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Post by andrewholgate on Mar 21, 2016 10:20:09 GMT
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Post by oldnick on Mar 21, 2016 11:54:06 GMT
Wot? No asterisks?
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Post by Deleted on Mar 21, 2016 11:55:41 GMT
When do you anticipate it becoming available on site?
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Post by profunder on Mar 21, 2016 12:19:18 GMT
What a laugh on this one.
So they are using the money to acquire another company with debt, to which they are taking on £3m in assertainable debt (£2m to Assetz and £1m prioritised to vendor I assume) and a further amount should the shares fall in 2years.
If their share price falls below £7.50 a serious risk therefore they can't pay.
Assetz here enter an arrangement to which only people with experience of detailed company economics will understand, therefore many investors on this loan will be put in a situation they just don't understand.
I'm sure this looks appealing to those less experienced, but run run a mile from this one. I give it around 20% chance of defaulting by end of 2018.
If you fancy this not to default, just buy their shares instead.
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Post by andrewholgate on Mar 21, 2016 13:50:06 GMT
When do you anticipate it becoming available on site? Credit paper due soon and then drawdown is end of the month.
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am
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Post by am on Mar 21, 2016 14:01:53 GMT
It costs you over 10% to buy their shares - the current touch, after a positive response to this announcement, is 3.75-4.25p. The long term share performance is, let us say, interesting. However up to July 2013 it was a different beast - an internet software/services company. In it's current incarnation it's been a penny share for all of its life.
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Post by profunder on Mar 21, 2016 15:31:38 GMT
... I give it around 20% chance of defaulting by end of 2018. A cumulative default probability of 20% over 2.75 years is about 7%/annum ... that's not any worse than the average AC loan! [br Except there will be no security to recover.
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Post by Deleted on Mar 21, 2016 16:33:01 GMT
profunder. Think you may be being a little harsh on AC there. The debt contribution is <50% of the total consideration, which (while not conservative) is around the typical level you would expect to see in these types of transactions. In terms of future payments, as the senior lender one would think that AC have formally subordinated the deferred consideration such that if the business was to be in breach of any covenants or terms the payment would either be suspended or a lesser amount would be due until such time as the company was fully compliant. Any lender worth his salt wouldn't allow the business to fall into problems as a result of deferred consideration being paid. I would imagine they have a similar mechanism in place for the additional consideration due in the event of a declining share price. Again, the headline didn't say if this would become payable immediately(?) and AC should have suitable protections in place for the lenders. Of more concern to me would be how they are going to repay the capital at the end of the term (given that it is interest-only), do we know if there is a cash lock-in mechanism during the term of the loan to ensure at least a % of cash is 'certain' to be available? Otherwise there must be bricks and mortar in the background to liquidate. profunder your point re. unsophisticated investors not being aware of what they are lending to is correct - I have had concerns for some time that as P2P loans become more structured, the platforms must have a duty to at least have some basic self-certification systems. As much as I am a fan of 'buyer beware', this is an area I know the FCA are concerned about and have intervened in other investment verticals to ensure investors are not jumping in unaware.
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Post by profunder on Mar 21, 2016 18:11:59 GMT
profunder. Think you may be being a little harsh on AC there. The debt contribution is <50% of the total consideration, which (while not conservative) is around the typical level you would expect to see in these types of transactions. In terms of future payments, as the senior lender one would think that AC have formally subordinated the deferred consideration such that if the business was to be in breach of any covenants or terms the payment would either be suspended or a lesser amount would be due until such time as the company was fully compliant. Any lender worth his salt wouldn't allow the business to fall into problems as a result of deferred consideration being paid. I would imagine they have a similar mechanism in place for the additional consideration due in the event of a declining share price. Again, the headline didn't say if this would become payable immediately(?) and AC should have suitable protections in place for the lenders. Of more concern to me would be how they are going to repay the capital at the end of the term (given that it is interest-only), do we know if there is a cash lock-in mechanism during the term of the loan to ensure at least a % of cash is 'certain' to be available? Otherwise there must be bricks and mortar in the background to liquidate. profunder your point re. unsophisticated investors not being aware of what they are lending to is correct - I have had concerns for some time that as P2P loans become more structured, the platforms must have a duty to at least have some basic self-certification systems. As much as I am a fan of 'buyer beware', this is an area I know the FCA are concerned about and have intervened in other investment verticals to ensure investors are not jumping in unaware. I probably sound a little harsh, 50% financing is not large in itself. Often acquisitions will be made from a facility provided by a bank for 100% of the purchase price. However I would expect normally to see EBITA showing 300% of any debt repayments and an acquisition size not more than 20% of parent market cap. I would then expect to have a debenture against the parent company. In this case we can't secure a debenture, other than in respect the target company stock, which by nature is almost worthless if you need to collect it as security. Further this is close to being a reverse takeover according to AIM rules. Maybe I am a synic, I do believe this will be repaid. However compare why you would invest in this vs the GBBA and you should be scratching your head.
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trouble
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Post by trouble on Mar 21, 2016 18:39:47 GMT
And this is why lending money is all about opinions  |
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davex
Member of DD Central
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Post by davex on Mar 22, 2016 11:39:21 GMT
As a new investor to AC , and therefore new to this sub forum, I am surprised not to have seen a response to the concerns above.
For the loan itself, why would I not just keep myself in the GBBA?
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Post by crabbyoldgit on Mar 23, 2016 8:49:32 GMT
I guess ac dare not make any comment that can be construed as advising or supporting investment in a loan an absolute no no re the regulator from previous statements from ac.Hence i suspect the very brief and circumspect blog by Mr Holgate.
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Post by crabbyoldgit on Mar 23, 2016 9:56:47 GMT
Thinking this through a bit further, given the restrictions ac face from the regulator reguarding giving advise on investments.If i was the md of a peer to peer company about to offer a very different loan to a customer base who a fair proportion may not know or understand the product on offer (i am very firmly in that group) Useing this forum's more experianced investers to educate people by throwing a pebble in the pond well before the loan was offered to get a discussion going would be a very clever and good idea.I always thought Andrew Holgate was an intelligent man,now add very clever.  |
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oldgrumpy
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Post by oldgrumpy on Mar 23, 2016 11:34:55 GMT
Thinking this through a bit further, given the restrictions ac face from the regulator reguarding giving advise on investments.If i was the md of a peer to peer company about to offer a very different loan to a customer base who a fair proportion may not know or understand the product on offer (i am very firmly in that group) Useing this forum's more experianced investers to educate people by throwing a pebble in the pond well before the loan was offered to get a discussion going would be a very clever and good idea.I always thought Andrew Holgate was an intelligent man,now add very clever. Hey, crabbers! Are you fishing for knighthood directorship?
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jonah
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Post by jonah on Apr 1, 2016 5:58:53 GMT
Is this / was this loan 250? Project B******y? I thought I'd seen docs on this which had lots of details, but can't see anything there now. I think this was the 2m financial loan or is my memory playing tricks on me?
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