[pure-silver] Re: Some good news concerning Ilford
- From: Dave Hornford <Dave.Hornford@xxxxxxxxxxxxxxxxxxxxxx>
- To: pure-silver@xxxxxxxxxxxxx
- Date: Wed, 23 Feb 2005 12:35:41 -0700
Georges Giralt wrote:
>Selon Nick Zentena <zentena@xxxxxxxxxxxx>:
>
>
>>On Wednesday 23 February 2005 03:44, Georges Giralt wrote:
>>
>>
>>>Hi !
>>>I do not think this is as good news as it seems.
>>>First, the plant was sold and is leased to the new Ilford Photo company.
>>>
>>>
>>When they owned the plant they needed to earn enough money to justify the
>>value of the land. Companies close locations because they can sell the land.
>>Now the new land owners may raise the lease payment or they may force Ilford
>>out. Worse case they'll have to decide if moving is worth the effort. OTOH
>>before you could have seen the whole thing closed because the land was sold
>>for condos.
>>
>>
>t may for the very first year, as you've sell some assets, but won't show the
>next fiscal year... Even for the first year, it could be bad : Often, selling
>assets only serve to pay interest fee to bankers or due bills. And do you
>expect the new factory owner to be able to resist it's shareholders better than
>Ilford's ones ? At the end of the first fiscal year, these share holders will
>yell because ratios deteriorate too much, so they will force the new owner to
>raise the lease an this may cause the failure of the new Ilford Photo
>company... I call these deals "fools deals" because the previous Ilford owner
>has got back it's money so can present a nice report and everybody thinks that
>the new founded company is safe.... For one year. This could only works if the
>market sees huge demand for the products they make, so this kind of deal is a
>real restart, but not in a declining market. In this case it's a smoke
>screen...
>I _do_ hope I'm wrong on this, but I fear I'm not. (during a previous life I'd
>a
>bad experience with such a "wondefull deal"
>
>
Ilford's actions need to be assessed against corporate survival.
Unchanged the company was dead, things that don't make sense to healthy
companies make a lot of sense to companies on life-support.
Sale-lease-backs are used to preserve capitol & dodge unfavourable
work-place rules. In this case Ilford needed the money to stave off
corporate death (a common use of sale lease-backs). Ilford may also have
been motivated get out of work-place rules & pay-rates (those laid off
Ilford workers probably do not have to be recalled by the new company).
Still alive they are hoping to generate enough revenue to pay the lease
on the plant. With the lease in place sudden changes in the deal, or the
appearance of condos, are not likely. The challenge is mid-term when the
plant needs upgrades or replacement. At that point Ilford needs to pony
up for a new plant or convince someone else to build one on another
lease-back deal. At this point they don't have an asset in place or a
facility to expand/upgrade.
Ilford was/is owned by an investment fund. They had written off the
asset (Ilford) and were carrying Ilford's debts. Clearly they are
structuring the deal to provide an opportunity to recover their money.
An operating photo plant is worth more than a closed photo plant to the
holding company. Closed it is worth the price of the price of the land,
the building and salvage on the plant equipment (I suspect the market
for used film coaters isn't that big.)
One question is did Ilford get a 3rd party to buy the asset or was the
asset transfered to another divison of the investment firm. In the
former Ilford's economics look good enough to a 3rd party to buy the
asset and recover on the lease-back. If the latter, its not as good.
Dave
=============================================================================================================
To unsubscribe from this list, go to www.freelists.org and logon to your
account (the same e-mail address and password you set-up when you subscribed,)
and unsubscribe from there.
Other related posts:
