MPG - Metro Performance Glass

[Crackity]

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.

Excellent post Bulltrap

Nice

And no you haven't encouraged me to buy any

[Greekwatchdog]

Liquidate it already. They need a miracle, but wait Xmas is less than 3 months away

[Shareguy]

Great post Bulltrap. I noted a lack of information released with the agm presentation to the NZX. It's a cluster with Cowes not a done deal yet. In the meantime Fletchers and others suggest the building decline is going to continue for a while yet.

[Popeye]

My patience ran out a couple of years back.  I did not have confidence that management could achieve a turnaround in the face of increased competition and a difficult market with a growing debt burden.  When your options to create some debt headroom are a CR when your SP is sinking like a stone, or selling your best performing business you need some entrepreneurial magic which I did not and do not see. 

The business needed (needs) to be nimble and a battler, but the listed corporate setup is a barrier to that.  They should have done an MBO or gone private years ago.  They are now a medium sized business which does not benefit from being on the NZX.  The board were foolish turning down that offer, quite why they thought the business was worth more is hard to gauge from the outside, thought they knew best and they clearly did not.  They are surplus to requirements

I hope they get some favourable winds (luck) to survive, but I remain happy I took a deep breath and elected to cut my losses.  It must have been an excruciating experience watching on for those who elected to believe in the never ending turnaround story...

[bulltrap]

1H25 results in.

Served with waffle...

When I think about the business performance, I do not dwell a great deal on the market. Our focus has been on our turnaround and the restructuring, reducing our cost base and our market positioning for success in the future. We are focused on getting quality product to our customers in full and on time.

... and a kinda-sorta update on the overdue cap raise:

Our banking syndicate remains supportive, continuing to ensure the company has the time and space to raise capital and complete the NZ turnaround. Our facilities have been extended to the end of February 2025 as we work through the complexities associated with the announced transactions as well as consider appropriate alternatives. There is more on our plans to follow, but it is fair to say we have confidence to ask shareholders to invest again.

[winner (n)]

The old tell the bad news after close and hope nobody will notice trick ...trouble is they didn't wait until Friday lol

Enuff said

https://announcements.nzx.com/attachment/433107.pdf

[Minimoke]

The old tell the bad news after close and hope nobody will notice trick ...trouble is they didn't wait until Friday lol

Enuff said

https://announcements.nzx.com/attachment/433107.pdf

Gee 10 years ago MPG was trading around $2.00. Now its $0.05

[BlackPeter]

Gee 10 years ago MPG was trading around $2.00. Now its $0.05

Which is a CASR (Cyclical Annual Shrink Rate) of more than 44% pa. Pretty good in anybody's book - as long as you are a shorter.

[winner (n)]

Which is a CASR (Cyclical Annual Shrink Rate) of more than 44% pa. Pretty good in anybody's book - as long as you are a shorter.

MFB had a CASR higher than that not that long ....but has recovered to be only about 40% pa at the moment

Pretty good in anybody's book - as long as you are shorter 😀 😆

[Shareguy]

What a surprise...

https://www.nzx.com/announcements/443779

Meanwhile we replace another panel courtesy of Metro.

[winner (n)]

Seems Cowes. Bay no longer part of Metro's future unless I interpreted " Discussions with Cowes Bay are now at an end."

Anyway $15m capital raise on way ...but it sounds expensive exercise

[Shareguy]

Yes Winner.  Debt extension was to 28th of Feb 25. So we have a declining market and very high debt. I just wonder how much interest there will be in a CR.  Hope it survives....

[Basil]

Yes Winner.  Debt extension was to 28th of Feb 25. So we have a declining market and very high debt. I just wonder how much interest there will be in a CR.  Hope it survives....

Who in their right mind would bother given their appalling track record.

[Minimoke]

Who in their right mind would bother given their appalling track record.

I dont see a Chinese White Knight on the horizon. Youd ne mad to throw money here - but there are some who like a gamble.

[winner (n)]

Metro could do a My Food Bag and have a sort recovery to get punters excited