MPG - Metro Performance Glass

[BlackPeter]

I can think of a couple who could buy it then integrate with existing business.

From memory they still own the property so if thats the case sell and and lease back.

You would be brave to buy and take on challenge and start from scratch.

Didn't FBU circle at some stage, but they might be currently short of cash as well?

Ah yes - and the geniuses who used to run the board last year rejected a $33m take over. This would have given them the current market cap plus the 15m they are now seeking :

But anyway - you are right, there is a lot of value - customer base, industry connections, distribution chain, ...

On the other hand, they do have a lot of debt - have a look at their balance sheet, and interest rates are high these days.

And while they automated a lot of their production, they optimized it for the NZ typical architect designed houses - their factory works most efficient when every window is unique. Not optimised for mass production.

I suppose that the only way to really get rid of our housing crisis is to standardise houses - and in this case they will find it hard to compete against cheap windows imported from e.g. China.

So, yes, there might be potential value, but there are as well high risks for anybody who dares to get in.

[Greekwatchdog]

Didn't FBU circle at some stage, but they might be currently short of cash as well?

Ah yes - and the geniuses who used to run the board last year rejected a $33m take over. This would have given them the current market cap plus the 15m they are now seeking :

But anyway - you are right, there is a lot of value - customer base, industry connections, distribution chain, ...

On the other hand, they do have a lot of debt - have a look at their balance sheet, and interest rates are high these days.

And while they automated a lot of their production, they optimized it for the NZ typical architect designed houses - their factory works most efficient when every window is unique. Not optimised for mass production.

I suppose that the only way to really get rid of our housing crisis is to standardise houses - and in this case they will find it hard to compete against cheap windows imported from e.g. China.

So, yes, there might be potential value, but there are as well high risks for anybody who dares to get in.

Private Equity own one of their major competition and we all know they live off debt. Synergies would be huge.

As for Chinese windows, you need to remember NZ market is unique where the home owner wants there own thing so generally we make what ever the client wants. It will work in some cases, but not all and we aren't a big market.

Also the introduction of H1 means the specs are super regulated.

This is the same for European windows and PVC.

[Minimoke]

I've got a cool $hundred mill or so lying around. I wonder, should I put it to Synlait Capital Raise or Metros capital raise.

Gee, so many choices on the NZX

[BlackPeter]

I've got a cool $hundred mill or so lying around. I wonder, should I put it to Synlait Capital Raise or Metros capital raise.

Gee, so many choices on the NZX

MPG wants only 15m (which would give you at estimated 4 cents per share) a two thirds voting majority - i.e the company would be basically yours for a bit of change. The remaining 85m might be enough to buy out Synlait (current market cap below $100m - i.e. $85m will go a long way).

The options from there are endless - you could build a huge MPG glass roof across the Dunsandel plant and convert the place into the First NZ business museum.

Given Dunsandel is along one of these tourist routes - there might be the odd visitor finding his or her way and learning about business opportunities in New Zealand ...  - well, this is obviously assuming THL stays a going concern :

[BlackPeter]

Nobody following anymore? I guess sure - nothing for the fainthearted, but certainly a good place to observe the last handful of years of a slow train wreck ...

Anyway - I admit, it feels sort of morbid ... but I just like to keep following the once glorious organisations. Helps me to put everything some people say about the wisdom of the market into perspective. Hey - this used to be 8 years ago a $2 plus share, and only the sky was the limit.

FY-results are out - and nobody noticing that MPG did beat several of its previous records?

https://api.nzx.com/public/announcement/431921/attachment/419721/431921-419721.pdf

While it is not the biggest loss they ever recorded, they deliver this year their highest liabilities to asset ratio (78%) as well their highest loss per equity ratio (58.8%) - ever. Hey, this is something, isn't it, nearly as good as the market share they used to command in NZ ;  ?

Outlook pretty gloomy as well, but hey - they are now starting the CR process in earnest. No doubt this will fix it.

I still think that there is value for somebody who understands the industry and able to run a company, but not so positive for retail shareholders. Anyway -good luck to the new board, they will need it. Wondering how the old board now thinks about the Takeover offer they declined last year. Wasn't it around 17 cents per share? Looks like boards are as hapless in determining companies value as markets are.

[winner (n)]

BP ...Shoeshine in NBR did a piece on Metro today

Basically said what you outlined

https://www.nbr.co.nz/shoeshine/metroglass-outlook-cloudy-with-a-chance-of-free-falls/
Prob paywalled

[BlackPeter]

BP ...Shoeshine in NBR did a piece on Metro today

Basically said what you outlined

https://www.nbr.co.nz/shoeshine/metroglass-outlook-cloudy-with-a-chance-of-free-falls/
Prob paywalled

Gave up my nbr susbcription a long time ago ... just not enough value to justify the expense . To make things worse - after me giving notice they kept billing my Credit Card. Took some time and effort to stop them to take my money, i.e. not interested to get them charging again.

