jfm
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Post by jfm on Jun 8, 2016 12:04:42 GMT
Could anyone explain simply what a debenture does? Is there anything that prevents the group assets being drained a la BHS? The security here seems rather different to previous (asset based) propositions. Presumably the interest rate reflects that.
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stevio
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Post by stevio on Jun 8, 2016 12:06:42 GMT
Hi ablrate ablrateandy - could you explain the security here in simple terms please! Is it the pub buildings themselves? If so, how much are they worth? The Loan Proposal says a Debenture over B&* L******** Ltd assets - but what are these please? The accounts detail assets as: FIXED ASSETS Leasehold Improvements 871,434 Fixtures & Fittings 624,660 Plant & Machinery 6,396 1,502,490 But what is 'Leasehold Improvements'? |
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mike
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Post by mike on Jun 8, 2016 12:23:26 GMT
On first glance I'm wondering about how the repayments (capital and interest) will be serviced.
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oldgrumpy
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Post by oldgrumpy on Jun 8, 2016 12:33:09 GMT
14% suggests to me that there is considerable risk hidden away somewhere. I will wait until a few pertinent questions have been asked about the security, and answered, before investing my ninepence.
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Post by ablrate on Jun 8, 2016 12:37:01 GMT
Hi
I am meeting with a representative of the borrower later his afternoon and will put questions to them and post the responses.
Thanks for all your input.
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Post by ladywhitenap on Jun 8, 2016 14:01:57 GMT
The term "personal guarantee" rings alarm bells for me. Having some experience of loans back by these on REBS and the ease with which guarantors can slide out of their commitments, I think I'll be sitting on the sidelines watching on this one.
It may well be a perfectly good Loan (and indeed C********k borrowed from REBS a while back and paid the loan off in full early) I'm just nervous of PGs.
I've also got a slice of the other 14% loan here so possibly enough risk for me at the moment.
LW
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SteveT
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Post by SteveT on Jun 8, 2016 14:43:41 GMT
It may well be a perfectly good Loan (and indeed C********k borrowed from REBS a while back and paid the loan off in full early) I'm just nervous of PGs. Ah, THAT's where I recognise the name from. £130k borrowed at something around 15-16% (rated a C on ReBS) in late 2014 as bridging finance secured on a freehold property plus corporate guarantee from B*********t Ltd and 2 PGs. Repaid in full in early 2016 when the property was sold.
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Post by ladywhitenap on Jun 8, 2016 14:52:57 GMT
It may well be a perfectly good Loan (and indeed C********k borrowed from REBS a while back and paid the loan off in full early) I'm just nervous of PGs. Ah, THAT's where I recognise the name from. £130k borrowed at something around 15-16% (rated a C on ReBS) in late 2014 as bridging finance secured on a freehold property plus corporate guarantee from B*********t Ltd and 2 PGs. Repaid in full in early 2016 when the property was sold. OOPs Apologies Steve, I forgot to edit the company name. Yes that is the one. Paid back in Feb 2106. The only contact we Rebs lenders had was a very open straightforward statement from the FD of C*******K. I seem to recall they were regular payers and the early repayment came out of the blue. We had no need to find out the integrity of their PGs in that instance. LW They also invited lenders to a pi88 up in the pub IIRC but it was a long way to travel for a free drink lol
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registerme
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Post by registerme on Jun 8, 2016 16:04:31 GMT
Reading through the (admittedly 2015) accounts, it seems to be carrying a lot of debt. I wonder is this new loan on top of the existing debt, or effectively "replacing" it (ie the Rebs loan referred to by ladywhitenap)? |
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baldpate
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Post by baldpate on Jun 8, 2016 17:10:15 GMT
Ah, THAT's where I recognise the name from. £130k borrowed at something around 15-16% (rated a C on ReBS) in late 2014 as bridging finance secured on a freehold property plus corporate guarantee from B*********t Ltd and 2 PGs. Repaid in full in early 2016 when the property was sold. I think the ReBS rating was actually a "B" (at least that's what the archived loan page says). That one (ReBS loan) at least had some property security, even if it didn't fully cover the loan amount. As far as I can see, this Ablrate loan is to an operating company which doesn't own the properties, and the debenture only picks up the assets of the operating company (fixtures & fittings, stock etc). When push comes to shove, your guess is as good as mine what the personal & corporate guarantees are worth. I'm in no hurry to invest in this one. Not what I'm looking for from Ablrate, really. Also - have a look at the Companies House records for the operating company we are being invited to lend to - with particular reference to the shareholding & directorship : it shows a single shareholder & director, apparently not one of the principals. Maybe the records at CH are out of date, but I'm puzzled.
