RYM-Ryman

[KW]

Basically, everything they've been developing since Simon Challis left the company. 

This is why their properties are starting to look more like hospitals than villages.  What they could do is refurb their older villages properly and charge a premium price, while their apartment blocks are sold to the bottom end of the market.  But charging the same for both is not achieving anything - nobody wants to pay top dollar for an old and outdated unit, and they dont want to pay for new units that dont have the atmosphere of the older villages.

[Left Field]

I still cannot beleive no one really saw this coming.

FWIW I saw this coming.

Since the "back up the truck", "You can't have enough"  OCA calls from certain posters, I have been a sceptic and have avoided this sector. I once did work for a "not for profit" Charitable organisation which had operated  in the 'retirement' sector for over 100 years.

The then Govt funding for care, was such that it made it impossible for them to operate... impossible to even maintain buildings and staff levels  to increasingly complex regulations and EQ standards... (and that was in a "not for profit" organisation!)  After 100 yrs they sold out of the sector.

 I've avoided it ever since.

Chickens coming home to roost IMO.

[Basil]

To be fair, we were sold the story that care suites were going to be transformative for the care industry and radically improve profits.  Also, Earl Gasparich was a very personable, likeable and believable guy.   I woke up and smelled the coffee years ago and sold most of mine at $1.40 when Tomlinson bought heaps.  Some people are still clinging to their delusion in this sector regarding care.  Others still think the sector overall can eventually make the same super profits the first mover advantage RYM enjoyed in the early days.  They're also holding on to false hope in my opinion.  SUM, the only one left with their credibility intact, will make quite good money, (not super profits), when the real estate market starts going up meaningfully.   

[KW]

The three firms arranging and underwriting the current cap raise are Craigs Investment Partners, Forsyth Barr and Jarden, which, as well as their merchant banking and stock broking activities, also have large funds management businesses.

What are the chances that the unwanted underwritten stock they all have to take up will simply be parked in their KiwiSaver (or other) funds, and retail unit holders will wear the fall out?

[Basil]

Yeap, just like when Forsyth Barr did clients a "huge Favour" and stuffed their managed clients' accounts full of unwanted Feltex Shares.
I got the huge hard sell....Man have we got the deal of the decade for you...  When you are on the receiving end of some hard sell line like that, don't ask questions, just hang up the phone.

[Mos]

Ryman cap raise is getting interesting with share price trading at $2.99 currently under the $3.05 offer price. Still have $281m to get in the door from the retail component of the rights offer which is not looking promising with shares available at a lower price on market. With the price action indicating quite an overhang already, the underwriters (Craigs, Forbar, Jarden) will need deep pockets to pick up a potentially massive retail component shortfall. Could be a monster overhang after that.

[Basil]

Ryman cap raise is getting interesting with share price trading at $2.99 currently under the $3.05 offer price. Still have $281m to get in the door from the retail component of the rights offer which is not looking promising with shares available at a lower price on market. With the price action indicating quite an overhang already, the underwriters (Craigs, Forbar, Jarden) will need deep pockets to pick up a potentially massive retail component shortfall. Could be a monster overhang after that.

Yes, it's getting interesting alright !  No doubt all three will issue compelling research with an extremely attractive 12-month price target to try and clear whatever stock they can't "kindly" stuff into managed client accounts.  Take such research with a grain of salt I reckon.  I reckon the company and brokers have misread how disillusioned the investment community have become with RYM's inept management. 

[BlackPeter]

Ryman cap raise is getting interesting with share price trading at $2.99 currently under the $3.05 offer price. Still have $281m to get in the door from the retail component of the rights offer which is not looking promising with shares available at a lower price on market. With the price action indicating quite an overhang already, the underwriters (Craigs, Forbar, Jarden) will need deep pockets to pick up a potentially massive retail component shortfall. Could be a monster overhang after that.

Yep, looks like the underwriters are already running out of steam. Normally they would really pay attention that the SP doesn't drop below the offer price during the offer period.

