Clearwater

All banks work in exactly the same way... Yes, a loan is an asset to a bank and, as I commented earlier, banks set covenants so as to be able to intervene whilst the company in question is still profitable and, hopefully, worth more than the loan outstanding I'm sorry but Barclays will not analyse the situation from a PR perspective. The consideration about "who shot Thomas" is not an argument that will be made with any relevance. How can you explain that to your shareholders? The compensation argument is also irrelevant. Barclays loan to Hornby is a tiny, tiny fraction of its loan book. By comparison Barclays will lend hundreds of millions to single FtSe 25 companies. When a loan defaults, the loan is typically transferred to a specialist recovery group. Those guys will be very hard nosed about retrieval of the cash. I'm afraid pr rarely features on their radar. Not Barclays, but you may recall a few years ago HBOS pulled a loan on Farepak just before Christmas leaving lots of people out of pocket. Got dire PR. Didn't stop them. I very much doubt whether Hornby will get any special treatment as the franchise holder for 00 Thomas... David

That's an impressively rapid delivery....

All of which is why I've bitten the bullet and decided to learn to build etched brass coach kits. Hopefully though the rtr market will help out with some of the variety! David

But happy trainspotters - did they bribe the signal man to ensure they got a deltic start up right next to them? David

Where do you get your 70% figure relating to trains? In my view, H provides insufficient disclosure in their accounts to work out profitability of individual lines. Hence the comments in this thread saying "we don't know what the problem is" On the city analyst point, I think you are conflating several separate points and issues. Firstly, Hornby Plc is an absolutely micro stock. From memory, the FtSe 100 will all have market capitalisations of over £2bn. The big stocks, which attract the most coverage from analyst, will be over £10bn. At c 50-100m Hornby simply isn't going to be on analysts' radar. A good analyst will know a huge amount about their coverage sector. If they don't, they won't survive. A top analyst will spend their time with CEOs and CFOs and with large scale investors. If they don't know their sector in enough depth to be able to talk and convey the equity story they would be found out very quickly and would be fired. their job as analysts is to help investors value the stock. They will need to know enough to ask pertinent questions of management and that may well include questioning how the supply and logistics chain is managed. They may then write investment reports critical or supportive of management. However to write that repot, you need to understand the business. To then blame those city analysts for the management of banks' is as analogous to blaming Hornby's product development team for other aspects of that business's failings. The city analyst's job is to understand and report on stocks in a given sector, not manage that bank. Whatever the business, public or private, managing an entity with turnover of multi billions and hundreds and thousands of staff globally is not an easy task. To suggest otherwise is overly simplistic David

Don't worry, it's the EP. Things can change to the final model

I note they have so many 71000s they use them as test beds...

I like the complete chutzpah/lack of irony trumpeting the imminent release of a 70yr anniversary tie in of the end of ww2 just the 6 or so months late. Now given demob happening in phases over 45-47 or so, perhaps they are right for the 70th but that feels like accident and not design! If I were them, I'd stop doing time dated products given the supply chain issues... David

Presumably each wheel adherent will take the opposing view on type of track!

Thanks Richard - more of my experience has been with private ly held companies where share charges are common. A quick check on companies house shows some property charges and fixed and floating charges over the business. David

I think that's a great point. Usual disclaimers about no connection etc,but browsing the brassmasters site offers a good example. One of my gripes as someone starting out in kits is that you need to buy other parts separately. Not knowing what to get can be off putting. On some of their pages on the ex- Martin finney kits, there's the ability to download instructions, pictures of the etches, suggestions on wheels and motors etc. Now I fully appreciate most kit manufacturers are small outfits wand web design may not be their forte and I wouldn't want to distract them but useful to see what can be achieved. I would say that most manufacturers I've asked queries have usually been most responsive in providing information David

Thanks! I may hold you to that. Whilst I don't work in a bank at present, I have financed a couple of power distribution companies.... I'm slightly over my skis answering that question, but I'd say the bank doesn't legally own the shares until they exercise the charge, they can only exercise if the borrower is in breach of the loan agreement and that breach cross defaults the security agreement. Technically they probably don't own them. To actually exercise is a final and irrevocable step so won't be taken lightly. However the threat being there creates the leverage in the negotiations David

If Enterprise value, the discounted value of the pre financing cash flows, is greater than the value of loans outstanding the business has equity value. Using the house analogy, when the mortgage is more than its value, we'd call it negative equity. Same here, same incentivise as if you can't keep up on your mortgage repayments. The bank will hold a charge over the shares (assuming it is secured). Therefore, unless the equity owners resolve the situation to the bank's satisfaction, they can exercise their charge and sell the business themselves. So long as equity value is greater than the costs of solving the problem, they or someone else should do so. If the loan is unsecured, calling the loan creates an insolvency event. Equity will be the last party to get paid from the liquidation proceeds so again if equity thinks there is value they are better controlling the situation by stumping up cash. As others have noted, the equity is not widely held. I'd have thought either direct with management and/or via the corporate broker they are discussing the plan to satisfy the banks. It's no use management saying they can equity without knowing they can do it. Given the stock is traded, this may mean they need to sign up to be insiders and face restrictions on their trading Ultimately the equity value to,the bank is that there are parties incentivised to ensure the bank gets all it's money back as there are others who will lose more. David

Did the gwr train ryanair's staff then?

