The Evil Diaries: Fairfax Financial and Chums

There is no denying that on the face of it I have been wrong-footed by the approach by Fairfax Financial and Chums to take over APR Energy (APR) since I thought that this would dissolve into a debt for equity swap with the bulk of the new equity going to the bankers.

I incline to the view that unless Fairfax has some brilliant wheeze on hand to improve the conduct of the company (unlikely) they will have to confront the same set of factors that the board and APR’s bankers have known about for many weeks.

It is true that, simply on the most recent accounts, despite the subsequent losses, there is theoretically a substantial surplus available to shareholders on the break up of the company. However, these values would surely come under pressure were they tested. So should a bid eventuate it could well be at 50p or less. And of course it must be stressed that there is in fact no bid yet on the table.