Hermes proposes plan

[eos 10 fan]

From the LA Times (free reg required): <p>

 

"Leica said that 'Hermes' supervisory board representatives had agreed

to the recapitalization plan. Under the complex scheme, Leica would

reduce its capital from 11.5 million euros (about $14 million) to 1.5

million and combine three shares into one. It also would take 4.2

million euros from its reserves to help offset most of the

15.5-million-euro loss it incurred last year.<p>

 

Shareholders would then be offered nine new shares for every one they

hold, at 1.70 euros a share. The shares have been trading at around

2.25 euros, which analysts suggested was about their worth after the

complicated capital adjustments."<p>

 

More info at this <a

href="http://www.latimes.com/business/la-ft-leica25apr25,1,3220376.story?coll=la-headlines-business"><b>link</b></a><p>--

[johns1]

Help us out here: if approved, the net effect will be Hermes owning more of Leica Camera???

 

Just curious. . .

[gigone_l.]

To quote the inimitable Bill Thorlin's comment about this situation:

 

"Well guys I think we have an idea of what to focus on in the future as things develop and the exposure of Hermes becomes clear, if they still wish to be in the frame and do not take a negative attitude and slide away into the distance."

 

Invite Bill to comment. He can probably explain this better than anyone.

[35mmdelux]

This is more of a simple re-configuration of capital structure. A key observation is that Leica is down very low on its equity part of the balance sheet,i.e., retained earnings and de facto working capital - they are rapidly running out of funds to cover shortfalls.

[michaelkh]

Ouch. Was that sentence first, or wordplay first?

 

I challenge him to get 'cable', 'release', 'raw', 'tripod' and 'acratech ultimate ballhead' in the

next one.

[bill_thorlin]

Gigone thank you for the kind thought but I am just about all sold out on this one. If anyone is interested may I suggest they go to your posting "Leica Press Release 4/15/05 ??? " 0f 18 April 2005 in this forum because between us all I think we got close to covering it all.

 

Michael the quote came at the end of the thread noted above which would put it context. I will try when I am Prague to receive inspiration from Kafka and see if can meet your challenge, Budvar permitting !!!

[billc1]

I think Leica needs to develop a price strategy. For example, some people have said that Leica's quality has not changed but their price keeps going up. I bought my m6 back in the summer of 2001 for 1800. after the 200. dollar rebate. Now they want 3200. new for their m bodies, that is crazy. I thought 1800. was alot of money. I hope they don't get too crazy asking a high price for the future digital m camera.

Bill

[bill_thorlin]

Michael, darn you (politely) but I could not resist the challenge and wait for Prague so got the wineglass recharged and here we go.

 

I saw the press release via Cable & Wireless who also referred to the tripod of major investors who in raw terms own over 50% of Leica and after serious consideration and feeling as if I had been revolving on an acratech ultimate ballhead, I think it is all down to what Hermes want to do.

[runkel]

Jack,

 

The 1-for-3 reverse stock split would affect all shares, so no ownership gain for Hermes there.

 

The offering to shareholders (a "rights offering") would not affect ownership if every shareholder took up all the shares offered to it (because the shares are offered in proportion to current ownership). The details of the what happens when some shareholders decline the offer of more shares have not been disclosed to my knowledge. However, the most likely approach would be that shares declined by nonparticipating shareholders would be offered to those shareholders that did participate in the initial round of the rights offering. If so, and Hermes took up its share of these reoffered shares, then its percentage ownership would increase. As a practical matter, some shareholders will surely decline the opporntunity to invest more money in Leica, so Hermes will probably have a chance to increase its ownership.

[charles_stobbs3]

I think you have to compare the prices in Euros then and now. Not in sinking dollars.

[bill_thorlin]

Seriously read Gigone's thread ( I know it is long but this is a complicated issue) as many people had input and I think all angles were covered. I am not trying to kill this post and I am sure any new points would be responded to.

[michaelkh]

Bill - It's not bad! I admire the literalist use of the ballhead.

