david42
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Post by david42 on Dec 22, 2017 15:47:52 GMT
Borrower: Air C**** Limited
Amount: £850,000
Term: 36 months (18 months minimum term)
Rate: 13% - Amortising
Primary Security: Chattel Mortgage over the two Aircraft
Secondary Security: Debenture over the SPV owning the aircraft and pledge of 100% of the equity; Debenture over Operating Company (the Borrower); Director Personal Guarantees
Instant Returns: Enabled
Loan Live: bidding from 2pm 23 December 2017
Related loans: none. This is a new borrower.
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eeyore
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Post by eeyore on Dec 22, 2017 15:53:55 GMT
The Borrowing Proposal does at least flag-up the risk of "regulatory change". With the aircraft registered in Bulgaria but able to be employed anywhere in the EU, I foresee administrative problems when (if) the UK leaves the EU. On the assumption that there's a two-year transition period to get such problems sorted-out (March 2021), then this loan should just have been paid off in time (Jan 2021); exit without a transition period could be a major threat.
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ablender
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Post by ablender on Dec 22, 2017 16:08:38 GMT
I am finding it hard to value the security. The only real figures I can see is the value at which the planes were bought, just over £750k. Their value now will be less. This for a loan of £850k. I know that the description mentions pledges, debentures and personal guarantee, but is there a way to put a value to all of this?
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Post by stevel on Dec 22, 2017 17:04:06 GMT
There's a current valuation for the aircraft giving a total of £1,142,538 - giving ltv of 74.4% and this is meant to decrease to 70.1% when an engine is replaced in February
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ablender
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Post by ablender on Dec 22, 2017 17:41:07 GMT
There's a current valuation for the aircraft giving a total of £1,142,538 - giving ltv of 74.4% and this is meant to decrease to 70.1% when an engine is replaced in February stevel : can you see any reason for the difference in the values, i.e. the one quoted as the amount the planes were bought for and the value that you quote?
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Post by df on Dec 22, 2017 17:43:39 GMT
The Borrowing Proposal does at least flag-up the risk of "regulatory change". With the aircraft registered in Bulgaria but able to be employed anywhere in the EU, I foresee administrative problems when (if) the UK leaves the EU. On the assumption that there's a two-year transition period to get such problems sorted-out (March 2021), then this loan should just have been paid off in time (Jan 2021); exit without a transition period could be a major threat. I hope there will be a transitional period, it will be a bit of catastrophy if they won't agree on this. Also the loan is amortising, so some of the capital should be repaid before Brexit, which reduces the risk.
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stevio
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Post by stevio on Dec 22, 2017 21:28:16 GMT
ablrate as you have expertise in this area, could you walk us through how the planes values are derived? Is this standard industry way of valuation? Why the purchase price and valuation differ? How the planes would be sold in default and likely sale value? Level of depreciation? Cost of maintenance and regulatory approvals etc
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Post by stevel on Dec 22, 2017 23:49:13 GMT
There's a current valuation for the aircraft giving a total of £1,142,538 - giving ltv of 74.4% and this is meant to decrease to 70.1% when an engine is replaced in February stevel : can you see any reason for the difference in the values, i.e. the one quoted as the amount the planes were bought for and the value that you quote? Think its the EASA compliance
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stub8535
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personal opinions only. Not qualified to advise on investment products.
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Post by stub8535 on Dec 23, 2017 4:27:32 GMT
1,142k is euros from the valuation documents.
These documents use abl supplied data and the proportion of half life remaining on key components to come to a value.
Each cycle (landing or engine start) and flying hour will reduce the value proportionally. As will heavy landings if memory serves me correctly.
As for the price paid, it seems that the two parties are well known to each other. It may also reflect the current servicing needs if the abl borrower were to pay for component purchase and fitting plus the 200k euro certification mentioned in the value. Maybe some back scratching deals going on, not unusual in IOM from what I saw when my sister was resident. Spares are supposedly plentiful so keeping the crates in the sky should be reasonable but offset this against poor fuel consumption and it may skew things considerably. I used to love trading spares in aging aircraft systems. Concorde was the hardest to get for a good price post Boeing/ McDonnell Douglas cabal action framed as environmental protection.
Still undecided myself.
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ceejay
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Post by ceejay on Dec 23, 2017 9:35:21 GMT
1,142k is euros from the valuation documents. No, the valuations add up to 1293k euros which has been converted at 0.88 to 1142k pounds.
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eeyore
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Post by eeyore on Dec 23, 2017 10:30:59 GMT
Maybe some back scratching deals going on, not unusual in IOM I'm not sure how much reliance to place on the price the borrower has arranged with the Bulgarian company (B*** F***) which holds the registration & EU operating licence of these two aircraft and will continue to service them, in the light of the fact that the borrower's Director and CEO holds 70% of the equity in the Bulgarian company. Maybe there there's not enough demand in Bulgaria and he thinks they'd be more profitably employed based in IoM. Given the borrower's principal apparently started his air freight career in Kazakhstan it's not surprising that Antonovs are his aircraft of choice.
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wilja
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Post by wilja on Dec 23, 2017 10:48:57 GMT
Thanks for insights so far. Any news from DD Central to share?
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stub8535
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personal opinions only. Not qualified to advise on investment products.
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Post by stub8535 on Dec 23, 2017 11:00:52 GMT
Thanks for insights so far. Any news from DD Central to share? Nothing yet.
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elliotn
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Post by elliotn on Dec 23, 2017 11:42:04 GMT
Maybe some back scratching deals going on, not unusual in IOM I'm not sure how much reliance to place on the price the borrower has arranged with the Bulgarian company (B*** F***) which holds the registration & EU operating licence of these two aircraft and will continue to service them, in the light of the fact that the borrower's Director and CEO holds 70% of the equity in the Bulgarian company. Maybe there there's not enough demand in Bulgaria and he thinks they'd be more profitably employed based in IoM. Given the borrower's principal apparently started his air freight career in Kazakhstan it's not surprising that Antonovs are his aircraft of choice. BF are only current flight operators, the two owners of the planes are distinct ie A******** is a Lithuanian cargo airline.
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kaya
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Post by kaya on Dec 23, 2017 12:20:34 GMT
Interesting proposition this. Effectively a business start-up, with two aged aircraft, there is the potential for various things to go wrong. Not sure if 13% reflects the risk.
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