Victoria plc (VCP)

[Bouleversee]

Does anyone else hold VCP which suffered a dramatic fall this week but is starting to recover a bit? I don't know quite what to make of this and whether it would be a good opportunity to transfer some into an ISA in the expectation of reaching previous heights again and possibly gift some to family or whether its multi acquisition policy is running out of steam and not going to be very profitable in the long run. Their statements in connection with replacing bank loans with bonds doesn't seem to have gone down too well . I had intended to hold forever as an AIM share but as there now seems to be some doubt about the continuation of the IHT exemption and as it would seem it is likely to be taken over at some point, I need to rethink my strategy.

Any views on the company's prospects?

[ https://www.victoriaplc.com/ ]

[Gengulphus]

... I had intended to hold forever as an AIM share but as there now seems to be some doubt about the continuation of the IHT exemption and as it would seem it is likely to be taken over at some point, I need to rethink my strategy.

Just as with any other tax break, there has always been some doubt about the continuation of the IHT exemption. IMHO the only sane way to deal with that is (a) to rethink one's strategy when the tax break is abolished, not to try to anticipate that happening; (b) not to be tempted by tax breaks that lock one into arrangements now for potential later tax benefits. And if the tax break is one that happens on death, as in this case, to select the investments on their normal investment prospects, regarding the tax break as a 'nice if it happens' bonus rather than as a significant reason for investing.

Similar considerations apply to takeover prospects. For both of them, don't pay significantly more for an investment than you would if the tax break / takeover prospects didn't exist...

Any views on the company's prospects?

I haven't seen anything concrete and significant to make them look bad. And as the company is presenting it, especially in Wednesday's RNS, it is on face value a sensible bit of debt management. There is however the question of just how economical with the truth they're being, especially in statements like "As the Group has grown over the last six years, our lending banks have been, and continue to be, very supportive of our strategy and performance." and "The potential Bond issue is an entirely discretionary exercise, and a final decision will be made at the Company's discretion in the coming days on whether to move ahead or retain the existing facilities." (There is always some economy with the truth in such statements, as telling the whole truth would end up being incredibly long and boring! But being economical with not-very-consequential detail is one thing, being economical to the point of being significantly misleading is another...)

I don't think it will be possible to discern more than that until more details of the proposed bond issue are released. If they go ahead with it and the coupon is very high, that would be very disquieting, as it would indicate that continuing to use their existing bank facilities is not an option, contrary to what they've implied. If they go ahead with a reasonable coupon on the bond, or if they don't go ahead with the bond at all, that would be reassuring.

Gengulphus

[Bouleversee]

Many thanks, Gengulphus.

[Gengulphus]

Victoria have posted an update on this: https://www.londonstockexchange.com/exc ... 55934.html.

A summary is that:

* They're not going ahead with the refinancing via the bond, because they've decided the 'indicative pricing' had moved too much against them - i.e. basically the market was demanding too high a coupon (i.e. interest rate) to justify doing it. This of course carries the implication that it was indeed merely an attempt at doing a sensible bit of debt refinancing: now that it's turned out not to be sensible after all, they've had no trouble backing out of it.

* They admit that "last week was not the Board's finest hour in terms of the clarity of our communication". As far as I'm concerned, well said!

Gengulphus

[Bouleversee]

Yes, that was the largest slice of humble pie I've seen from a CEO. I thought the s.p. would rocket after that and bought in my ISA early this a.m. only to see it drift lower and lower but recover later in the day and end up at the same buying price. Spruce House keeps adding and now holds 13.56% so hopefully the upward trend will continue.