Raven Russia

everhopeful

Raven Russia Preference shares are yielding around 9% at the current price. They are held in large numbers by the directors, Invesco and Neil Woodford. They do not appear on the list of Preference Shares on this site. The shares are liquid and the company has a large land bank as well as its established warehouses in major Russian cities. I am tempted to buy as the yield possibly reflects the risk but would value any comments from those with more experience.

Finn2

I have held these off and on for some time now. Apart from the obvious geopolitical risk, the only point I would make is that they are redeemable under certain circumstances, which explains some of the higher yield. As you imply, I have taken some comfort from some of the other holders.

Laughton

Quite a big holding for me, and I added more when yield was a bit over 10%.
They have recently or are about to issue more Prefs which will rank ahead of these. Am waiting to see what price these start at.

Recommended reading:-
http://boards.fool.co.uk/raven-russia-prefs-rusp-13015668.aspx?sort=whole#13391428

triceratops

I've held some of these for several years. From what I've read about the company it is well run. Recently they have issued some new preference shares which I believe subordinate RUSP. Have a read of the Motley Fool Banking Board for some further discussion on these. With Putins Russia nothing can be taken for granted though so I personally would not get too exposed.

everhopeful

Many thanks for these comments and for the link to extensive coverage on the Fool. I now have a toe in the water.

Laughton

Those new convertible prefs (RUSC) started trading today - 101/104 quoted, but so far only for very small amounts.

Laughton

Raven Russia results out today.

http://www.lse.co.uk/share-regulatory-news.asp?shareprice=RUS&ArticleCode=vuryixia&ArticleHeadline=Final_Results

I'm content to hold on to my RUSP.

Laughton

Raven Russia made announcement today - part of which relates to Preference shares as follows:

Raven Russia notes the recent announcement by Aviva plc of its ability to cancel certain irredeemable shares it had issued at or close to par value through a reduction of capital, and the resulting interest from the UK Financial Conduct Authority and a number of institutional investors. The Company has taken its own legal advice on the matter. In light of that advice, the Board considers it appropriate to put to shareholders at the Annual General Meeting proposed amendments to the Articles that would provide that a reduction of capital of the Company's cumulative redeemable preference shares of 1p each ("Preference Shares") or Convertible Preference Shares (which, in effect, could implement a cancellation of such shares at a significant discount to their market price) should require the specific class consent of the relevant class of shares. The amendments will also require the class consent of the holders of Preference Shares (in so far as they relate to the rights attaching to the Preference Shares) and the holders of Convertible Preference Shares (in so far as they relate to the rights attaching to the Convertible Preference Shares).

Looks like they, along with Ecclesiatical, at least are trying to do the right thing.

Laughton

Raven Russia Interims out today.

https://www.theravenpropertygroup.com/media/1454/20190826-interim-results-rns-version-paginated.pdf

Despite the Putin and other geopolitical risks, I'm happy to hold on.

Laughton

""The Board of Raven refers to its announcement of earlier today and announces that the Company has now entered into a conditional agreement to purchase off-market 139,678,106 of its ordinary shares from Invesco Asset Management Limited (acting as agent for its underlying funds) ("IAML"), representing 28.5% of the Company's current issued ordinary share capital. The purchase price for the shares to be acquired by the Company is 36 pence per ordinary share, payable in cash.

The shares proposed to be acquired represent all of the ordinary shares in the Company held by funds managed by IAML. The proposed purchase of these shares will be a related party transaction under the FCA's Listing Rules as IAML and its underlying funds are together a substantial shareholder of the Company for the purposes of the Listing Rules.

The Company is progressing negotiations regarding the financing required to purchase the shares and will provide an update in due course.

The purchase will be conditional, inter alia, on ordinary shareholders, preference shareholders and convertible preference shareholders passing the resolutions necessary to authorise the transaction.

The Company intends to hold the ordinary shares purchased in treasury.

At 30 June 2019 the Company reported a net asset value per share of 67 pence. Following the purchase and cancellation of ordinary shares in August 2019 and October 2019, together with the 8 November 2019 tender offer and assuming completion of the purchase of ordinary shares outlined above, on a pro forma basis, the equivalent net asset value per share will increase by 32.8% to 89 pence per share*.

The Company intends to post circulars (including notices of meetings) to ordinary shareholders, preference shareholders and convertible preference shareholders in respect of the transaction outlined above in January 2020 and a further announcement will be made at such time.""

Assuming they can fund such a big purchase at reasonable cost this must surely be a positive, mustn't it?

arjungaur

the fact that there is large institutional seller on the other side of the transaction should give a pause that it might not be so positive, they are selling out at 36 when nav is at 67 going to 89.

the nav moved from 48 to 67 in first two quarters of the year, looks like they are leveraging too high to juice up the nav from 10% currency gains, 677mil secured debt, 110 mil pref, 214mil convertible, that's a billion liability on 1.3 billion underlying property value, i can see another 14.8% tranche being sold out by woodford/invesco in Aug, looks like barnett is still not out of 'wood' : )

https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/RAV/14201895.html
https://www.thisismoney.co.uk/money/markets/article-7739915/Neil-Woodfords-embattled-former-protege-snubbed-management-shake-asset-manager-Invesco.html

all these convertible and preference share type financial engineering got woodford companies in trouble, it's better to keep the capital structure clean and liquid otherwise it creates questions and people sell first and ask questions later, and questions begets more questions, why did they tender at 55p

dandigirl

Hello Laughton: This is a Mark Barnett sale, I think.

https://citywire.co.uk/wealth-manager/news/invescos-barnett-retreats-from-raven-with-50m-discounted-sale/a1301611

Hope the link works. Shares are held in 3 of his Invesco funds - Income, High Income and EDIN. IMV probably good for Raven in that they are buying on a [significantly?] discounted basis, not so good for Barnett's 3 Invesco funds. He is under pressure to improve his performance. In the case of EDIN, these shares are almost the smallest holdings. Suspect we will see more of this from him.

arjungaur

Has woodford got any more holdings left in this that might be creating overhang on the stock, the stock jump is not over the top at 2%, any new institutional interest in these russian warehouses

Laughton

Having been alerted on another site to what looks like a slight anomoly I have today sold out of RAVP @134.75 and switched into RAVC @105.5.