... but here you go - my posts are free  !

[winner (n)]

In 2006 Private Equity paid $350m for Metro Glass

In 2014 they hocked it off for $310 in an IPO ...to clear the debt

Nice yoy only need to front up with $2 for 13% of the company ( and lend them some cash)

Pretty amazing eh

https://api.nzx.com/public/announcement/437937/attachment/427058/437937-427058.pdf

Zillions of new 3 cent shares

[Shareguy]

Share price holding up. Not only have you a dilutive placement of new shares you have a cap raise at 3 cents.

[winner (n)]

Share price holding up. Not only have you a dilutive placement of new shares you have a cap raise at 3 cents.

And $10m/$15m only puts a little dent in the $50m debt they have

New shareholder becomes the lendern..... imagine that comes at an added cost as well

[Shareguy]

And $10m/$15m only puts a little dent in the $50m debt they have

New shareholder becomes the lendern..... imagine that comes at an added cost as well

Due diligence needs to be completed, so not a done deal yet. A lender of last resort who will no doubt have favourable terms for the debt. Not sure how many shareholders will be forking out. Cowes Bay might well get the 19.9 percent.

The good news is though hopefully this company will be saved. Will be interested in what Masfen and Wells do.

[bulltrap]

Will be interested in what Masfen and Wells do.

As per SSH announcements today, they're no longer pooling their holdings.

Fair to say they're not going to have another crack at a joint takeover.

Maybe they weren't aligned on working with Cowes Bay or supporting the cap raise? Could be a sign of regrouping.

[Shareguy]

As per SSH announcements today, they're no longer pooling their holdings.

Fair to say they're not going to have another crack at a joint takeover.

Maybe they weren't aligned on working with Cowes Bay or supporting the cap raise? Could be a sign of regrouping.

Yes I was thinking the same. It's anyone's guess and could go either way.

[bulltrap]

Yes I was thinking the same. It's anyone's guess and could go either way.

I suppose things get tricky around rights issues and takeover rules regarding creeping holdings above 20%.

With holdings separated, each of them can participate fully without much chance of exceeding 20% (even if overall uptake is low), and perhaps apply to take up some excess.

Renewing their partnership soon after the rights issue would look dodgy, but in the longer term maybe they could regroup for another attempt. Should they ever team up three-way with Cowes Bay, that could give them a de facto voting majority off the bat, in which case I can only hope minor shareholders are respected (c.f. SML).

[bulltrap]

I cringed my way through the annual shareholders meeting today - here are some of my notes and reactions:

CR offer documents will be issued within the next four weeks, and should include scenario projections through to 2027 (Shawn first called it a 'forecast' but dialled that back). The CR will allow oversubscription. After this, no further CR is planned. Although the CR doesn't directly address the debt mountain, and projections even have a near-term increase in debt, the plan is for the business turnaround to fund reducing debt.

Turning the NZ business around is expected to take 2-3 years.

As part of the growth plan for Australia, MPG is looking to purchase a plant from a failed processor. For New Zealand growth, Simon Bennett spoke highly of AGG CEO Steve Hamer, and how he'd had been increasingly tapping him for guidance in the New Zealand business. I had the impression that AGG hadn't yet been integrated with the New Zealand business, and that Steve was being offered a larger role. Some cost reduction measures in New Zealand mentioned were exiting the Bay of Plenty lease, and subleasing out the mothballed Wellington premises.

Regarding the canned AGG sale, Shawn revealed MPG had negotiated a 'not bad' offer for AGG, but ultimately declined on strategic grounds: 'don't sell your stars, instead fix your dogs'.

Cowes Bay will become 95% lender with a three-year facility from October. Terms sheets are already signed. Responding to a question on Cowes Bay's intentions, Shawn described Cowes Bay as not being a vulture, and claimed that it would be 'illogical' for Cowes Bay to pursue a predatory 'loan-to-own' scenario given that they are also taking an equity stake. I felt that commentary was disingenuous, noting the clarification that it was Cowes Bay who approached MPG, and that the McKendrick family do have a history of taking over companies at the receivership stage (Feltex, Armstrong Flooring). The Cowes Bay refinancing covers roughly the timeframe for anticipated turnaround - and after that, really who knows?

Answering the inevitable shareholder question, Shawn opined that rejecting last year's 18c per share offer looked foolish in hindsight, and that the 7c per share issue to Cowes Bay is at a 'good price' (presumably meaning, not a bargain). He says he doesn't know why the offer was rejected, and suggested asking the previous board. That was an odd brush-off - even if the board is so shambolic that the decision wasn't documented or reviewed, Julia was present throughout and could've fielded the question.

Cowes may appoint a director, but is as-yet undecided if it will. There had been no requests for a board seat from existing major shareholders (read: Masfen and Wells). Simon described major shareholders he had been in contact with as 'nodding' in agreement with the turnaround strategy.