No problem Kevin! Please note my comments are generic and not specific to Hornby or Barclays and some of my specifics may be slightly incorrect however the generality should hold/. I'm also from the practical side of banking as opposed to academia so some of my theoretical knowledge is high level. Barclays has made a loan of, for sake of argument, of £10m. That loan has a fixed term, to 2019 if memory serves, and is more akin to a glorified overdraft than a mortgage. In banking terms, the loan "revolves" and can be drawn and repaid at any time within the term of the loan. Under a mortgage, usually; once borrowered you repay the loan over time. Normally, the bank will allocate some of its own capital against the loan it has advanced. The regulators, and markets including rating agencies, will monitor how may capital tre bank is holding against its loan book. (Don't forget that for a bank a loan is an asset). Typically banks capital is a fraction of the loans extended. Loans will typically have margins of up to 3-5%. Higher risk borrowers attract higher margins. If we have a 10 loans all of 100m each at 2%, we expect to make profit, pre the banks own funding and operating costs, of 20m. If one loan decision is wrong, the full loss would drawf the profits. However, if the bank can recover the loan at 80p in the pound, overall the bank would make no loss. Excuse the simple numbers to illustrate the point -in reality a bank has thousands of loans and other revenue sources, eg fees. Bank capitalisation rules and how loan capital is allocated is a massive topic in its own right. When a bank advances a loan, it usually sets up an early warning system to allow it to intervene before there is no value in the company. This is usually a financial covenant package. Typically bankers look at interest cover (ie ability to keep making interest payments! And leverage - debt to value. (Like on a domestic mortgage with loanto value). Lending against value doesn't work for listed stocks - neither party can manage the share price, so the calculation tends to be debt divided by ebitda. In the back of the bankers mind is the fundamental value of the company. That is typically 6-10d ebitda. There are exceptions in either direction. If the convenant is set at 3x debt to ebitda, theorietixally the bank can step in whilst the value of the business still has a healthy cushion to the loan outstanding. The banker will be thinking how do I get my loan repaid. They will be well aware that no other bank is likely to step in and provide capital. Of course if mgmt can find someone to step into the loan position then Barclays would be delighted. Mgt are incentivised to find such a party. So are any third parties who might wish to mount a bid for all or part of the business. However, if the bank calls the loan, in a fire sale, full value is, in all probability, unlikely to be received. However, if a viable plan to either manage the decline more slowly, sell bits from a going concern etc increases the chances of one of the other events happening. However, if there is no plan showing better than, say, a60% recovery of the loan, then liqudation may be better. My feeling here is that there is some value in Hornby, the shares show a value way in excess of the loan and probably price in a future capital raise. Therefore pulling the loan can only force Hornby either to not make payments to suppliers (bad for cash flow and trading), sell profitable businesses below full market value or sell stock below cost which increases losses. I don't see how that's in the banks interest when there appears to be equity value. I think they'll put the new mgmt team on a tight lease and monitor carefully. David

Kevin Q1 - B. Barclays won't want to make a bad situation worse although the interest margin will massively increase as will the covenant package. They may ask for disposals to aid pay down on the loan. But the bankers will recognise that pulling the working cap line is tantamount to closing them given the cash outflow to China being ahead of the receipts from customers Q2 -A,. If the bank who knows you best and has lent to you for 15+ years walks away, why would anyone else step in? What do they know that you don't? Etc Both answers prefaced with caveat that we don't have the info here to analyse Richard E Re out/ calls, I agree that's an effective trading strategy but given the lack of liquidity generally in H's stock and the massive volatility seen, would anyone write you an option at an efficient price to trade? Not my field but I'm sceptical David

The FCA would likely investigate the scenario you describe. Basically, that's market abuse and carries some pretty hefty penalties. When I was in banking, we had pretty frequent training courses on that sort of thing. Spreading false rumours to cause a price crash would fall into that category David

Quite possibly - beyond my knowledge I'm afraid! I don't agree with you second statement though. It's a market. Whether they are able to close out a trade without ever paying for the shares is irrelevant. It's the same as a speed bet. Hornby got the cash long ago from the share issue so not their issue per se. The investment fund has a made a decision to buy. They have to have the capital to pay for the shares they have brought. The trade has used both their financial and intellectual capital. They've worked out what the stock should be worth, taken advantage of some panic selling and made a profit. Fair enough to get paid for that. David

The stock price represents a variety of things depending on your perspective. Corporate finance theory suggests it is the net present value of future dividends net of cash injection/ etc how ever it also reflects supply and demand in the market. If you are a fundamental investor, you'll buy when below your view on value and vice versa. However, with the share price cash some traders will have thought "this stock is oversold; I'll buy now and sell if it recovers by say 10p". However to do that trade, you still need to have a view on valuation above the trading price low. I suspect the current smallish fall is as a result of people who brought at c20p cashing out. Nice little profit if you did that, congratulations! David

I'm no expert here but given it was just post war and there hadn't been much investment, the wagon must have been past their best and a bit beeten up... Sorry, hat coat gone David

Reading "inside the railway room" in RM suggests that there are a fair few wives who buy a set for retiring husband who then expands collection. Again a shop perspective would be helpful but I'm sure wives will go for a brand they've heard of, eg Hornby, and a sub brand they've also heard of such as flying Scotsman or Pullman coaches David

You've added a sunshine emoji / emocotion or whatever they're called Wasn't sunshine stock corridor stock

Yup - hence why I suggested him but given he is/was a major shareholder and hasn't been on the board, I'd concluded he wasn't interested for whatever reason (time I'd guess)

Best thing is if you get an unexpected guest, you can chop off one leg and it will grow another! Btw, our genial host seems quiet. Hope all ok with him!