This company sells only a very small amount of its production to Rover, its trading at around eight times earnings, has a very healthy and safe dividend yield (5%),is benefiting from the move to source a lot of its production in low cost Eastern Europe and also has an excellent sales to capitalisation ratio. With the current gloom and negative sentiment, now is the time to adopt to adopt a classic contrarian strategy and buy.

Decided to take a 30% profit as it appears to have peaked.

Well done halifax it does appear a struggle for WAGN to get away from 40p. Early strength today due to sharecrazy tip yesterday I expect, still got mine there may be some buying prior to them going exd. --------he says hopefully.
2517

4 June 2008

Wagon plc

Proposed re-financing initiatives

Wagon plc ('Wagon', 'the Group', 'the Company'), the European automotive components group, today announces proposed re-financing initiatives to realise growth opportunities and to place the Group in a stronger financial position to continue pursuing its strategy.

Terms agreed on 155 million Revised Debt Facilities with five banks, including existing and new lenders, to replace the existing 166 million facilities that expire on 31 December 2008. The Revised Debt Facilities comprise 125 million three year credit facilities and a 30 million revolving loan facility for 364 days. The Revised Debt Facilities are conditional on the receipt of the Rights Issue Proceeds.

Proposed 10 for 1 Rights Issue at 4 pence per share to raise approximately 49 million (before expenses). The Rights Issue has been underwritten in full by funds managed by WL Ross, a major shareholder in Wagon.

In order to issue the Rights Issue Shares at the proposed price, the Capital Reorganisation is required to reduce the nominal value of each ordinary share to 1 penny.

The Takeover Panel has agreed to waive any obligation on any member of the Concert Party to make a mandatory offer under Rule 9 of the Takeover Code, subject to the approval of the Independent Ordinary Shareholders on a poll at the General Meeting.

So, let me get this right, you now have a share worth 7p and they expect you to subscribe 10x4p , or 40p, to a rights issue for each share you own?
Bit excessive is't it?
Or is it now good value?

If shareholders do not subscribe to the rights issue then the underwriter WL Ross will have effectively taken over the company for 49million.Is that a fair price for this company?

Er,I don't understand.
-As I see it they are diluting shareholders just 10% and asking for cash at 4p ( to make it "attractive"). This should raise just under 49m. The co says they need this for on-going work and to bid for fresh contracts....presumably this is what they should do to keep going. The reorganising of the shares looks odd - but they say the market price should remain the same.
There is some lease-back issue, but looks sense when cash is tight and property prices falling...just hope they got a fair price.
+The other issue is a loan that has to be repaid at the end of the year - it looks smart to me, to raise money "now" well ahead of this time, when investors might be more "cautious" as time is short./ This fundraising looks OK to me - BUT not OK enough to invest "now" as I don't hold..
Just wait and see, eh?

(Expect the sp to fall to the "rights" price......then it depends on what cash they get and what they appear to be doing with it; say in another couple of months...etc.)
DYOR, - this looks jumpy!

hangon suggest you read the RNS issued on 4th June regarding the proposed refinancing, in particular the section confiming that the takeover panel has waived the normal requirement for the parties acting in concert to make an offer to all sharehoders in the event they end up with more than 30% of the shares in issue after the rights issue is completed. As I wrote earlier if sharehoders do not subscribe to the rights issue the new shares will end up with the underwriters and they will then control the company.

Thanks Halifax, I'm watching and learning.
-one to wait, then.

Just look at this graph!

this is bouncing today

Dead cat bounce

41% increase.....wish my shares would do that

The spread is huge - 21% and I can't see any bounce