star dust
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Post by star dust on Dec 3, 2015 12:17:34 GMT
Not quite sure what to make of MTs new loan partner. It's not a sector I know much about, but 80% LTV on an asset that decreases in value doesn't sound too enticing, on the other hand there is at least a buy back pledge for defaults, and security on 50% of the loan book. Also the company has only been in business two years. Any views anyone?
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Post by Deleted on Dec 3, 2015 12:20:11 GMT
80% seems high and of course it depends on what the V is. Are we talking Glaziers V, the buy V or the sell V.
Right now I think Ed may be rushing it,
So I think we need to know more
Why 80%?
What V?
From the website
Edit V
• The loan represents just 50% of the total amount receivable under the Hire Purchase Agreements; and • The loan represents 80% of the current retail value (according to Glasses Guide) of the underlying vehicles.
which makes a bit more sense
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star dust
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Post by star dust on Dec 3, 2015 12:23:10 GMT
Yes it does seem rushed, only four hours to think it over before investing doesn't seem very long.
In Edit: Are these likely to be the only loans to this partner I wonder?
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ben
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Post by ben on Dec 3, 2015 12:26:52 GMT
The assets will depreciate over time , so what happens in 6 months you get the option to renew but the cars will be worth less then they are now so the LTV will be far higher still
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Post by MoneyThing on Dec 3, 2015 12:33:01 GMT
80% seems high and of course it depends on what the V is. Are we talking Glaziers V, the buy V or the sell V. Right now I think Ed may be rushing it, So I think we need to know more Why 80%? What V? From the website Edit V• The loan represents just 50% of the total amount receivable under the Hire Purchase Agreements; and • The loan represents 80% of the current retail value (according to Glasses Guide) of the underlying vehicles. which makes a bit more sense Afternoon. The value is based on Glass's Guide Retail. The portfolio is managed in combination of the two aspects; up to 80% current Value of the asset AND up to 50% of the total current Outstanding Receivables. Kind regards, Ed.
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Post by mrclondon on Dec 3, 2015 12:34:17 GMT
MoneyThing - can you explain what arrangements are in place should the partner cease trading.
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Post by Deleted on Dec 3, 2015 12:35:23 GMT
if we assume 20% dep per year as a basic. The 10% in 6 months so LTV 89% at each 6 month end, is that roughly it? I guess the actual cars that cycle in and out of the accounts will change but their dep rate will stay roughly-roughly the same and the churn will keep dropping the LTV backtowards 80%. So assuming 1/6 change every month probably more like 86% ? I guess we need Ed to offer some calcs on this. Ed?
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Post by MoneyThing on Dec 3, 2015 12:35:42 GMT
Yes it does seem rushed, only four hours to think it over before investing doesn't seem very long. In Edit: Are these likely to be the only loans to this partner I wonder? Acknowledged. I apologise for not providing a little more time to dwell on these loans, we are somewhat restricted at the moment in order to schedule the release of the SM. I would also like to mention that these will be the first of many of these portfolio's of HP contracts with this borrower. Regards, Ed.
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Post by MoneyThing on Dec 3, 2015 12:37:21 GMT
The assets will depreciate over time , so what happens in 6 months you get the option to renew but the cars will be worth less then they are now so the LTV will be far higher still Yes these are depreciating assets, however the portfolio will be reviewed and updated with new HP contracts on a monthly basis so as to maintain the maximum overall LTVs. EDIT: Note that the total current Outstanding Receivables will also reduce each month as their borrowers repay monthly both capital & interest. This, combined with the depreciation mean that more HP agreements will be added to the portfolio monthly to maintain the overall LTVs.
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Post by MoneyThing on Dec 3, 2015 12:39:35 GMT
MoneyThing - can you explain what arrangements are in place should the partner cease trading. In our agreement, we have step-in rights to take over these contracts. Regards, Ed.
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alanp
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Post by alanp on Dec 3, 2015 12:55:36 GMT
A Company Check shows that the named person resigned from the board in March 2015 yet the supplied information on MT has him down as the Chairman. I guess one of them is incorrect. Any comment please MoneyThing Ed? Thanks
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am
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Post by am on Dec 3, 2015 13:02:04 GMT
It's not explicitly stated either way - am I correct in believing that these are non-amortising loans? (Are all MT loans non-amortising? and would this always be the case?)
My reading is that this is effectively (and perhaps truly) a secured loan to AE, and the risk is not the default of individual HP loans (AE manage the portfolio to maintain the value of the security, and from what I'm told make from default loans, in that they get to sell the asset over again), but the failure of AE as a company.
The loan would appeared to be equivalent to a debenture over the income from the HP agreements - in the event of default I read this as were are entitled to the income from the HP agreements, and should any of those default, to the underlying physical security.
So, what happens if AE runs into problems. Is the income from the portfolio contractually earmarked to pay our interest, or could the interest go astray if AE ran in cash flow problems? If AE goes bust is the portfolio and it's income legally assigned to us rather than being part of the general assets of the company, and is there a mechanism to run off the HP agreements (presumably with any surplus being returned to the hypothetical administrators of AE).
The other question is if the worse comes to the worse, what is the LTV compared not just the capital (50%) but to the total of capital and accruing interest (do we continue to receive interest after the loan defaults in the capital is repaid) over the lifetime of the HP agreements (not the lifetime of our loan to AE).
I think we need to have more of the legal structure of the loan explained to us, and what MT plan to do to secure our interests in the event of a default.
PS: For the people worrying about depreciating security, as I read it the portfolio is supposed to be managed to maintain the value of the security, i.e. AE's security depreciates, ours doesn't. But there remains a potential risk of a breach of that contract term leaving us more exposed that expected.
Edit: I see that some of the questions have been asked and answered while I was composing this.
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Post by MoneyThing on Dec 3, 2015 13:08:43 GMT
A Company Check shows that the named person resigned from the board in March 2015 yet the supplied information on MT has him down as the Chairman. I guess one of them is incorrect. Any comment please MoneyThing Ed? Thanks Firstly, please could I ask you to edit your post and redact/blank-out the directors name and also remove the link. You are correct in that he is not a current director, however he is chairman of the company. Regards, Ed.
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am
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Post by am on Dec 3, 2015 13:08:48 GMT
I don't see the point of having two separate managed portfolios with the same interest rate and duration, instead of one. What am I missing?
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am
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Post by am on Dec 3, 2015 13:11:41 GMT
Firstly, please could I ask you to edit your post and redact/blank-out the directors name. You are correct in that he is not a current director, however he is chairman of the company. Regards, Ed. I thought that the chairman of a company was de jure a director of the company. Do I misunderstand company law? Or did you mean that he's not an executive director?
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