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nick
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Post by nick on Jun 8, 2016 20:29:56 GMT
Ah, THAT's where I recognise the name from. £130k borrowed at something around 15-16% (rated a C on ReBS) in late 2014 as bridging finance secured on a freehold property plus corporate guarantee from B*********t Ltd and 2 PGs. Repaid in full in early 2016 when the property was sold. I think the ReBS rating was actually a "B" (at least that's what the archived loan page says). That one (ReBS loan) at least had some property security, even if it didn't fully cover the loan amount. As far as I can see, this Ablrate loan is to an operating company which doesn't own the properties, and the debenture only picks up the assets of the operating company (fixtures & fittings, stock etc). When push comes to shove, your guess is as good as mine what the personal & corporate guarantees are worth. I'm in no hurry to invest in this one. Not what I'm looking for from Ablrate, really. Also - have a look at the Companies House records for the operating company we are being invited to lend to - with particular reference to the shareholding & directorship : it shows a single shareholder & director, apparently not one of the principals. Maybe the records at CH are out of date, but I'm puzzled. It was a B rate loan on RebS and had a marginal rate of 17%. From memory, they had a perfect repayment record which is increasingly rare on RebS. Its not clear what the borrower's relationship is with the B****** Group - it is not mentioned as a subsidiary or associate company in B********* July 2015 group accounts. There is a lot of debt in B****** Grp with £2.5m of the £3.9m total secured on charges on the freehold properties held by the group. A positive is that £1m equity was injected last year which I assume means that the shareholders continue have belief in the business and have a reasonable amount of skin in the game (although the equity injection may have been required to satisfy loan covenants?). It would be helpful to get more colour on the exact nature of the relationship between the borrower and B******** Grp beyond the bland statement that the former was 'spun off'. I can see no common share ownership or other control. I think is always important to fully understand the nature of such relationships notwithstanding the guarantees given, particularly in this case of cross guarantees where liability can flow either way.
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stevio
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Post by stevio on Jun 9, 2016 9:42:25 GMT
Hi I am meeting with a representative of the borrower later his afternoon and will put questions to them and post the responses. Thanks for all your input. Any update? I would have thought Ablrate could have answered the questions as they are quite basic?
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nick
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Post by nick on Jun 9, 2016 11:03:36 GMT
Andy - some other questions for which answers would be useful to evaluate the potential loan: - Has B******* Group been in breach of any debt covenants in the past 2 years? Was the equity injection in FY 2015 to address covenant issues?
- What other corporate guarantees has the borrower and B****** Group made to companies outside the group?
- What other personal guarantees has the shareholder provided beyond the brewery loans disclosed in the accounts?
- What are the circumstances behind the resignation of Mr H******** in February 2016? What role did he play at the group and at C*********. What has happened to his 21.5% shareholding in the holding company?
- The exact nature of the borrower's relationship with the the B******* group
Thanks
Nick
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Post by ablrate on Jun 9, 2016 11:21:56 GMT
Hi I am meeting with a representative of the borrower later his afternoon and will put questions to them and post the responses. Thanks for all your input. Any update? I would have thought Ablrate could have answered the questions as they are quite basic? Hi True... but, in the case, and going forward, we want to have the borrower approve everything we comment upon. It makes sense fro a regulatory perspective and a commercial perspective. Just collating various answer at the mo.
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stevio
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Post by stevio on Jun 10, 2016 9:25:15 GMT
ablrate ablrateandy Any update? I would have thought Ablrate could have answered the questions as they are quite basic? Hi True... but, in the case, and going forward, we want to have the borrower approve everything we comment upon. It makes sense fro a regulatory perspective and a commercial perspective. Just collating various answer at the mo. This is going to extend questions by several days then, or weeks at this rate! One of the good things about Ablrate was the quick responsiveness and the openness about the loans.........
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