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  1. #31
    ShareTrader Legend Beagle's Avatar
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    Quote Originally Posted by winner69 View Post
    Thanks Peat

    First paragraph says maybe ....but second says NO (as a SPP)

    Immaterial - dilution was about 10 million shares on top of 74 million shares - quite a lot I reckon. The $3.75 would be reduced to about $3.26 (my calc) in theory to keep things fair (?)

    If second paragraph is the gospel according to Turners then have we been 'screwed'?
    No question whatsoever that bondholders have been materially disadvantaged.
    No butts, hold no mutts, (unless they're the furry variety).

  2. #32
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    Quote Originally Posted by Beagle View Post
    No question whatsoever that bondholders have been materially disadvantaged.
    The counterpoint is that:

    1/ Bondholders have been offered the wonderful chance of buying some new 'extra' TRA shares at $3.02, something that wasn't envisaged at bond issue time. AND
    2/ Come the time when the bonds are due to mature, in a years time, those extra shares that you bought at $3.02 will be shown to have been issued at a wonderful discount to the expected $3.75 conversion price for shares at bond maturity. WHILE
    3/ Bondholders have collected stellar 6.5% gross interest for the two years they had the privilege of holding those TRAHB bonds.

    "A real win-win-win for bondholders!"

    Or from the perspective of the other Beagle who doesn't consider $3.02 cheap and doesn't consider a 6.5% gross bond return adequate for the risk taken:

    "A real whine-whine-whine for bondholders!"

    The difference between the two points of view is confidence. You have to be confident that management will continue to do what they say they will do. If you are confident, then all puffed up risks disappear. Simple. ;-P

    SNOOPY
    Last edited by Snoopy; 27-09-2017 at 02:30 PM.
    To be free or not to be free. That is the cash-flow question....

  3. #33
    ShareTrader Legend Beagle's Avatar
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    New Zealand shareholders association were deeply unimpressed with how quickly the issue was done and the methodology used. Behind the paywall article on NBR questioned what was the rush and said no satisfactory explanation had been forthcoming.

    My point is that I shouldn't have to throw them more bones to compensate for the fact that the conversion terms on the ones I've already leant them have become less attractive.
    How do you have confidence in a company that waters down the terms of the deal you already have with them ? Why would you give them more capital to play with when they don't play fair with the money you've already loaned them ? This issue waters down the chances of the bonds being in the money at conversion date, that's in plain sight for anyone thinking objectively about this and disregarding the specific terms and idiosyncrasies of the bond offer document is a direct violation of the principle's of natural justice of the bondholders.
    There is no way I will do further business with a company that conducts itself in that manner. I look forward to asking for my bondholder money to be redeemed in cash on conversion date.
    Last edited by Beagle; 27-09-2017 at 03:53 PM.
    No butts, hold no mutts, (unless they're the furry variety).

  4. #34
    percy
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    Quote Originally Posted by Beagle View Post
    New Zealand shareholders association were deeply unimpressed with how quickly the issue was done and the methodology used. Behind the paywall article on NBR questioned what was the rush and said no satisfactory explanation had been forthcoming.

    My point is that I shouldn't have to throw them more bones to compensate for the fact that the conversion terms on the ones I've already leant them have become less attractive.
    How do you have confidence in a company that waters down the terms of the deal you already have with them ? Why would you give them more capital to play with when they don't play fair with the money you've already loaned them ? This issue waters down the chances of the bonds being in the money at conversion date, that's in plain sight for anyone thinking objectively about this and disregarding the specific terms and idiosyncrasies of the bond offer document is a direct violation of the principle's of natural justice of the bondholders.
    There is no way I will do further business with a company that conducts itself in that manner. I look forward to asking for my bondholder money to be redeemed in cash on conversion date.
    I am sure other bond holders will feel the same way.
    It is in TRA's interest to have happy bond holders,who will continue to support future larger issues.
    The trust I help out on holds both TRAHBs and TRA shares.They are held in Hobson Wealth "custodial services".We have instructed them to apply for $15,000 spp via TRAHBs and $15,000 via TRA's.Be interesting to see if we get both.?
    It will be interesting to compare the "full" returns from holding TRAHBs compared with other bonds the trust holds,when the TRAHB's mature.At least at that time, the trust will have the option to take cash or shares.

