[ad_1]
What a useful phrase, “current market conditions”. It can be deployed in almost any situation with no need to join the dots between, say, latest tensions in the US-China trade war and an attempt to raise $500m to help construct an enormous fertiliser mine under the North York Moors.
Sirius Minerals, hard at work already near Whitby, rolled out the magic words as it pulled its junk bond offer and promised to return next month to have another go. Well, OK, the threats and insults flowing between Washington and Beijing are clearly a broad worry for all investors. But it’s not obvious why they should move the dial at Sirius, which is almost the definition of a special situation.
The company’s polyhalite mine will be the biggest to be dug in the UK in years and the plans involve sinking two shafts to a depth of 1,500 metres – equivalent to the height of 20 York Minsters – and building a 23-mile underground tunnel, complete with conveyor belt, to a port on Teesside. In any construction project of that size, there is a risk of cost overruns.
It is why the bonds were pitched with a fat 13.5% coupon, or interest rate, in the first place. Maybe marginal buyers will bite in a month’s time, and Sirius shareholders must pray that’s the case. The $500m (£412m) is required to unlock a $2.5bn credit facility from JP Morgan and time is running short. Sirius currently only has enough cash to keeping running until the end of next month.
Chief executive Chris Fraser has done well to get his ambitious project this far, defying the “you cannot be Sirius” gags. But the share price, down 20% on Tuesday at 10.4p, has halved since he unveiled the complicated $3.8bn four-part financing plan in April. Shareholders’ worry is obvious. If someone has to dig deeper to replace the junk bonds, it’ll probably be them.
Clinically cool fashion
Few people would regard Karen Millen and Coast as big online brands. Both businesses, until now, spoke the language of flagship stores, boutiques and concessions. Direct online sales comprised only about 15% of combined revenues in the last financial year. But Boohoo’s management isn’t bothered. It’s buying the online operations and intellectual property rights for the knock-down price of £18.2m thanks very much, and will leave behind all 209 physical outlets.
This outcome is likely to be appalling for the staff in the shops – 1,100 jobs are at risk – but the clinical transaction shows the state of fashion world. If revenues have stagnated, stores and leases are a permanent headache. But, once those fixed costs are removed, a second life for the brands is possible in the online-only world.
There’s no guarantee that reincarnation will be achieved, but for Boohoo it’s a low-risk punt. A sum of £18m is peanuts for a company that is now worth a remarkable £2.7bn.
In terms of market positioning, Karen Millen and Coast are miles away from Boohoo’s current fast fashion portfolio, which takes in PrettyLittleThing and Nasty Gal. But that, presumably, is the point. Once the teenagers and 20-somethings have been hooked, they can be sold more expensive, and longer lasting clothes as they grow up.
It’s only the joint administrator, Rob Harding of Deloitte, who needs to pipe down. Yes, as you say, you’ve facilitated “the survival of these iconic British brands” if we’re allowing a liberal application of “iconic”. But the staff also wanted you to save jobs.
No deal, not much protection
Rolls-Royce says it has spent £100m preparing a no-deal Brexit, but that the company is committed to the UK and expects to cope. In case any no-deal zealots are tempted to seize on the positive half of chief executive Warren East’s assessment and ignore the rest, let’s set out his quote:
“I don’t think many people in Rolls-Royce are going to lose their jobs as a result of Brexit directly [but] at a lot of other companies that’s what people are looking at.” Quite. Some high-profile names will be able to protect themselves. But that would not be the full picture. Nothing like.
[ad_2]
READ SOURCE
