Burntwood new issue

Got an email from iDealing yesterday late
Bruntwood who have a bond due for maturity 24 July 2020 have announced a replacement issue, same 6% due 25 February 2025. Why did they not just extend? Maybe terms are different.
Anyone familiar with the existing?
I do not hold having missed st the original issue date

Steve
«1

Comments

  • Sorry
    Predictive txt took over

    BRUNTWOOD
  • edited January 31
    extending needs permission from existing holders, replacement issue can be sold to new folks if the previous ones aren't interesting in staying invested, i guess that's why 6% coupon to make sure it goes smoothly, like ipf2 at 7.75%

    i haven't seen their financial statements, bru1 price chart suggests smooth sailing, though 6% is bit much for smooth sailing, haha
  • I need to see the last few years accounts at Companies House, but have not done so yet.
    Job for the weekend
  • I think that this is the best new issue for a long time. I have been able to sell a lower yielding issue at a good profit and use the monies to apply for this which will give a considerably bigger yield. I have seen the balance sheet for the group and the covenants and for myself I am content.
  • i think they add few years accounts within the prospectus itself, so you don't need to even go to Companies House website

    their stock price should have given any red flags, but in the absence of it, going through financial statements is probably required to make up for it, bru1 price chart should be sufficient for those short on time and with small size
  • From the Prospectus :

    Offer by Bruntwood Bond 2 plc to the holders of the £50,000,000 6.000 per cent bonds due 2020 issued by Bruntwood Investments plc to exchange their existing bonds for Sterling denominated 6.00 per cent. bonds due 25 February 2025 issued by Bruntwood Bond 2 plc and guaranteed by Bruntwood Limited and Bruntwood Management Services Limited..
  • Also :

    Each Existing 2020 Bondholder that participates in the Exchange Offer will receive £100 in nominal amount of Bonds for every £100 of Existing 2020 Bonds validly offered and accepted for exchange by the Issuer and in addition, will receive an exchange fee of £1.25 for every £100 in nominal amount of Existing 2020 Bonds exchanged for participating in the Exchange Offer in addition to any accrued interest payable to them.
  • given their terms seem generous, they should try to fulfil all the small orders first and then scale back the larger ones, this should help with achieving larger long term investor base
  • There seems to be a strage lack of discussion on this thread compared to the threads on previous issues. Is this because everyone is on a winter break or is interest on this site is beginning to wane ?

    The interest offered may seem high by current standards, but (as I read it) bondholders will be at the bottom of the list of creditors should anything adverse happen. The previous bond was secured against fixed assets.

    The 'Bond of the Week' review of the 2013 offering offers some good background information on the company and the sector, it can be found here :

    https://www.fixedincomeinvestor.co.uk/x/analysis.html?type=bond-of-the-week&cat=analysis-comment&y=2013&aid=1051

    LTV is at 48.7% which according to the article above seems average for the sector. To my untrained eye, the amount of fixed assets should provide enough cushion to cover current debts if waters get choppy, but what do I know ? I was an IT consultant, not a financial expert. Does anyone else have a view on this ?

    I will probably apply for the new bond from my ISA and let my 2013 bonds held outside my ISA carry on until the original redemption date.
  • Euro17, yes things are quiet on here as not too many new issues to discuss I guess. Anyway I waded through most of the 143 pages on this issue and you are right the security is not so good but in itself I don't see it's that bad an offer and at 6% think it will be successful. I'm almost certainly puting some into family ISA's. Their customer base looks a bit ' blue chip ' !?
  • Selftrade have offered holders of the 2020s the exchange - just about half an hour after I had queried what was happening!!! Continuation of a 6% payment plus the 1.25% incentive. I must forget that old saying about "if it looks too good to be true....." Seriously though this does seem like a simple decision.
  • I note that the LTV has reduced substantially over the last years and they are partnering with some big players in the property world. Having now read all the docs I noted that there is a comparison between to 2020 bond and this current one.
    One thing that puzzles me in that particular para (page 81of prospectus) is

    The Bonds will initially be unsecured. On and from the date the First Floating Charge is granted (expected to be 25 July 2020), the Bonds will benefit from floating charge security granted by the Parent Guarantor over all its assets. However, unlike the Existing 2020 Bonds, such assets will not include real estate assets or any other material tangible assets.

    I would have thought that the floating charge covered ALL assets or am I being obtuse or niaive here. Any thoughts?
  • whitebeard: floating charges are subordinate to fixed i.e. fixed charges take priority such that they get the first pay-out, floaters come afterwards. That's my understanding anyway.
  • As already pointed the security is not as good as the previous bond, however there are some good positive points.
    1) The term is for 5 years, and not as before 7 years, which I find more appealing
    2) LTV has from 2013 reduced from 64% to 48.7%
    3) Occupancy Rate, 2013 = 86%, Sept 2019 = 91%
    4) Net worth (Shareholders Funds) of the business has grown - 2013 £256m, 2019=£609m
    5) Reasonable Covenants ( I believe, but I'm no expert)
    6) Company Reporting - Accounts published 4 months end of year-end, 3 Months for their half-year

    Other Points
    1) Lead Managers (joint) - City & Continental - Oliver Butt, therefore I suspect we won't receive any write-up?
    2) Looks a very well managed business - employee focused!
    3) I participated in the 2013 bond, with a final disposal in September 2019 due to a low yield of 2.9% (price obtained 1.0251), thus indicating a low risk business!
    4) The reward of a 6% coupon, is I believe in line with the risk of default, however such a security need monitoring -
    With the lack of other Orb Bonds, I have placed orders which equate to 5% of my total portfolio (the maximum I adhere to any single security) and sold some of my undated securities, eg Pref Shares in the Insurance / Assurance sector (concerned re the Wuhan virus!). Gut feeling that this offer will close early
  • Thanks Dandi
    Yes my understanding too
    Perhaps its just the way its worded stating that it excluded real estate assets, in that its a comparison
    I have looked at the accounts and all the paperwork and concur with Shaun about this so have put in for slice
  • shaunm: great post. As you say, this could close early so we got in fast. Thank you. d
  • edited February 5
    ah, covenant-loose - 'the interest offered may seem high by current standards, but (as I read it) bondholders will be at the bottom of the list of creditors should anything adverse happen. The previous bond was secured against fixed assets'

    https://www.bloomberg.com/news/articles/2020-01-23/clos-are-packed-with-new-loopholes-triggering-investor-backlash

    Does the Parent Guarantor own these real estate assets or any other material tangible assets. Or those have been moved in some other ring-fenced entity.

    The problem with the lower 48.7% LTV is that it can be increased back to 64% by next selling senior institutional debt once this junior financing has been sold to retail suckers, haha, and there they'll be using these real estate assets or any other material tangible assets as collateral that has been shielded off from the retail suckers for now, haha, 6% makes total sense now, hmmm
  • As GliderPilot indicated, I fully support his view that this offer is the best for a long time. Provides a good opportunity to re-arrange one's portfolio (shorten average maturity). One of the key incentives of this offering is that it is only for 5 years! I have no problem with the floating charge (makes business sense for the company). Important for bond holders to monitor this holding for LTV %, hence my previous comment regarding re quick statutory reporting.
    Dandigirl, thank you for your comment
    Good that we still have a few contributors to this forum
    Sometimes when you read up on a company, one can by turned "off" or "on" by "general information", the Bruntwood Group provides a comfortable read!
  • shaum thank you too for your input on this issue and indeed all discussions, your comments/observations are always welcome along with other regular contributors. I think it is important that everyone should be encouraged to engage on this site because as has been mentioned by a number of people recently it is a source of some good sound observations/ideas and thankfully the tone of discussion/chat has mostly been pleasant without rancour. Some other sites have become just extensions of cheap and nasty Twitter type attacks and even worse Facebook style ' showboating' and and bragging.
    We just need some more new issues to talk about !

