Disclosure: I have an interest in Northern Bear shares
Northern Bear released a trading update today. It had three key notices:
- Trading in the year to 31st March has been good - 'at least in line with the prior year'.
- Chirmarn, the group's asbestos removal company, has had another bad year. It is loss making and drawing on group cash. As a consequence, it will be sold for £50k.
- New bank facilities are in place, now for £3.5m, to replace the term loan expiring last week. These have a reduced interest rate (previously LIBOR+325bps) and a £1m overdraft facility. I think the group should be below £2m net debt at year end, so this does give significant flexibility.
The fun thing about investing in a company like Northern Bear is that no-one really knows what the stock will or should do on a results announcement. Trading volumes are incredibly thin. There are no institutions driving liquidity. There are no broker notes to set expectations or guide participants, so there is no uniform consensus of what constitutes a 'surprise'. (more…)