7:59 cut – BON, VNET, CRL

Bonmarché (BON) – Trading Update

Due to worsening trading and a potential qualification of the accounts by their auditor, the company now recommends shareholders accept the cash offer of 11.445p from Spectre Holdings Limited / Phillip Day, noting that Spectre need to give 14 days notice before closing the offer.

There is a small risk of Spectre invoking a Material Adverse Change (MAC) clause due to the downturn in trading. Additionally some shareholders might not want to wait for the offer to complete before receiving the money. These factors may push the bid price below 11.445p this morning.

I was foolish enough to hold these once, but smart enough to sell out on the day of the March profits warning.

Vianet (VNET) – AGM Trading Update

These look like strong figures, slightly ahead, however be aware that the company has been consuming cash of late and the rollout of new connections is may require further working capital.

I hold (large-sized position) and will be monitoring price this morning with a view to adding.

Creightons (CRL) – FY Results

This is a quick initial look.

Although I have not been able to find any official forecasts, today’s figures confirm the growth seen in H1 and expectations of larger private investors. A higher run-rate [edit: at least in profits] is likely to bake in further yoy growth for H1 2020, as is the recent acquisition and the outlook is positive.

While they are benefiting from capacity investments made earlier, as I noted at the time elsewhere, this only resulted in modest capacity improvements and further investment will be required imminently. If their products were to fall out of favour with customers or retailers then this investment would not be recouped. Furthermore, growth has and will continue to lead to increased inventories which both consumes working capital and increases exposure to potential write-downs. On the other hand, payables have grown remarkably slowly (probably reflecting the high gross margins) – if this is sustainable then this will support capital-light growth

I note that cash has fallen (before the small acquisition announced yesterday) while debt has been steady – the dividend hike may prove imprudent.

I hold (mid-sized position) and will be monitoring price this morning with a view to either adding or reducing. Note: Full market, not AIM.

[Edit: Good coverage of yesterday’s acquisition on today’s SCVP, some good stuff especially from Wimbledonsprinter in the comments, with more likely to come in the main section later today. To attend live webinar at 2pm email creightons@piworld.co.uk]

7:59 cut – BON

Bonmarché (BON) – Response to offer

Bonmarché have recently had a very bad run of trading in their shops, burning through their cash and putting their future existence into material doubt.

BM Holdings, of Sun Capital Partners, the private equity firm that took Bonmarché to market back in 2013 and still held over 50%, recently sold out Spectre (a Philip Day vehicle) at around a 40% discount to the then prevailing share price and a 95% discount to their first day’s closing price back in 2013. This required them to make a takeover offer for the remainder of the company at the highest price paid (in this case, the only price paid).

In today’s statement Bonmarché say that the offer materially undervalues the company and advise shareholders to take no action, as is customary. What is more interesting is that:

  • It took 8 working days to produce a holding statement.
  • They have been unable to positively engage with Philip Day in the meantime, implying that he has little confidence / interest in their turnaround plans.

This share is now a gambling chip rather than an investment, with many unknowns. But what we do know is that:

  • BM Holdings were willing to sell out at 11.445p. They may have been willing to sell for less. We may suspect they were a distressed seller, but importantly they now have no more shares to sell.
  • Spectre was willing to buy for 11.445p and may have been willing to pay more. Since they have more to buy this is of more relevance.
  • The price cannot fall below 11.445p during the mandatory offer period.

Therefore there is clearly an asymmetric upside from 11.445p, e.g. in the event of a sudden improvement in trading or an increased takeover offer. However for me, the current 15p price already reflects this.


I do not currently own shares in Bonmarché.