or another, since capitalism exists - nothing wrong in that.
What LBO and "modern" Anglo-Saxon financing introduced is the concept of running for cash like there's no tomorrow, which has radically different implications on the way businesses are run.
Just as a very simple example (which is not strictly accounting, but is probably the most common "creative" way to alter cash), LBOed companies, regardless of whether they're private or floated, when faced with the alternative of delaying the payment of supplies from third parties or of the interests/installments to the lenders, obviously go for the first, with no hint of hesitation.
The traditional entrepreneur would have at least considered to delay the distribution of dividends to himself, if he knew that by delaying the payments to the suppliers he could have put the business at risk in the not so long term.
I don't think we can say that LBO loans "fortunately" change these kind of behaviours.
Otoh, if a company is badly managed, of course changes are necessary. But then again, it has always been like that, and successful turnarounds took place well before and regardless of LBO loans.
jfm
Well-Known Member
Slightly apples/oranges comparison. Normalised Ebitda first half 2008/9 was 25m/7.2m respectively. "Trajectory" isn't relevant - no serious investor would extrapolate what's happened over the last year else we're all doomed! Even if the business can never make more than £7.2m cash in a half year ever again, which is a downbeat outlook, that's still a perfectly good business. The only problem is it's not enuf cashflow to service £90m of debt. But the business itself will survive this, just as the repossessed house remains a perfectly good home for its next owners. The shareholders might never see another penny and the £90m lenders might only get 2/3 of their money back, but the business itself will continue
jfm
Well-Known Member
Mmmm.... Are you sure it isn't the modern Anglo-Saxon world financing that got out of touch with the reality, lately?
At the end of the day, businesses have always been run for cash, one way or another, since capitalism exists - nothing wrong in that.
What LBO and "modern" Anglo-Saxon financing introduced is the concept of running for cash like there's no tomorrow, which has radically different implications on the way businesses are run.
Just as a very simple example (which is not strictly accounting, but is probably the most common "creative" way to alter cash), LBOed companies, regardless of whether they're private or floated, when faced with the alternative of delaying the payment of supplies from third parties or of the interests/installments to the lenders, obviously go for the first, with no hint of hesitation.
The traditional entrepreneur would have at least considered to delay the distribution of dividends to himself, if he knew that by delaying the payments to the suppliers he could have put the business at risk in the not so long term.
I don't think we can say that LBO loans "fortunately" change these kind of behaviours.
Otoh, if a company is badly managed, of course changes are necessary. But then again, it has always been like that, and successful turnarounds took place well before and regardless of LBO loans.
Yes, though of course it's a matter of case-by case analysis whether an owner-entreprenuer was being too soft in paying suppliers too fast, rather than merely doing what was necessary to not harm the business. If he was indeed being too soft, it's ok for a new owner to crack the whip and take back the free-ride hitherto given to suppliers.
But these are all new points, you're moving the discussion on, and conveniently not being open in admitting that you're backpedalling from your earlier incorrect allegation that "creative accounting", managing for "quarterly results", "vicious circle" and so on are all general characteristics of LBO-debt backed companies?