Dairy chit chat II

GrasstoMilk wrote:

Would 11 miles be too far to draw silage? We drew silage 7/8 miles last year this would be well over double the acerage of last year though

I have 1st cut rented 10 miles away

Chaps, sixty roofed cubicles scraped by tractor into lined lagoon big enough for 150 cows, anyone able to throw a ballpark figure on the cost for the lot?

jaymla627 wrote: »

Learned a pretty intresting piece of info at a regionial meeting tonight, uptake of the gap scheme was only 6 odd million of the 50 setaside for farmers, the other 44 million that was taken up is been used by glanbia for funding purposes...

Funding for what?

whelan2 wrote: »

Funding for what?

Their using the money basically as a intrest free overdraft, the security for the bond works around them being able to call in the bond and purchase co-op shares at 22 euro, great way if it is called in for the plc to further dilute the co-ops stake in the plc

kowtow wrote: »

I haven't seen the terms but presumably the bond is convertible ... i.e. they can redeem it (at their option, or at the option of the bondholder?) by delivering a PLC share for every EUR22 of the bond? In other words they can settle the debt using the PLC shares?

Out of interest what is the current PLC share price and what was it when the bond was issued?

As I said I might have the wrong end of the stick completely as haven't read any of the papers!

They can redeem the bond for co-op shares not plc shares, seen a article where the farmers journal had a value of 53 euro in real terms for co-op shares due to what theyre worth when a spinout occurs, they are traded for a fiver to farmers who want to become a member of the co-op.....
intresting thing is the bondholder will get a 4% stake in the plc if he converts the 100 million to co-op shares and i think if this occurs it drops the co-ops stake in the plc to circa 32-33% and this has further consequences going forward

freedominacup wrote: »

What rule in the co-op allows people who aren't farmers hold co-op shares? Edit; certainly to vote. Should be straightforward to change it anyway. No matter how many co-op shares they hold they only have one vote. I can't see any percentage for an institution to hold co-op shares.

Doesn't make any sense at all to me, a convertible bond is quite common - although it's normally convertible at the behest of the bond holder(s), it's a way of investing by loan (with interest) but participating in any upside in the company. In effect it comes with a free option on the shares. If the shares are trading above the conversion price at the time the loan is due you simply opt to take shares rather than cash, and (if you like) sell them on the day pocketing the profits. If the company hasn't prospered you take the cash, you've had the interest, and there is often also an additional security in case of default.

It would be a bit odd if this was convertible at the option of the co-op, in other words if they could use shares to pay down the loan, but anything is possible.

However, unless the co-op shares are freely convertible to plc shares, or freely tradeable for cash, I can't see what possible use they would be to any investor - and I'd have thought that the co-op articles prevent them from even being registered to a non-farmer?


Edit:

I just checked the issue document..

The loan is till 2021, 1.375% coupon (interest) paid semi-annually, convertible by the bond holder(s) to PLC shares if the shares rise above 23.26 by the day of maturity at a price of 23.26. In other words as soon as (and if) the shares exceed that price the bond holder can leave the bond and take the shares.

The issue documents specify that the majority of the proceeds are to be used to fund the GAP scheme, which may be of interest. There are a couple of additional clauses in the term sheet mainly to protect the bond-holder against dilution.

The price of 23.26 is a 40% premium to the price Glanbia shares were trading at during the weeks prior to issue.

The co-op has an option to redeem early from, I think, 2019, provided that the shares have risen by a specified amount.

There are some interesting points here..

1. Presumably the intention is to maintain the revolving GAP fund, so I suppose the co-op will sequester the majority of the 100,000,000 in accordance with the intentions it states in the term sheet regardless of the apparent fact that very little of the scheme has been used to date.

2. Should PLC shares rise above 23 EUR odd by 2021, co-op members are paying away any additional value to the bondholders. Co-op members and their management need the PLC to do well, but not too well.

3. The fact that the term sheet says the majority of the funds will be used for a GAP fund may not trouble the bond-holders too much and it's probably only the bond-holders who can act directly on that wording. The term sheet was not issued for the benefit of co-op members and I don't think their authority was required for the transaction?

Keepgrowing wrote:

Got it in one, which leads us back to the original post that led to this. What are they financing? Can you answer, because I'd love to know

A takeover??

