AIREA

[eepee]

AIEA has been good to me with a return of over 8% for a holding of about eighteen months.

Question is - is it time to sell?

Has anybody worked out the repercussions of the proposed closure of Ryalux?

Regards,
ep

[WickedLester]

Hi ep

Airea was good to me too. I bought in at about 10p some years ago when they were trading at a substantial discount to NTAV. They did nothing for ages whilst I collected a decent dividend and then they doubled to 20p at which point I sold out.

But as for now i'd say that the move to close Ryalux, whilst unfortunate for staff, will generate cash and leave a much more profitable company going forward. I think Burmatex is worth £30m against a current ev of about £15m so plenty of upside IMO if the business continues to perform.

One thing I would like to know is if they will have to continue to pump £600k a year into the pension fund now that the funding position is looking a lot better.

I notice they are planning to buy back 6m shares so hopefully that will at least support the share price in the medium term. I also think they should consider selling the investment property as this would free up more cash to return to shareholders and I doubt the income from it is particularly significant in the grand scheme of things.

All in all my opinion is that if Burmatex can continue to perform well then I think you could do worse than hang on and possibly get a fair bit of cash out of the shares, a 6.5p dividend this year is a pretty good start.

[WickedLester]

Hi again ep

I've just noticed a major flaw in my reasoning and that is that the finals were for an 18 month period so I would adjust my estimate of Burmatex's valuation to about £20m. On that basis it doesn't look anything like as cheap as I first thought. I still don't think it's especially pricey but if they still have to pump £400k a year into the pension fund then i'd suggest they're pretty fairly valued.

I don't think i'll be a buyer at this price but I'd guess that the decision to sell should be based on the outlook for the commercial floor coverings martket over the next couple of years and it may be worth your while doing some research on this.

[eepee]

Many thanks for your analysis.

Decision time? Maybe in a few weeks once the dust has settled.

Regards,
ep

[WickedLester]

Hi ep

Have you seen the rise in Airea today? Hopefully you haven't sold out. Airea oddly enough don't seem to have made an announcement yet but James Halstead have.

https://www.investegate.co.uk/james-hal ... 22338659J/

James Halstead plc ("James Halstead") notes the recent movement in the share price of Airea plc ("Airea") and confirms that the Board of directors of James Halstead (the "Board") is at the very early stages of evaluating making an offer for Airea which could lead to an offer being made for the entire issued and to be issued share capital of Airea (the "Possible Offer").

I would think it has to be credible, JHD has a great balance sheet and could pay cash for AIEA with ease.

[eepee]

Oh dear!

Feeling rather over-exposed and noticing that the price had gone up beyond the divi due in May, I decided to sell enough to cover a notional divi.

I am therefore left with just two and a half k or so. Still with about 12p gain it's not too bad. Perhaps watch closely on Monday.

I must say I am extremely disappointed by your late information by about 8 hours!!!! If only you had predicted ..... Only kidding of course! )

Kindest regards,
ep

[eepee]

Thought I would tidy it up to about 4k in view of possible interesting news to follow.

Quite happy to do this having cashed in, as I said, a notional divi the other day.

Regards,
Ernest

[Bouleversee]

Any more news on this? I see Jas. Halstead's s.p. has dropped a lot recently and I couldn't understand the RNS notices that came out today. Can anyone interpret? Their last trading statement didn't tell us much. I want to scream when I read "in line with market expectations" when I have no idea what the market is expecting.

[PinkDalek]

Any more news on this? I see Jas. Halstead's s.p. has dropped a lot recently and I couldn't understand the RNS notices that came out today. Can anyone interpret? Their last trading statement didn't tell us much. I want to scream when I read "in line with market expectations" when I have no idea what the market is expecting.

Where did you see "in line with market expectations", as I can't spot it here:

http://www.londonstockexchange.com/exch ... 82081.html

[Bouleversee]

That's a very good question, PD. I couldn't spot it either. I finally realised I was confusing it with another of my holdings, James Latham, in so far as the trading statement was concerned; am losing money on both of them. Memo to self: never rely on your failing memory.

However, I'd still like to know what's happening re Aerea. Did you look at the RNS releases today and did they mean any more to you than to me? The takeover code was mentioned on at least one of them.

[PinkDalek]

... However, I'd still like to know what's happening re Aerea. Did you look at the RNS releases today and did they mean any more to you than to me? The takeover code was mentioned on at least one of them.

I haven’t looked but they are probably the standard takeover panel rule 8 disclosures in a bid situation. Something like all holders with 1% or more has to make an announcement either at the start of the process or when going over that limit. Along those lines anyway.

[Bouleversee]

OK, thanks. So it looks as though an offer is still on the cards.

[PinkDalek]

OK, thanks. So it looks as though an offer is still on the cards.

