TRA - Turners Automotive Group [previously TNR - Turners Limited]

[Beagle]

Well, you can - just depends what you want to demonstrate.

My point was: Given that even a gold star company like SUM had periods of quite ugly looking TA does it seems dangerous to assess a companies health just based on latter.

Okay I see you point now. Yes last November was a grim time. I clung on like a sick dog hanging in their by the skin of its claws to my SUM shares when things got really ugly and I'm really glad I did. Suppose Percy knows the feeling a bit seeing as this was $3.60 years ago and meanwhile the market has roared away....

[percy]

Yes the underlying business is doing very well but they need to get tough on themselves and really commit to no more dilution.

Anyone knowhow difficult or what the chance of them improving their credit rating to get lower cost of capital is?

The message at their presentation was that they had already got "tough on themselves and really committed to no more dilution." This has been borne out by the fact the new bond issue will not be convertible.
Credit rating.Always helpful,but in today's low cost of funding I think it is more important to concentrate on their very high NIM [net interest margin] which is over 9%.
Should TRA want to raise capital in the future, I think we will see a pro-rata rights issue,after their last capital raise attracted widespread criticism.

[Patient Panda]

Thanks Percy. I was reading an article yesterday and was surprised to see Z energy bonds were 4% whilst TRA at 5% and whilst they’re obviously very different business a 1.5% differential is fairly substantial and even a small reduction in TRA cost of capital would surely be a huge gain to NPAT

forgive my ignorance but whats the advantage of a pro rata rights issue? Thats still issuing new shares isn’t it?

[percy]

Thanks Percy. I was reading an article yesterday and was surprised to see Z energy bonds were 4% whilst TRA at 5% and whilst they’re obviously very different business a 1.5% differential is fairly substantial and even a small reduction in TRA cost of capital would surely be a huge gain to NPAT

forgive my ignorance but whats the advantage of a pro rata rights issue? Thats still issuing new shares isn’t it?

Yes/no/maybe.It is funny how rising interest rates actually do not hinder firms such as TRA.Yes borrowing at a lesser rate would improve profit,however they are still not paying over the top for funds.
SSP.Everyone can apply for $15,000 worth,whether you have a 100 shares or 100,000 shares.Last time those with 100 shares received very few,while those with 100,000 received $15,000 worth of shares.
Rights issue.Now a 1 for 10 rights issue,or whatever 1 for 5 etc means everyone has a fair go based on the number of shares they hold.
Should it be an renounceable rights issue you can sell your rights,should you decide not to take them up.
Both TRA and HBL received a great deal [rightly]of criticism from NZ Shareholders Assn when they did placements and SPPs.Both companies realised their mistake.

[winner69]

I guess the question is - is it better for them to have more equity or more loans on the balance sheet? Any conversion will reduce their leverage, which is good if you feel that they carry currently too much debt. Obviously - it means as well dilution, which is not necessarily good for existing share holders.

If the new bond pays 5.5%, than a low conversion rate would be good for shareholders if the company makes in average more than 5.5%, which they do. I.e. following this argument a low conversion rate would be good for existing share holders and the share price.

On the other hand could a low conversion rate point to limited investors confidence in the share price of the company (otherwise - why would you not convert) - I.e. a high conversion rate would point to high confidence, which again is likely to push the share price up.

No matter what it is - it might be seen as a win-win as well as a lose-lose .

In reality I think the conversion rate will be somewhere in the middle ... and it should be all good.

What is their ROIC?

[BlackPeter]

What is their ROIC?

Sorry - not a bean counter and unfamiliar with this term. Their RoE was last time I checked 10.9%;

[percy]

Brought more at $2.96 today.
{ No Couta1, not the 150,000.}

[JayRiggs]

I've been buying the past few weeks myself around $3.
We are well positioned for the dividends due in about a month!!!

[winner69]

this from Turners the other day about the proposed new bond offer —

In the event of any scaling of applications, Turners intends to give preference to Existing Convertible Bondholders who are New Zealand resident and who have not elected to convert their Existing Convertible Bonds. Turners intend to allow such holders to request that Turners apply some or all of the redemption proceeds from their Existing Convertible Bonds to subscribe for New Bonds.

Is this the bribe to try to minimise the number converted to shares

Can’t have too much dilution can we

[Beagle]

Decision day tomorrow on Turners bond election, (allowing 3 clear days for mail delivery to registry to be sure of delivery on time).
SP is currently slightly below where i see the 90 day VWAP up to this point.
What to do Hmmmmm…... Might take half in cash and half in shares and can then only be half wrong lol