MPG - Metro Glass

[Fortunecookie]

Capital Management

Metroglass has begun to reduce working capital commitments in line with the improving reliability of the international supply chain and this is expected to materially reduce its investment in working capital through the first half of FY24. Metroglass’ net debt to EBITDA ratio decreased to 3.3x at 31 March 2023 from 3.8x in the prior period, primarily as a result of the increase in EBITDA. The net debt to EBITDA ratio is expected to continue to improve through the first half of FY24 through the improving performance of the New Zealand business and the unwinding of working capital invested in inventory. During the year, Metroglass concluded an extension of its current syndicated banking facilities out to the end of October 2024 (previously October 2023).

I see, thanks Rawz.

Yep let's wait and see. I am surprised that the banks agreed to it or they have given an ultimatum they need to sort it out within the next 12 odd months.

[Rawz]

I see, thanks Rawz.

Yep let's wait and see. I am surprised that the banks agreed to it or they have given an ultimatum they need to sort it out within the next 12 odd months.

Yeah they say sell Aus and pay us back...

A shame because Aus looks like it is finally after many moons making good money.

Looks like a sale will reduce debt by 2/3s ish

[Fortunecookie]

Yeah they say sell Aus and pay us back...

A shame because Aus looks like it is finally after many moons making good money.

Looks like a sale will reduce debt by 2/3s ish

Unfortunately it is a best case scenario. I don't think they are in a good position to negotiate on price.
That working capital is a real worry when they don't really have a debt facility to fall back on.

[winner69]

Share price hanging in there in the 14s but heading to new all time lows in the 13s

I keep checking the AFR for news of Aussie sale but nothing …but then shareholder Shepherd might do what he jokingly said he might do and acquire the whole company.

Maybe Forbar will come out and say what they said about PEB in that the longer it’s taking for a good outcome the higher the probability there will be one.

[Rawz]

Worth a punt you reckon W69?

What’s book value these days?

[winner69]

Worth a punt you reckon W69?

What’s book value these days?

Book Value about 46 cents ……say if they took a bit more goodwill impairment about 35 cenyts

Hmmm

[Leemsip]

I think the oz business is worth a lot less than Raws $40m odd (2/3 of debt).



I calculated a year or so ago that their GP is much less in the Oz business.

	NZ	OZ
Sales	177.99	58.077
Gross profit	77.1	16.488
Gross profit	43%	28%

Pretty skinny margins. I sort of think about 40% as being a minimum GP... Once you chuck in distribution and glazing costs (roughly half of GP?) and marketing and admin overheads and capex spend, it starts to look unprofitable.

I suspect (possibly with no base in reality) that they are now using some interesting accounting to skew all the profit towards Oz before they make the sale. A purchasor will see through this.

I think they will get about $20mish, so leaving the remaining business with $40m debt.

Anyway, super interesting to see what happens.

[Balance]

When a company sells its best asset to pay down debt, it usually means :

1. The banks are in control and they have lost patience and confidence so they just want their money back

and

2. The company is in survival mode. In this case, MPG will need to recapitalise its NZ operations unless it can get $60m+ for its Australian operations.

Un-investable.

[BlackPeter]

When a company sells its best asset to pay down debt, it usually means :

1. The banks are in control and they have lost patience and confidence so they just want their money back

and

2. The company is in survival mode. In this case, MPG will need to recapitalise its NZ operations unless it can get $60m+ for its Australian operations.

Un-investable.

Maybe they are just acknowledging that it was a mistake to make the jump to Australia in the first place. Many NZ companies made the step and came back with a bloody nose. Their home base is New Zealand, and they certainly knew how to make money here.

I think it is a mistake to look just at the risks and dismiss the opportunities without looking at them.

Yes, there clearly are risks, and on top of your points - they have a quite average CEO and a lame board.

On the plus side - I think they still command more than 50% of the NZ Glass market, they do have quite well equipped and automated factories (state of the art) and they have the largest and best nit logistical network in NZ as well all the connections with the building industry.

Hard to say, how much this is worth, but certainly more than nothing. While I am not sure the people who got them into the mud have as well the potential to pull them out of it - I am sure their tangible and nontangible assets (and connections) will be worth something for somebody.

So, yes - it is risky, but it certainly is not un-investible.

Just wondering what Peter Wells plans to do with his 10.9%?

Are you saying he is an idiot and put money into an in-investable enterprise? I guess we will see who will come laughing out of this episode.

[winner69]

And Masfen doesn’t like losing money either