[frank granovski]

Plans are always good. Good plans are even better. ;*)

[dennis_couvillion]

What I find interesting is that we're not talking about REALLY big money. Yea, it's millions of dollars... but Michael Jordan could probabaly buy Leica if he wanted to. I know Steven Spielberg could. The signal I'm getting is that the company is so messed up nobody wants to sink money into it. With digital absolutely dominating the market investing in Leica may seem to investors like investing in the proverbial buggy whip company. I'll be sad if they go but maybe time just moves on.

 

Dennis

[frank granovski]

Locally Leica dealers either carry liitle stock or have dropped the Leica line altogether. So, how can the Leica company make money?

[dennis_couvillion]

As far as I know there is not one camera dealer in New Olreans where you can actually go and hold a new Leica. I believe one place may still be an official Leica dealer but they have none on display... I assume none in stock. For that matter you don't see used ones either. Back in the seventies and eighties there was a camera shop, Alfredo's, in downtown New Orleans which had a big selection of Leicas, new and used. It'd be fun to hop into a time machine and see what they had back then... and the prices.

 

Dennis

 

In the last few years the only places where I've seen inventories of Leicas in shops have been New York and Germany.

[richard_ilomaki]

Dennis

 

All, or most of them can be seen in shops in Tokyo - literally hundreds in the various shops. Oh well!!! They get bought by the dealers who apparently can sell them sooner or later at ridiculous prices.

 

Cheers

[gigone_l.]

Richard is right about Japan. In Japan, at SUKIYA CAMERA in Tokyo, black paint M2's, M3's, and M4's are selling for up to $9000, depending on condition.

 

That according to S. "Fritz" Takeda, September, 2004 in "What?s Hot In The Tokyo Used Camera Biz?; Classic Imports Command Top Dollar": http://www.shutterbug.com/features/0904sb_tokyo/

[frank granovski]

Leica has a good ally.

[anders_gelbheit]

What kind of a plan is that? So, after some creative refinancing and share price reshuffling, it's back to business as usual? What are the long-term, strategic plans for the company, if any? What are they gonna do differently?

[jtk]

It's being vanished into a larger, more repellant org. The brand will surface on loafers in which to be lite.

[kelly_flanigan1]

Dennis C.; Between Lakeside camera and the CBD; I remember a couple of camera shops I visted long ago that had Leica gear. Maybe you can rattle up my memory here. One was the next? exit east past Causeway on 10; I think Bonnebell; then one snaked south of this exit to a camera shop south say a mile or two; to a store on the right. Another was more towards the CBD; but not in downtown yet. I got a 50mm F4 El Nikkor there in 1968. On Canal around St Charles on the east side here were a mess of cheapie cameras hawked to vistors.

[pbizarro]

To me it is really simple: the cameras are too expensive, and offer no more than the cheaper ones, in practical terms. Why are Leicas so expensive, honestly? Do they cost a lot to be manufactured?

 

The market is dictated by consumers that very rarely print above A4 size, so the advantages of Leica glass are not perceived. So what is left? A niche market, not enough to support the company.

[bill_thorlin]

The proposals would not have been made without prior approval from Hermes, you do not ignore your major shareholder especially one with over 30%, which holding will inevitably increase when the loan stock issue falls in (they underwrote 95% of that issue).

 

If the past pattern continues Leica will ultimately fall under Hermes control, it is a matter of time and at what cost to Hermes. The strange silence has been from the banks who recently pulled credit lines but not the plug, one must assume they have been "advised" and have no complaints.

 

To me the big question is what do Hermes want out of the deal ? I can only but assume it is the brand as this appears to be the Hermes strength.

 

As has been said it is not a "mega bucks" deal but it is important in the photographic world and from an historical perspective.

 

Gigone - where is your input ? Michael - I am not going to do a physical test, imagine the crossed eyes !

[mskovacs]

<i>I bought my m6 back in the summer of 2001 for 1800. after the 200. dollar rebate. Now they want 3200. new for their m bodies, that is crazy. I thought 1800. was alot of money.</i>

<p>I presume that you are in the USA? There is a certain man that came to power in January 2001 that you can thank for your dollar being in the toilet. He's done such a great job he gets to continue for another 4 years.