    PS.Bit early, but I posted the wife's and mine cheques away today for the SPP.Applying for the full amount for both of us.
    Last edited by percy; 27-09-2017 at 04:56 PM.

  5. #35
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    Quote Originally Posted by Beagle View Post
    New Zealand shareholders association were deeply unimpressed with how quickly the issue was done and the methodology used. Behind the paywall article on NBR questioned what was the rush and said no satisfactory explanation had been forthcoming.

    My point is that I shouldn't have to throw them more bones to compensate for the fact that the conversion terms on the ones I've already leant them have become less attractive.
    How do you have confidence in a company that waters down the terms of the deal you already have with them ? Why would you give them more capital to play with when they don't play fair with the money you've already loaned them ? This issue waters down the chances of the bonds being in the money at conversion date, that's in plain sight for anyone thinking objectively about this and disregarding the specific terms and idiosyncrasies of the bond offer document is a direct violation of the principle's of natural justice of the bondholders.
    There is no way I will do further business with a company that conducts itself in that manner. I look forward to asking for my bondholder money to be redeemed in cash on conversion date.
    Hi Beagle,

    If you had done some serious due diligence you will see that TRA when they were DPC have previously in the opinion of some "shafted" bond holders. The DPC010's (I think from memory were called 010's) were repurchased at below par or something like that..... I do not have all the details at hand but I know that a colleauge sold DPCOB's to purchase bonds and was ropable when the options shot up and the bonds went down because of the actions of DPC.

  6. #36
    percy
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    Quote Originally Posted by blackcap View Post
    Hi Beagle,

    If you had done some serious due diligence you will see that TRA when they were DPC have previously in the opinion of some "shafted" bond holders. The DPC010's (I think from memory were called 010's) were repurchased at below par or something like that..... I do not have all the details at hand but I know that a colleauge sold DPCOB's to purchase bonds and was ropable when the options shot up and the bonds went down because of the actions of DPC.
    Was this before WW1 or WW11 ?

  7. #37
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    Quote Originally Posted by Beagle View Post
    This issue waters down the chances of the bonds being in the money at conversion date
    'The SPP issue and placement' waters down the chance to buy shares at a 'super discounted' price, should the TRA share price at the conversion date be more than $3.95 (triggering the $3.75 conversion price ceiling). But it doesn't water down the chance of the bonds being 'in the money'. Because the offer to purchase shares using the bond money at bond maturity still stands. And those shares will still be issued at a 5% discount to the prevailing share price, whatever that price may be. The lower the prevailing share price at bond maturity time, the more shares the bondholder gets. Granted most of that 5% discount would evaporate if the bondholder wanted to sell their newly acquired shares in a hurry. But why would they want to do that, when the option exists for a full cash repayment of the bond at face value?

    There is one more benefit for bondholders that deserves a mention. That is the opportunity to get in on the ground floor for a helping of new TRAHC bonds should Turners see fit to issue such a thing. I am betting TRAHC bonds will be a reality.

    SNOOPY
    Last edited by Snoopy; 27-09-2017 at 07:20 PM.
    To be free or not to be free. That is the cash-flow question....

  8. #38
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    Quote Originally Posted by percy View Post
    Was this before WW1 or WW11 ?
    Yeah about 2012, 2013 or thereabouts....

  9. #39
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    Quote Originally Posted by blackcap View Post
    Yeah about 2012, 2013 or thereabouts....
    So well before TRA days.
    In late 2013 the present directors took control of DPC and had a lot of cleaning up to do.
    In fact DPC only survived because they fronted up.
    Come a long way since they took control.

  10. #40
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    Quote Originally Posted by percy View Post
    So well before TRA days.
    In late 2013 the present directors took control of DPC and had a lot of cleaning up to do.
    In fact DPC only survived because they fronted up.
    Come a long way since they took control.
    Correct, and DPC survived because they did front up. I just know that at the time it was not all kosher in the eyes of a few what happened. They did not need to do what they did. Some of the directors that were there then are still here now. Not saying they are implicit, just stating let the buyer beware. I know back then too the actions did wonders for the share price, it was bond holders who felt disadvantaged. As a shareholder myself I was not concerned. However my friend who had sold his shares (options) to buy the "less risky" bonds (to keep the same $ investment in DPC) felt he lost a lot of money and we are talking in the $100,000's here. So he was mightily ropable.

