Jump to content
House Price Crash Forum
Sign in to follow this  
interestrateripoff

Wetherspoon Axes Dividend On Loan Fears

Recommended Posts

http://business.timesonline.co.uk/tol/busi...icle5551164.ece

JD Wetherspoon, the pubs group, has axed its dividend and called a halt to almost all corporate spending over fears it will not be able to re-arrange a loan of nearly £100 million that comes due in September.

The company's lead lender is Royal Bank of Scotland (RBS), whose shares collapsed by 67 per cent yesterday after revealing it expects full-year losses to hit £28 billion — the worst loss in UK corporate history.

Tim Martin, the chairman and founder of Wetherspoons, said that his company was in a good financial shape, with relatively low gearing by comparison with other pub companies.

Last year, free cashflow reached £72 million and Wetherspoon spent £17 million on dividend payments.

But in the uncertainty surrounding the banks and the possible unavailability of finance, his board had taken the decision to cut spending, including on new pub openings, in order to repay the loan out of cash flow.

"It's illustrative of a larger issue," he told The Times. "We don't know that we couldn't re-arrange it (the loan), but it wouldn't be a good time to bet."

Wetherspoon's concern on the availability of financing, even for a robust and well-capitalised business, will be shared by directors of other companies with loans falling due.

Yesterday, RBS pledged to increase its lending to customers by £6 billion, boosted by the £5 billion in additional capital the bank will receive when the Government increases its stake in the lender from 58 per cent to 70 per cent.

Paying off your debts with profit, no there's a novelty.

No doubt because they are taking the sensible long term view the share price will fall.

Share this post


Link to post
Share on other sites
http://business.timesonline.co.uk/tol/busi...icle5551164.ece

Paying off your debts with profit, no there's a novelty.

No doubt because they are taking the sensible long term view the share price will fall.

Share price was in the doldrums anyway so they may as well axe the dividend; the shares in JDW rose 9% on this news. I would think that many other yield stocks will be thinking along the same lines at the moment. Is this the end of the WACC theory I wonder - it does seem to have become somewhat redundant now?

Share this post


Link to post
Share on other sites

Companies are now changing state from profit-maximisers to debt-reducers. Survival first, proftits second.

Individuals are figuring it out too.

Once in this state, its tough for any economic policy to get people spending again.

VMR.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 295 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.