some really good analysis here. today's "news" on WeFox might even present a better entry point. also worth noting that VSL doesn't hold loans at amortised cost: it has taken ECL reserves of £6.4m at year end 2023 (vs 16m at end 2022). so if loans are repaid at par that's another 6m you need to add to the NAV
From an article in the Mail on Sunday that appeared in my Google news feed:
"In a memo circulated to shareholders earlier this month – first reported by Sky News – Hartigan warned that Wefox could become insolvent 'in August, or potentially even earlier'. He plans to close a number of subsidiaries to stem losses.
But the Mail on Sunday understands Hartigan has also put Wefox up for sale and is in advanced talks to sell the business to Ardonagh, a leading London insurance broker.
If he succeeds, sources say he will pick up a £20 million bonus for completing the deal. One disgruntled Wefox investor said Hartigan had been 'trying to frighten all of us into believing the business is in terminal trouble, but we don't believe him.
'This is exactly the type of scare tactics he used at LV when he was trying to sell the business on the cheap to Bain Capital,' the investor added. 'Wefox is fundamentally a fast growing and sound business that just needs further investment.'
Another source added: 'Hartigan is putting maximum pressure on investors to approve his plan to sell at a knockdown price to Ardonagh – and collect his [£20 million] bonus.
'But some of the investors are discussing how to fight against it, remove him and come up with an alternative plan.'"
Great spot Mark. Donald Pond wrote about it today too on his blog.
The WeFox investors are substantial players - I'm surprised Hartigan's appointment got through due diligence - given that the scare tactics used at LV are actually in the public domain.
Hi Nick, are you sure they are paying dividends? I checked a number of data sources which said they are not. Or at least the next event is the 2024 AGM where that might change, possibly. NBDG has had a fairly flat performance over 10 years - there's not much that attracts me to it. The spread on it is quite severe and I would be concerned to be sat on a loss on day 1 for a prolonged period. Charges of 2.21% are a consideration too. Something like VSL offers similar discount but is much more liquid and a lower spread and they definitely pay dividends.
VSL's WeFox holding (£20m) is 7.2p per share, or 5.3p per share considering the 36% discount to NAV (i.e. failure is already priced in to some extent). Reducing by 5.3p assumes the equity holding is worth zero. The Sky News article states it circulated a letter earlier this month to its investors. So CHRY reducing it by 1/3 suggests that there's a 1/3 chance of failure, because if bankruptcy were certain CHRY would have written it down to zero. 5.3p reduced to one third is 1.8p per VSL share.
The WeFox CEO says "The opportunity to rebuild through restructuring and any optionality for the future remains dependent upon reaching [a] sustainable position by balancing cashflows with the timing of our planned disposals,"
Well, timing could be spot on. Two weeks ago it appears WeFox has already disposed of its Italian business - so it's making progress it seems:
some really good analysis here. today's "news" on WeFox might even present a better entry point. also worth noting that VSL doesn't hold loans at amortised cost: it has taken ECL reserves of £6.4m at year end 2023 (vs 16m at end 2022). so if loans are repaid at par that's another 6m you need to add to the NAV
From an article in the Mail on Sunday that appeared in my Google news feed:
"In a memo circulated to shareholders earlier this month – first reported by Sky News – Hartigan warned that Wefox could become insolvent 'in August, or potentially even earlier'. He plans to close a number of subsidiaries to stem losses.
But the Mail on Sunday understands Hartigan has also put Wefox up for sale and is in advanced talks to sell the business to Ardonagh, a leading London insurance broker.
If he succeeds, sources say he will pick up a £20 million bonus for completing the deal. One disgruntled Wefox investor said Hartigan had been 'trying to frighten all of us into believing the business is in terminal trouble, but we don't believe him.
'This is exactly the type of scare tactics he used at LV when he was trying to sell the business on the cheap to Bain Capital,' the investor added. 'Wefox is fundamentally a fast growing and sound business that just needs further investment.'
Another source added: 'Hartigan is putting maximum pressure on investors to approve his plan to sell at a knockdown price to Ardonagh – and collect his [£20 million] bonus.
'But some of the investors are discussing how to fight against it, remove him and come up with an alternative plan.'"
Great spot Mark. Donald Pond wrote about it today too on his blog.
The WeFox investors are substantial players - I'm surprised Hartigan's appointment got through due diligence - given that the scare tactics used at LV are actually in the public domain.
Wefox investors are:
UBS, Goldman Sachs, Salesforce Ventures, Chrysalis, Mubadala Capital Ventures, Target Global, AngelList, Seedcamp, Speedinvest, Horizon Ventures, Samsung Catalyst Fund, Verve
Does OB have a view on NB Distressed Debt, at least as a comment? It's showing at a 50%+ discount to NAV and due to go xd soon.
Hi Nick, are you sure they are paying dividends? I checked a number of data sources which said they are not. Or at least the next event is the 2024 AGM where that might change, possibly. NBDG has had a fairly flat performance over 10 years - there's not much that attracts me to it. The spread on it is quite severe and I would be concerned to be sat on a loss on day 1 for a prolonged period. Charges of 2.21% are a consideration too. Something like VSL offers similar discount but is much more liquid and a lower spread and they definitely pay dividends.
Hope that helps.
OB
Yes the charge and especially the spread are concerns. Best to stick with VSL I agree. Thanks OB 🍺
Chrysalis adds €3m to European insurer wefox amid insolvency risks
https://www.investmentweek.co.uk/news/4209283/chrysalis-adds-eur3m-european-insurer-wefox-amid-insolvency-risks
We fox could be bankrupt by the summer according to the Chairman/Chief Exec. - On Sky News earlier today.
VSL's WeFox holding (£20m) is 7.2p per share, or 5.3p per share considering the 36% discount to NAV (i.e. failure is already priced in to some extent). Reducing by 5.3p assumes the equity holding is worth zero. The Sky News article states it circulated a letter earlier this month to its investors. So CHRY reducing it by 1/3 suggests that there's a 1/3 chance of failure, because if bankruptcy were certain CHRY would have written it down to zero. 5.3p reduced to one third is 1.8p per VSL share.
The WeFox CEO says "The opportunity to rebuild through restructuring and any optionality for the future remains dependent upon reaching [a] sustainable position by balancing cashflows with the timing of our planned disposals,"
Well, timing could be spot on. Two weeks ago it appears WeFox has already disposed of its Italian business - so it's making progress it seems:
https://www.coverager.com/ardonagh-to-acquire-mansutti-s-r-l/
Is there a problem with Wefox today as CRHY crashed pm?