  11. #41
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    Quote Originally Posted by Snoopy View Post
    'The SPP issue and placement' waters down the chance to buy shares at a 'super discounted' price, should the TRA share price at the conversion date be more than $3.95 (triggering the $3.75 conversion price ceiling). But it doesn't water down the chance of the bonds being 'in the money'. Because the offer to purchase shares using the bond money at bond maturity still stands. And those shares will still be issued at a 5% discount to the prevailing share price, whatever that price may be. The lower the prevailing share price at bond maturity time, the more shares the bondholder gets. Granted most of that 5% discount would evaporate if the bondholder wanted to sell their newly acquired shares in a hurry. But why would they want to do that, when the option exists for a full cash repayment of the bond at face value?

    There is one more benefit for bondholders that deserves a mention. That is the opportunity to get in on the ground floor for a helping of new TRAHC bonds should Turners see fit to issue such a thing. I am betting TRAHC bonds will be a reality.

    SNOOPY
    You need a super discount if you can call it that for any new shares on bond conversion to be in the money if recent market evidence is reliable. Shares were $3.40 or thereabouts for quite a while and are now $3.20 or thereabouts which is a 6% SP decrease through the current capital raise and we're not done yet. There's also the chance more shareholders will sell in the next few days to fund their SPP entitlement and more selling after the SPP shares are issued as some shareholders look to work the arbitrage between the current SP and $3.02.

    I agree 100% that the likelihood of a new issue of TRAHC is extremely high and as you quite rightly point out the current bonds confer preference on a future issue of same, (for whatever that's worth) which in light of the history that Blackcap has kindly reminded me of, it would appear to be very little.

    Get bitten once through lack of deep research is one thing but to expose yourself to being treated inequitably a second time, that's one's own fault. Any way you slice and dice this bondholders are being treated inequitably. The premium to par the bonds have been trading at has vanished and that is clear market evidence that bondholders prospects for a capital gain on conversion has sharply diminished. I will take the 6.5% return and while I won't absolutely commit to a course of action at this stage, at this point I am strongly inclined towards investing elsewhere next September. 9% EPS growth this year, (even if achieved) doesn't overwhelm me with enthusiasm.

    Quote Originally Posted by blackcap View Post
    Correct, and DPC survived because they did front up. I just know that at the time it was not all kosher in the eyes of a few what happened. They did not need to do what they did. Some of the directors that were there then are still here now. Not saying they are implicit, just stating let the buyer beware. I know back then too the actions did wonders for the share price, it was bond holders who felt disadvantaged. As a shareholder myself I was not concerned. However my friend who had sold his shares (options) to buy the "less risky" bonds (to keep the same $ investment in DPC) felt he lost a lot of money and we are talking in the $100,000's here. So he was mightily ropable.
    Thanks mate, appreciate your background reminder on their darker historical days. Makes another motor vehicle company's 99 year solid history look even more compelling by comparison doesn't it !
    Last edited by Beagle; 28-09-2017 at 09:16 AM.
    No butts, hold no mutts, (unless they're the furry variety).

  12. #42
    percy
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    [QUOTE=



    Thanks mate, appreciate your background reminder on their darker historical days. Makes another motor vehicle company's 99 year solid history look even more compelling by comparison doesn't it ![/QUOTE]

    Your "pure angel" had some very dark history that I know about in the 1960s,and some very funny dark stories were told of the 30s,40s and 50s..And those were at just one of the reputable dealerships.!!
    Don't go there.!..lol.
    Last edited by percy; 28-09-2017 at 10:05 AM.

  13. #43
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    Quote Originally Posted by Beagle View Post
    You need a super discount if you can call it that for any new shares on bond conversion to be in the money if recent market evidence is reliable. Shares were $3.40 or thereabouts for quite a while and are now $3.20 or thereabouts which is a 6% SP decrease through the current capital raise and we're not done yet. There's also the chance more shareholders will sell in the next few days to fund their SPP entitlement and more selling after the SPP shares are issued as some shareholders look to work the arbitrage between the current SP and $3.02.