You may already know but, following the RNS mentioned earlier in the thread, Halstead issued a replacement RNS on 5 April 2018 http://www.londonstockexchange.com/exch ... 92323.html which I think is the latest.

In accordance with Rule 2.6(a) of the Code, James Halstead is required, by no later than 5.00 p.m. on 2 May 2018, to either announce a firm intention to make an offer for Airea in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline will only be extended with the consent of the Takeover Panel in accordance with Rule 2.6(c) of the Code.

[Bouleversee]

Thanks, PD. I did see that but I thought I might have missed a later announcement but presumably not. I think your earlier assumption must be the answer to my question. Will have to await developments.

[PinkDalek]

Thanks, PD. I did see that but I thought I might have missed a later announcement but presumably not. I think your earlier assumption must be the answer to my question. Will have to await developments.

Paul Scott at Mello 2018 talked positively about AIREA (about 17 minutes in):

https://stockopedia.wistia.com/medias/euzuzdam3y

[Bouleversee]

Thanks, PD. I did see that but I thought I might have missed a later announcement but presumably not. I think your earlier assumption must be the answer to my question. Will have to await developments.

Paul Scott at Mello 2018 talked positively about AIREA (about 17 minutes in):

https://stockopedia.wistia.com/medias/euzuzdam3y

Many thanks for that link, PD. Very interesting and some useful tips. I hold some of the companies mentioned, including Victoria (which has been almost too good to be true), Headlam (which has been disappointing of late so his comments were encouraging), Topps Tiles (which has also been going through a bad patch but which I had topped up earlier today), Air Partner (which gave us a nasty shock recently but Paul Scott seems to think is OK, which is a relief) and James Halstead (which may or may not make an offer for Airea and which I read elsewhere today is not a buy). I might buy some Airea on Monday.

My memory being what it is, I need to listen to it again which I shall do on my tablet in the bath with a glass of bubbly to hand, having just heard that Scottish Mortgage IT is at the top of the FTSE because of its holding in Amazon and seen Petrofac shoot up rather than fall after I had topped up just before they went xd. Not a bad week for a change.

Did you notice Paul said dividends weren't important? Hope nobody on the HYP board is watching.

[PinkDalek]

... and James Halstead (which may or may not make an offer for Airea and which I read elsewhere today is not a buy). I might buy some Airea on Monday.

My memory being what it is, I need to listen to it again which I shall do on my tablet in the bath with a glass of bubbly to hand, ...

I doubt you missed it but ... At the request of the board of Airea, the Panel on Takeovers and Mergers (the "Panel") has consented to an extension of this deadline by 21 days in accordance with Rule 2.6(c) of the Code and, accordingly, James Halstead must, by no later than 5.00 p.m. on 23 May 2018, either announce a firm intention to make an offer for Airea in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline will only be extended with the consent of the Panel. ... from http://www.londonstockexchange.com/exch ... 27808.html

Not time to break out the Magnum, yet, unless you like the Unilever ice cream.

[Bouleversee]

Thanks for that, PD. I hadn't seen it actually, and I didn't get round to buying Airea either or have time to listen to that recording again. Too much on my plate at the moment and grabbing any dry days to catch up in the garden. No doubt the s.p. will have risen in the meantime.

[Clitheroekid]

I bought these on Monday purely as a punt, having listened to Paul Scott's extremely interesting speech at Mello and taken the view that a bid was more likely than not.

Unfortunately, by the time I got round to actually buying the price had already risen by 10%, so through gritted teeth I paid 60p a share. I was quite shocked at the massive spread as well, but I bought on the basis that if James Halstead did proceed with a bid the premium would be enough to produce a decent profit (and no spread on the sale, either) and if they didn't the company seemed to be in a good position anyway, having shed the loss-making Ryalux business.

But then the price dropped quite rapidly not long after I'd bought - it was down 5% that afternoon, which said to me that there had been some insider trading, and that there would be no bid.

I therefore resigned myself to having bought - albeit inadvertently! - a long term investment.

So when the news came through of the extension of time it quite perked me up. An extension can only be applied for by the target company, so to me it indicates that Airea are willing to sell and that Halstead are still wanting to buy.

This appears to have been recognised elsewhere, as the SP was up nearly 14% today, and from a hefty loss I'm now showing a good profit. Such is the fun of trading!

[PinkDalek]

22 May 2018 James Halstead plc ("James Halstead" or the "Company") Statement regarding Airea plc ("Airea")

No intention to bid statement

http://www.londonstockexchange.com/exch ... 51105.html

Further to the announcement of 2 May 2018, after careful consideration, the board of James Halstead confirms that it does not intend to make an offer for Airea pursuant to Rule 2.7 of the Code. ...

Paul Scott discusses the announcement in a little more detail here (for registered readers):

https://www.stockopedia.com/content/sma ... ks-366324/