Author Topic: RHDGF - Retail Holdings  (Read 27342 times)

Hielko

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Re: RHDGF - Retail Holdings
« Reply #80 on: September 27, 2018, 02:14:41 AM »
He's off on the Bangladesh shares. Most importantly he forgets to mention that there are sale restrictions on the 15m non-remittance shares held by Sewko. Apart from that it's a nice summary.
He does mention it in the last paragraph, but I think he does take that issue a bit too easy. I think there is a real risk that these shares are more or less worthless. I doubt you can just sell them to local investors to get around the non-remittance restrictions. Otherwise the solution to the accumulated cash is also quite easy. Just sell the cash to a local investor... and ka-ching! the local investor pays you. The whole idea of non-remittance is that there is no cash going to go from Bangladesh to the outside. So the sole value of the shares and accumulated cash is more or less the possibility that at some point things change in Bangladesh. Which might take a very very long time since these shares were already created decades ago, and so far nothing...
« Last Edit: September 27, 2018, 02:31:36 AM by Hielko »


writser

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Re: RHDGF - Retail Holdings
« Reply #81 on: September 27, 2018, 04:05:56 AM »
Indeed, they way I read it the blogger only thinks the dividends can't leave the country and is not taking into account the fact that selling these shares and repatriating the proceeds is impossible too. So yeah, he's way too optimistic. I think a big haircut is appropriate as the Bangladeshi government has no incentive to 'go easy' on the non-remittance shares. That would make them look stupid (and investable money would flow out of the country).

But I think you might be a bit too pessimistic:

1. A Trumpian "terrific deal" would be an improvement over the current situation for both parties: i.e. Sewko agrees to pay a ridiculous amount of taxes over a sale to allow repatriating proceeds. Even a hypothetical 75% would be fine for shareholders at current prices (and surely juicy for the Bangladeshi government). Not sure how likely this scenario is but I wouldn't rule it out completely. Literal quote from a press release last year: "[..] a restriction that the Company is seeking to eliminate or modify."
2. "These shares were created decades ago, and so far nothing". True, but the relevant question is whether Retail Holdings has been actively trying to find a solution to this problem before. You don't start negotiating this issue without good reason (which the company now has: it wants to liquidate). I.e. you don't buy non-remittance shares and contact the government a year later to lift restrictions 'just in case'.
3. Retail Holdings still maintains that they will commence the 'ultimate liquidation' of the company within one or two years and the CEO has a huge position. The company seems to think a solution will be reached and given that the value of the non-remittance shares is substantial I don't think that solution will be: fuck it, they're worthless.

We can argue over what haircut is fair but even if you apply a 75% haircut your expected IRR won't be too bad given that they will probably return a significant amount of capital in 2019.

This is all just armchair theorizing so take it with a grain of salt.
« Last Edit: September 27, 2018, 04:13:49 AM by writser »
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Foreign Tuffett

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Re: RHDGF - Retail Holdings
« Reply #82 on: October 15, 2018, 07:44:12 AM »
RHDGF's remaining stake in Singer Sri Lanka has been sold.

http://www.retailholdings.com/pressReleases/pressReleasesFile_170.pdf

writser

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Re: RHDGF - Retail Holdings
« Reply #83 on: October 15, 2018, 07:46:35 AM »
You beat me to it. Sale was expected but still nice to see the money in the bank.
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.