A slight lift on the YTM (although lower running yield), a fixed maturity date and higher up the food chain should things go wrong.

arjungaur

there seems to be demand for ravp vs ravc and so you can see the corresponding price action, who did they issue 150 mil shares with no prior announcement at year-end, you don't want to mess with these russians, haha

https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/RAV/14364562.html

Laughton

It was actually only 150,000 shares and they were issued to holders who wished to be paid their dividends in more shares rather than cash. Happens every time dividends are paid.

arjungaur

haha, i was thinking of all their buyback in tens of millions that i misread 150k as 150 mil : )

do you have the link for the alert on that other site with this anomaly in ravp vs ravc

Laughton

Buybacks are great at the prices they're paying (as far as I'm concerned).

arjungaur

selling assets to finance discounted buybacks is great, like picking up dollar bills for 90 cents, but just loading up on more debt to finance those buybacks is a recipe for disaster when there is volatility in those underlying assets

Laughton

Ordinarily you might be right - but I see it as exchanging one form of debt for another, much cheaper, form of debt.

arjungaur

looking at their announcements, they have brought back common shares, pref and convertible pref, the div payments to those can be suspended without triggering default event? are you referring to these common shares, pref and convertible pref as debt?

i haven't seen their latest financials, how were these buybacks financed and how much did the debt/asset ratio go up?

Laughton

Apologies, you're right arjungaur, none of them are "debt". I know that I shouldn't but I can't help myself thinking of prefs as such.

They bought back and cancelled about 90M ordinary shares at 36p which effectively increased the NAV by 5p. Current share price a shade under 50p

They also bought lots (but I can't remember how much) of the prefs and I think placed them with institutions.

Both purchases made from what I consider a distressed seller (Woodford & Invesco).

No-one should consider anything I've said here as a recommendation to buy (this is a company based in Guernsey doing business in Russia and the yield should tell you the risk involved) - I only posted a couple of days ago to keep the thread alive for anyone who is interested.

arjungaur

obviously, debt, pref and common shares are all part of same capital structure, you can't screw any of them and hope they are just going to forget and move on, so yes, you could think of pref as debt to the capital provider : )

i actually took your recommendation and bought a whole lot of ravc, if these tank i am going to fca and ombudsman to complain about your shady financial advisory business, haha

Laughton

In that case, can you provide me with your bank details so that I can set up a direct debit to my account in the Cayman Islands to cover my ongoing fees. Obviously these will only be payable for as long as you hold RAVC, however there is a further charge should you decide to dispose of any or all of your holding. Such charge will be disclosed on sale

arjungaur

first i need to see your guarantee for direct debit, which i can cancel anytime, of course i'll let you know in that case, haha

dandigirl

Topped up with just a couple thousand this a.m. ahead of the ex-div date.

Wozzitworthit

Proposed Purchase and Placing of Shares

https://www.londonstockexchange.com/news-article/RAV/proposed-purchase-and-placing-of-shares/14839870

and

https://www.londonstockexchange.com/news-article/RAV/update-on-proposed-purchase-and-placing-of-shares/14840766

dandigirl

Thank you, Wozz.

Hadn't seen this nor received email from RR. Interesting.

Invesco selling out their big holdings at a discount, it seems. Discount is the price of the deal, for them.

See that RAVP went to 100ish this a.m. to recover later. Ords down too.

Overall it should be beneficial for Raven, I think. Fewer ords as a chunk is to be cancelled and, hence, position of Prefs marginally improves?

Russian Bank VTB showing faith in providing funding. Hopefully, placing will go smoothly.

Augers well, is my quick, first impression. Will be trying to pay close attention.

Thank you, again.

JammyDodger

I picked up a considerable amount of these yesterday morning between 101p and 102p.

Nothing changed yesterday except the shareholder base, the underlying business remains the same.

I see this as marginally worse for the prefs as the small reduction in ords gives less of a buffer to the prefs.

I suggest the share price has been falling for weeks/months in advance of this news and I would think some of the shares in the Invesco placing will come back on the market in due course as some are always willing to flip for 10% or whatever.

This is not a risk free trade. Investors should take note of the Rouble weakness which will result in a considerable loss for Raven since the last set of accounts. I have tried to work out this number. It is complicated because Raven's income and cost streams do not match in currencies in a complex manner. Suffice to say the loss will be uncomfortably large. Large meaning somewhere between £50m and £100m and it's got worse since December year end.

dandigirl

Jammy is the right name for you. Well done!

I didn't see this until Wozz posted. Topped up a couple of thousand more this a.m. @ 108.52. Enough at this price. We may be offered some of the placing?

I would think that VTB have gone over this in some detail and are comfortable with what they see.

As you say, not risk-free, though.

Next step awaited.

dandigirl

Big placing today - Ords @ 21.6. Prefs @ 90.8. Currently 108.23.