    I agree 100% that the likelihood of a new issue of TRAHC is extremely high and as you quite rightly point out the current bonds confer preference on a future issue of same, (for whatever that's worth) which in light of the history that Blackcap has kindly reminded me of, it would appear to be very little.

    Get bitten once through lack of deep research is one thing but to expose yourself to being treated inequitably a second time, that's one's own fault. Any way you slice and dice this bondholders are being treated inequitably. The premium to par the bonds have been trading at has vanished and that is clear market evidence that bondholders prospects for a capital gain on conversion has sharply diminished. I will take the 6.5% return and while I won't absolutely commit to a course of action at this stage, at this point I am strongly inclined towards investing elsewhere next September. 9% EPS growth this year, (even if achieved) doesn't overwhelm me with enthusiasm.



    Thanks mate, appreciate your background reminder on their darker historical days. Makes another motor vehicle company's 99 year solid history look even more compelling by comparison doesn't it !
    No worries, but I must add a disclaimer that I too hold TRA bonds (well my partner does but I do the decision making there) and TRA shares. Bit disappointed that they are not changing the terms but sorta expected that too. Still think the shares will do very well in the coming years and happy to be a holder and topping up at $3.02.

  14. #44
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    Below is a straight copy of a most of mine on the TRA 'equity' thread. I think it is significant enough to be a 'must read' for bondholders.

    Quote Originally Posted by Fox View Post
    My apologies for the confusion, the distribution from the trust to Turner's has the lowest seniority after the more senior tranches are paid first. The reverse occurs for credit losses as well, any bad debts or impairments are covered by the lowest tranches first i.e. Turner's, then any remainder credit losses beyond that tranche are shared with the next tranche i.e. BNZ. This is why the finance receivables are still reported on the Group's balance sheet as they still retain the substantial risks and rewards of those loans.
    OK, the fact that Turners are last on the waterfall to get the rewards of the Securitization but first on the waterfall to absorb the losses of the Securitization makes much more sense. Thanks.

    The bonds referred to were the TRAHB sub notes of $25m that are held as security over the trust. These, along with other assets, provide that buffer to absorb any potential credit losses before BNZ up to the agreed upon 8% contribution by Turner's.
    In the March 2018 newsletter (p1), Turners are looking to extend their securitization facility in the future to $250m.

    8% of $250m is $20m.

    There are just over $25m of TNRHB bonds outstanding. So there are more than enough bonds to satisfy the Turners Automotive Group Guarantee (amounting to 8% of the securitized loan balance) of the 'Turners Marque Warehouse Trust 1' (the loan securitization entity).

    However the quantum of current loans securitised at EOFY2018 balance date has not yet been disclosed. As at the half year it was $117m. So it seems not all of the TNRHA bond capital is required to guarantee the securitised loans.

    I had another look at the bond prospectus and found this quote on p21

    "The Turners Groupís primary finance activities include the Bank Borrower Finance Companies which rely on borrowers to repay their loans and make interest payments on due date. The Bank Borrower Finance Companies take security over assets to secure most of the loans they make. However if a borrower fails to repay the loan on its due date and the value of the secured asset (if the loan is secured) and/or the amount recovered under any guarantee is insufficient to cover the outstanding payments, the relevant Bank Borrower Finance Company will make a loss on that loan (credit risk). If this occurs in relation to a significant number of loans, Turners may default with its lenders (including Bondholders)."

    From what Fox is saying, it seems that as the quantum of organized loans goes up so does the quantum of TNRHB bonds tied to supporting those loans. So rather than TNRHB bonds being used as 'general loan capital' to support the wider activity of the group, we are heading for a situation where the TNRHB bonds support securitized car loans only. Thus it appears to me that the underlying risk profile of the TNRHB bonds is changing over time. It does look to me as though they have become riskier!

    SNOOPY
    To be free or not to be free. That is the cash-flow question....

  15. #45
    Guru peat's Avatar
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    certainly their price has decreased to reflect some change in their value

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