Buford T. Justice V wrote: »

€30 a head Dairy cow welfare scheme mooted, possibly linked to using sexed semen.

http://www.farmersjournal.ie/exclusive-30-cow-dairy-welfare-scheme-250795

Bananas...absolutely Bananas

kowtow wrote: »

Unlikely I would have thought?

Who is to say that they aren't keeping 50 million + for the GAP fund on one side?

I'd be a bit surprised if they went outside their stated funding purposes on the term sheet and related announcements, especially if the "remnant" of the facility turned out to be 90M +

In fact if I was a co-op member and that actually happened, I'd become something of a pain in the arse to the board.

The bould Henry got very shifty when challenged about this in Kilkenny a few months ago. Very non commital about where it was gone.

kowtow wrote: »

Doesn't make any sense at all to me, a convertible bond is quite common - although it's normally convertible at the behest of the bond holder(s), it's a way of investing by loan (with interest) but participating in any upside in the company. In effect it comes with a free option on the shares. If the shares are trading above the conversion price at the time the loan is due you simply opt to take shares rather than cash, and (if you like) sell them on the day pocketing the profits. If the company hasn't prospered you take the cash, you've had the interest, and there is often also an additional security in case of default.

It would be a bit odd if this was convertible at the option of the co-op, in other words if they could use shares to pay down the loan, but anything is possible.

However, unless the co-op shares are freely convertible to plc shares, or freely tradeable for cash, I can't see what possible use they would be to any investor - and I'd have thought that the co-op articles prevent them from even being registered to a non-farmer?


Edit:

I just checked the issue document..

The loan is till 2021, 1.375% coupon (interest) paid semi-annually, convertible by the bond holder(s) to PLC shares if the shares rise above 23.26 by the day of maturity at a price of 23.26. In other words as soon as (and if) the shares exceed that price the bond holder can leave the bond and take the shares.

The issue documents specify that the majority of the proceeds are to be used to fund the GAP scheme, which may be of interest. There are a couple of additional clauses in the term sheet mainly to protect the bond-holder against dilution.

The price of 23.26 is a 40% premium to the price Glanbia shares were trading at during the weeks prior to issue.

The co-op has an option to redeem early from, I think, 2019, provided that the shares have risen by a specified amount.

Kowtow, can you outline what happens when the bond matured and share price hasn't hit €23.

My understanding is if not at 23 they get their €100m and tip on
If it's at 23 or above they get €100m and then the balance and tip on

If one was to believe what's posted here there was a fierce shortage of cash on farms as a result of poor price yet the up take of interest free money was so low.

Is it a matter or crying wolf, just venting, not understanding ones position or were funds secured elsewhere at an interest cost. I can't understand why interest free money wasn't used more

Keepgrowing wrote: »

Kowtow, can you outline what happens when the bond matured and share price hasn't hit €23.

My understanding is if not at 23 they get their €100m and tip on
If it's at 23 or above they get €100m and then the balance and tip on

If one was to believe what's posted here there was a fierce shortage of cash on farms as a result of poor price yet the up take of interest free money was so low.

Is it a matter or crying wolf, just venting, not understanding ones position or were funds secured elsewhere at an interest cost. I can't understand why interest free money wasn't used more

It's an exchangeable rather than a convertible bond which is a bit weird, but essentially it must be redeemed at maturity by the issuer (the co-op) if it hasn't been exchanged for the shares.

The co-op press release says it can only be exchanged if the share price hits 23.26 before maturity, that isn't *strictly* true, it can be exchanged but nobody in their right mind would, because the shares they got would be worth less than the cash they are owed on the bond, although they would of course get the dividend stream from the date of exchange which you need to factor in.

So the answer is that upon maturity, if it's over 23.26 most bondholders will take shares and sell them, or the co-op can actually pay them the value of the shares in cash instead and hang on to the shares should it wish. In fact the co-op can start doing this early in 2019 if the shares are 30% up over the price last year...

If the shares don't make it to 23.26 etc. then this is fairly cheap debt although I haven't looked at the dividend stream, I can't imagine they'll squeeze too much into a 40% premium in good enough time to make early exhange by the buyers a tasty bet.

What's the annual divvy per share on a plc share at the momnet?

In a way the easiest way to understand it is as laid out in the press release. You lend 100,000 EUR to the co-op at 1.75% interest. At any point you can take 4,299 PLC shares to settle the debt, with all that those shares entail (dividends etc.) but of course losing the interest payment.

At a share price of 16 those shares are only worth about 70K, when would you plump to exchange rather than hang on for the cash?