Rule of thumb for ok-ish CR's is that SP might drop after the conclusion of the offer period for another 10 to 15%. This would be something like $2.50 to $2.70 bottom, and obviously the band to watch for anybody interested to buy some RYM shares.

Incidentally - $2.50 would be close to 50% of (new, diluted) NTA.

Tempting? Actually, I think I might invest some more money into ARMR (ASX) instead ... hey, this is currently going up like a rocket.

[Basil]

$4.92 I have read is the adjusted NTA.
Put the same discount to NTA as OCA currently trades on at 53% and fair value is $2.30. That's all they're worth in my opinion.

[Shareguy]

Ended up taking part in the cap raise while overseas. Thought I had done well and was even scaled back on my original order.

Back in NZ with decent internet looks like the price is going to stay below the issue price with a big overhang coming potentially.  The underwriters looking like they will be left with a few.

Looks like my eagerness has cost me. Will not be taking up my rights under the retail component.

[Basil]

Welcome back mate.  What a bloody fiasco this and the previous capital raise were.
Not with a 40th foot barge pole is how I see it. 

[lorraina]

Ryman has an excellent record of supplying out standing villages.
Dean Hamilton [the chair] has an excellent record of sorting out a business.
Therefore my late friend's trust, of which I am a trustee of, are supporting the retail part of RYM's capital raise.

[winner (n)]

Dean must have wondered what did he do wrong to get lumbered with both Ryman and The Warehouse

[BlackPeter]

Ryman has an excellent record of supplying out standing villages.
Dean Hamilton [the chair] has an excellent record of sorting out a business.
Therefore my late friend's trust, of which I am a trustee of, are supporting the retail part of RYM's capital raise.

You are right - Ryman used to have an outstanding record of supplying and running outstanding villages. Maybe they still have.

Their first big problem came when they decided to borrow nearly 1$b unhedged and uninsured in the US. No sensible and decent business man would have agreed to these conditions, and that a full board of highly paid directors agreed to them is for me still beyond comprehension.

Ah well, they asked the shareholders to bail them out, and they did.

The second problem was when they decided to allow their debts to creep up again. Good business people would have learned from their first disaster.

Ah well, they asked shareholders again to bail them out, and while not sure yet about the share holders, but the underwriters promised to bail them out.

So - I don't think anybody would disagree with your statement of them providing and running good villages.

I think the question is more about whether they are good and prudent business people. They clearly made big mistakes paid for by their shareholders. They clearly did not learn the first time round.

Sure - maybe they lear something the second time (and I suppose this lesson will still linger around for some time), but maybe not.

From a personal perspective - I didn't foresee their second mistake (and therefore still holding some). I don't intend to throw good money after bad money ... and, if I really want to increase my holding, than I could have got the same shares cheaper on the market - and I think the odds are good that the SP will drop after the offer closing (i.e. the real sale is yet to come).

So - not sure, why it would be a good idea to buy Ryman shares for $3.05, when you could get them already last week on market in the $2.90íes - and you are likely to get them in the coming weeks further discounted? Remember - the underwriters are not interested to turn into long term shareholders.

Buying the shares on offer now is not even a donation to Ryman, but to the underwriters. Not in the business to make donations to companies who like to benefit from companies under financial stress.

[Basil]

Great post BP. The new CEO wants to list RYM on the ASX because "there's no comparable company like it listed there".  Hmmm, not sure what rock she has been living under, but SUM is listed there already.  Doesn't inspire me with any confidence that the new leader is any less incompetent than the last few.

Quite aside from that, some of their newer villages bear more than a passing resemblance to a glorified prison.  Other older villages have lots of expensive issues.

For me, you can divide RYM corporate existence up into two very distinct parts, while they had the excellent management services of Simon Challis and dominated the market, and ever since when competition has become rampant, and the caliber of management is a pale shadow of what it once was.
I called it a SELL 11 years ago in 2014 at ~ $9, three times the price it is now and have never seen any good reasons to change my view.