agent69
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Post by agent69 on Aug 4, 2014 17:48:23 GMT
It may be another senior moment, but the email I received today regarding the FCF loan looked like it was offering up to 7% cash back.
They must be desperate
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j
Member of DD Central
Penguins are very misunderstood!
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Post by j on Aug 4, 2014 20:35:45 GMT
If I was a TC member I would be interested. It does beg the question though that if the loan was a solid one, it would fill within a reasonable time frame, unless there are liquidity issues
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pikestaff
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Post by pikestaff on Aug 4, 2014 21:17:50 GMT
...I suppose given that it's a 5-year loan, the borrower might prefer to pay say an average of 5% upfront to a percentage of the bids (say 80% who do £2k+). That works out still cheaper than raising the running yield to say 13%... They can do the cashback without re-starting the auction, which they'd have to do if they changed the rate. I do think the cashback is unnecessarily high, though.
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wysiati
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Post by wysiati on Aug 5, 2014 10:38:45 GMT
This a leveraged business model with TC sitting behind the senior lender which will have a capital commitment many times the TC balance. Interest only for at least 2 years.
The TC funds are needed to gear up via an extension of the the senior lender facility and to maintain reputation. The incentives presumably also partly reflect the alternative (unfunded) scenario cost in terms of business lost/foregone.
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bernard
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Post by bernard on Aug 5, 2014 12:45:22 GMT
All imho: TC is a thin mezzanine/subordinated slice of the cap structure in this company, with only minimally sufficient equity ahead of it. It should be priced accordingly; unfortunately given the too low starting level even the 7% bonus doesn't get it to the right level for me (15%).
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pikestaff
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Post by pikestaff on Aug 5, 2014 20:59:03 GMT
Not that thin, but I agree it's highly geared. I'm not sure what the right price is, but I'm leaning toward 12%ish, once the PG is factored in (which would make the incentives about right, so my previous post was wrong). There are substantial net assets (in addition to the family home) backing the PG. However, there are some questions about the PG because the present proposals dilute the security on loan 1. If the PG on loan 2 was subordinated to that on loan 2, I'd agree that 15% is the right rate for loan 2.
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Post by bracknellboy on Aug 6, 2014 6:28:37 GMT
so we need to wait and see what the 'resolution' to the PG issue is.
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