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Post by mietek on Jan 12, 2014 8:27:54 GMT
What are your views when loans are extended?
surely if investors do not fill the loan within the agreed timescale then the terms are not attractive.
your thoughts please
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Post by elljay on Jan 12, 2014 10:08:34 GMT
Agreed. Or there are too many active loans. Or there are better returns elsewhere. Or everyone's spent their cash on Christmas...  There's been at least one recently where the borrower said they'd accept a smaller amount and the loan was extended after that point which meant that interest would start accruing later. From memory on another one TC recognised that and the interest was due to start, I think, immediately after the new close date. I may be misremembering though. I've deleted the emails now. |
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agent69
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Post by agent69 on Jan 12, 2014 10:37:19 GMT
Agreed. Or there are too many active loans. Or there are better returns elsewhere. Or everyone's spent their cash on Christmas... There's been at least one recently where the borrower said they'd accept a smaller amount and the loan was extended after that point which meant that interest would start accruing later. From memory on another one TC recognised that and the interest was due to start, I think, immediately after the new close date. I may be misremembering though. I've deleted the emails now. I believe that on the large airline loan there was agreement to pay interest from a specified date, so the extension didn't affect anything. Personally I'm not a fan of extensions, especially if the loan still doesn't fill (which looks the case in a couple of the recent offerings).
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spiral
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Post by spiral on Jan 12, 2014 19:33:34 GMT
I'm also not keen on them drawing a loan that is not fully funded. I make my bid based on the plan they have and that can't always play out if the loan is not fully funded.
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Post by mrclondon on Jan 12, 2014 20:10:51 GMT
I'm also not keen on them drawing a loan that is not fully funded. I make my bid based on the plan they have and that can't always play out if the loan is not fully funded. The second extension on the London restaurant group loan listing seemed delibrately focussed on reaching the minimum threshold for drawdown (£300k; of which just £9k now missing). But like you I have concerns if borrowers then try to accomplish too much with the funds they have managed to attract.
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pikestaff
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Post by pikestaff on Jan 13, 2014 14:04:01 GMT
I'm not overly keen on extensions but accept they are sometimes a necessary evil. It happens much less often on TC than on Assetz.
Drawdowns of a less-than-full loan may or may not be an issue depending on the circumstances. Not worried in the least if it's to fund the expansion of an invoice discounter - they will just write less business than they'd hoped, or come back for more later. Much more worried (to the point that it should not be allowed) if it's a business turnaround situation that is liable to fall over if they don't raise enough. Other situations may fall between these extremes. I think I trust TC and the sponsors to know when to agree to this, and when not to.
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Post by mrclondon on Jan 13, 2014 19:58:17 GMT
What are your views when loans are extended? surely if investors do not fill the loan within the agreed timescale then the terms are not attractive. your thoughts please given the direction the thread has taken, perhaps you would be kind enough to comment on the issue of drawing a loan that is not fully funded, especially given the most recent of the three (?) loans you have sponsored on TC was drawn down c. £85k short of target after a 7 day auction (no extension as I recall). I am a lender on the loan in question, and had this loan in mind when I wrote my earlier reply.
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Post by mietek on Jan 13, 2014 22:42:35 GMT
The loan you refer stated that a lower figure was acceptable and that we reserved the right to request further funding as the order book and business grows. Therefore we raised more than the minimum required and therefore will not be requiring further funding for a few more months. I hope that this answers your question.
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Post by tybalt on Jan 13, 2014 22:53:07 GMT
Pikestaff's reply does it for me. An invoice discounter or lender on log books can simply lend less money. Where the loan is for Capital Expenditure plus the working capital to cover sales growth a smaller loan draw down means a bigger risk
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pikestaff
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Post by pikestaff on Jan 14, 2014 0:47:30 GMT
Further to my previous post I should add that I would generally prefer an extension to the acceptance of a partly-filled loan. It does not add to risk and it does not necessarily delay the actual draw-down date: they can still be working on the legals in the background.
Quite often the need for an extension is not because the terms are unattractive. It can be because the loan has not been sold very well (I can think of a few instances) or there is a temporary imbalance of supply and demand. Until recently TC have had an excess of demand over supply (sometimes too much of an excess) but the large volume of listings over the Christmas period, combined with the IT issues, seems to have reversed the position.
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