    Have a good day all.
  • edited February 5
    Being able to look through other people's eyes allows all of us to overcome our two big barriers - ego and blindspot - https://www.principles.com/principles-for-success

    rancour, cheap and nasty Twitter type attacks > Emotional Pressure
    Facebook style ' showboating' and and bragging > Financial Pressure
  • need some more new issues to talk about > inertia

    There is no shortage of potential opportunities that you could talk about instead.
  • "No Shortage of Potential Opportunities", sorry but within the UK Fixed Income Securities, I don't see many opportunities, more the other way. Most of us on this forum want fairly save and boring investments, possibly for their pension (whether held in a SIPP or ISA). Recently sold my Principality BS 7% (Callable 1/6/2020) holdings, due to possible call or re-set of coupon. The call didn't concern me, but the reset rate is 3% plus 5 year Gilt, the price would have dropped the price by a few percentage points. Sold at 96.75, not ideal
  • edited February 6
    within the UK Fixed Income Securities > inertia

    There is no shortage of potential opportunities outside UK Fixed Income Securities that you could talk about instead.

    fairly save and boring investments > Reducing Emotional & Financial Pressure

    Yes, breaking inertia brings emotional and financial pressure. That's why they say change is so hard, it's a trade-off : )
  • Well spotted pdepp! Not really a surprise in the current climate. Luckily for those of us holding the earlier bond and looking for a transfer the 'Exchange Offer' remains open until 18 February so perhaps a little nudge to Selftrade to make sure they get my exchange acceptance in before then.
  • Arjungaur, You could be right in some aspects, in particular as I have just taken a long punt on a small supplier of testing kits for the new Wuhan Virus, namely NCYT NOVACYT S.A. EUR1/15TH (CDI), went in at 46.2 - Saw an article this morning on the FT online.
    Good News regarding Bruntwood, in that it closed early.
    Also taken a short position on the FT100 using XUKS, in the last week, due to the Wuham virus causing massive disruption to international trade & travel, however the majority of my portfolio continue to be in boring Fixed Income securities.
    I can see places like Heathrow airport being shortly empty of travelers like Wuhan city centre or Hong Kong, due to the high risk of picking up the new virus.
    Cruise ships companies like P & O are going find it very tough going (all passengers & crew having, I suspect, to be tested before going on board)
  • edited February 7
    It's a mistake to close this offer early, given their terms seem generous, they should try to get as many orders as they can, fulfil all the small orders first and then scale back the larger ones, this should help with achieving larger long term investor base

    everyone should have figured out that this was likely to close early given such strong demand, nothing special shaunm could see that others couldn't see as well

    you don't have to worry about whether i am right in some aspects, or what my conclusions are, you just have to look through others eyes to see what they can see that you alone can't see - https://www.principles.com/principles-for-success

    NCYT is a good example of reflexivity where now the sudden price jump would attract buyers leading to self-reinforcing run up, but break your inertia quickly once the cycle reverses in the other direction - https://en.wikipedia.org/wiki/Reflexivity_(social_theory)#In_economics
  • edited February 7
    The problem with short position in equity market is the price action in S&P500 this week. It started last Friday with a bounce off the 50day moving average. Now the gap up on Monday immediately indicated that people had thought of this issue over the weekend and rejected the notion that it's not a good time to get invested because of this coronavirus. From there on we have been on a tear up. Tuesday open was a no-brainer from there on, it again gapped up, this time from 20day moving average and suddenly we are sitting on 100 points up in a week in midst of all this coronavirus. The recoveries column also popped up amongst all this - https://en.wikipedia.org/wiki/Template:2019–20_Wuhan_coronavirus_data

    SARS presented a similar picture, the activity just gets backloaded for the year. It's not a permanent hit, just rearrangement of the GDP for the year. And equities are great at looking through short term noise and discounting from the long term potential instead.

    Soleimani assassination was a similar story, it's a presidential re-election year, we are coming from a great year last year which is usually followed by another double digit year, sitting short here is not likely to work. Markets clearly want to go up, it's the path of least resistance and markets love to climb a wall of worry.

    Though long-short ideas should still work, long NCYT and short P & O, like the above rearrangement of the GDP, you just can't be short human potential overall : )
  • edited February 8
    Bar low security android can't seem to read/post here easily now. Shame as great posters and info here. Can't see problem with OB commenting on facts with no recommendation at end. Fund managers are allowed to say complete rubbish without facts and know nothing as most don't beat index. Woodford with HL saying how great he was, look at that outcome. I applied in size as seems ok to me, surviving the Manchester crash 50% says something. Once HL email arrived it closed so can see where demand is, but they have said £58m new bonds plus rollover so at say £100m liquidity will be better than bur1. My bet is new applications, not rolls, will be scaled back 33%
Sign In or Register to comment.