Author Topic: ETR:PBY - Publity AG  (Read 9908 times)

Spekulatius

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Re: ETR:PBY - Publity AG
« Reply #10 on: October 17, 2017, 08:13:28 PM »
One more thing:  I can't seem to get the change in equity between periods to foot with net income and dividends paid.  I'm not suggesting anything nefarious here - I'm probably just making a mistake somewhere.  See the the bottom of the balance sheet on the attached excel file.

It seems to me the the difference they you are seeing is simply due to capital raised by issuing stock.
To be a realist, one has to believe in miracles.


ActOfWill

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Re: ETR:PBY - Publity AG
« Reply #11 on: October 18, 2017, 06:17:07 AM »
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actofwill-  thanks for your reply.  So are you saying that Gewinnvortrag = statutory capital, and German law forbids the company from paying dividends in excess of this amount? 

Apologies – I see my wording across the posts is confusing and that’s because I am clearly not an expert.
It’s the “Gewinnvortrag” + “Jahresüberschuss” only that can be paid out as dividend at the end of the year.  So only profits earned in the past or the current year, basically.

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Do you understand the difference between Gewinnvortrag and Kapitalrücklage (capital reserve)?  I think I understand the other two components of equity - Gezeichnetes Kapital is the issued shares at par value of one euro each, while Jahresüberschuss is the profit for that period (though I'm not sure why this a seperate line item and not allocated to the Gewinnvortrag and/or Kapitalrücklage.)

Kapitalrücklage is the amount at which shares have been issued above par value (which is EUR 1) historically. That amount can not be paid out as dividend.

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Lastly, I believe the dividend was paid in late June and therefore most of the 20m from the convert did actually go to pay the dividend in 1H17.   (I calculate the dividend was 16.94m = 6.05m shares * 2.80 ... not 18m as claimed by Valentum.).  I do see that they spent just over 12m on Sonstige Vermögensgegenstände (other current assets).  Is this what you're calling "other co-investments"?  If so, why?  I see no detail on this line item in the notes

I understood this from IR as cash waiting to be co-invested. All properties have individual LuxCos. During bidding these LuxCos are loaded with cash so from memory this is cash dropped down into these LuxCos until transaction consummation.

Given that only retained earnings can be paid out, technically the convert was raised to fund working capital (i.e. receivable balance) + co-investments of a fast growing business with a CEO committed to dividend pay outs. I see no issue with that given the statutory protection, seniority and full strike adjustment of the convertible. Receivables at Dec'16 should convert to cash by Dec' 2017 - if that does not happen I would start to get concerned.
 
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One more thing:  I can't seem to get the change in equity between periods to foot with net income and dividends paid.  I'm not suggesting anything nefarious here - I'm probably just making a mistake somewhere.  See the the bottom of the balance sheet on the attached excel file.

Agree with Spekulatius here – quick scan shows these are the years that capital was raised which I think is the only external event that can create this imbalance.

misterkrusty

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Re: ETR:PBY - Publity AG
« Reply #12 on: October 18, 2017, 07:19:46 AM »
thanks.  and good catch to spekulatius

ActOfWill

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Important Upcoming Bondholder Vote 13-15 November 2017
« Reply #13 on: November 10, 2017, 07:17:12 AM »
Important Upcoming Bondholder Vote

** We recommend Publity AG convertible note holders to VOTE YES ON THE COUNTER MOTION submitted yesterday for the note holder vote taking place the 13th to 15th of November. **

On the 3rd of November Publity posted a resolution to amend the terms of the convertible.

This initial proposal was quite drastic as it proposed to remove most important credit protections: the pari passu language, the negative pledge, the debt covenant and EUR 5m limit and the dividend stopper.

Apart from the fact that under statutory protections bondholders can not be forced to vote in favor of “chopping off their own legs” the market reacted badly and the bond price dropped to low 90s.

We ascertained that the vote in current form would be extremely likely to fail based on expected common sense behavior of bondholders and we decided to enter a dialogue with Publity to see what the story was.

It seemed their intentions were quite modest compared to the initial amendment proposal posted - which could be ascribed to stuff being lost in translation between management and lawyers.

In essence, we understood Publity would like to have more cash at hand for co-investments and other opportunities than that their current earnings can organically provide. We believe these opportunities to be genuine.

Based upon this we negotiated a counter motion that:

1) would preserve all the protections for bond holders,

2) except for an increase of the additional debt limit from EUR 5 to EUR 30m (so max EUR 80m in total including the convert), and

3) the note holders would waive Publity having to cure an over payment of dividend that occurred for the year 2016 (note that this dividend payment already lowered the strike price of the convertible), and

4) in return the note holders would get a strike adjustment to EUR 39 (with existing anti dilution mechanisms preserved) from the current strike price of EUR 41.58, or

5) failing a strike adjustment (due to a failure to get shareholder authorisation, which is unlikely as management owns +50% of the stock) the coupon would be increased to 5% from 3.5% currently.

This counter motion was subsequently endorsed by management and the bonds traded up to the 96-98 level. We think this counter motion represents a balanced approach where Publity can pursue more and quicker growth whilst convertible holders get a significant strike adjustment in return for the additional credit risk resulting from the extra leverage.

We would encourage other bondholders to vote in favor of the counter motion as well, especially given that proposals needs 75% of voters to vote yes.

The details of the vote can be found here:

http://www.publity.de/en/investor/investorrelations/convertible-bonds

Please be aware NOT to vote earlier than Monday the 13th of November, as any votes submitted too early will be invalid.

We happy to discuss and help out with any questions.
« Last Edit: November 10, 2017, 07:18:57 AM by ActOfWill »

Pondside47

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Re: ETR:PBY - Publity AG
« Reply #14 on: November 10, 2017, 12:52:48 PM »
For people who holds the convertible bonds, any idea where to obtain the Prospectus? Or is there a Prospectus for these type of German convertible bondsd? The documents published on Publity websites do not satisfy the compliance requirement of Charles Schwab, and they will not be able to buy the bond for me without the Prospectus. The IR department of Publity has not responded to my email.

ActOfWill

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Re: ETR:PBY - Publity AG
« Reply #15 on: November 11, 2017, 07:20:53 AM »
Hi  - if you click on the voting link you will find the latest prospectus - hopefully to be amended next week ... :

http://www.publity.de/en/investor/investorrelations/convertible-bonds

_JJ_

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Re: ETR:PBY - Publity AG
« Reply #16 on: November 21, 2017, 04:09:16 AM »
The quorum of 50% was not reached (47,6%), there will be a new vote where a 25% quorum will be enough. The vote is expected in the first two weeks of December.

whiterose

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Re: ETR:PBY - Publity AG
« Reply #17 on: November 24, 2017, 01:00:51 PM »
I researched the company almost a year or so ago, but was not impressed with the founder(-personality). Although I have no details about the current overall management team and their qualities. I don't really get the USP and the competitive landscape. If it is possible to achieve "above market" returns in this space, why isn't it more crowded?
It does not seem too difficult to replicate the business, there is no real moat(?)
How does the long term strategy look like?
Just my two cents on the matter..

_JJ_

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Re: ETR:PBY - Publity AG
« Reply #18 on: November 26, 2017, 08:28:12 PM »
I just read the new invitation to vote. It seems they are trying to amend the terms as they originally proposed. No mention of the counter motion terms management agreed to. ActOfWill, will you submit the same counter motion again?

ActOfWill

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Re: ETR:PBY - Publity AG
« Reply #19 on: November 27, 2017, 09:32:05 AM »
Yes we will. Preparing docs shortly - probably be out in the next 1-2 days.