Hi All
Questions and answers:
jfm - 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.
Ablrate - A debenture creates a series of fixed and floating charges over the assets of a company. The fixed charges attach to assets which are not disposed in the ordinary course of business. A floating charge is taken over the remainder of the company's undertaking.
So any asset that is in place, like the electronic equipment, the kitchen equipment and anything fixed that company owns is charged. The lease is also essentially charged and has value (the lease is a 20 year lease) stock, cash, etc which is used in the everyday running of the business has a floating charge (meaning the charge over these items remains but can be sold without affecting a satisfaction of security each time). I can't comment on what happened at BHS, but the charge over fixed assets is there and would a be breach if they were salted away.
mike - On first glance I'm wondering about how the repayments (capital and interest) will be serviced.
The group is turning over £16 million p.a presently and is projected to develop those revenues going forward that can more than service this loan. ((Ablrate - I would imagine that the sports bars will be doing very well this summer with the Euros and Olympics))
registerme - 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)?
In absolute terms there is a large amount of debt within the business, the management team are highly experienced at managing businesses of this nature which the progression of the business shows. Debt has been used to acquire trading assets and refurbish the estate so as to generate more cash flow within the group. There has been no consolidation of debt or any borrowings that would be classed as replacement of debt. The group has an A1 track record with all borrowers, including another p2p lender.
Has B******* Group been in breach of any debt covenants in the past 2 years?
No, the company hasn't missed a DDM payment on any loans.
Was the equity injection in FY 2015 to address covenant issues?
No, it was to strengthen the balance sheet and give the business more fire power for acquisitions.
What other corporate guarantees has the borrower and B****** Group made to companies outside the group?
Nothing to companies outside of the group.
What other personal guarantees has the shareholder provided beyond the brewery loans disclosed in the accounts?
Approximately 50% of the loans have been guaranteed by the shareholder. It is important to appreciate that this is a substantial individual with a very good track record in the industry. It is unlike some PG's where there are few assets outside of the personal home, which can cause issues.
What are the circumstances behind the resignation of Mr H******** in February 2016?
The director retired from the group because of personal reasons and a move to the south of England. There is nothing exciting or acrimonious, he just needed to prioritise his personal situation.
What role did he play at the group and at C*********.
He was in an operational capacity but his departure has not affected operations as there are multiple suitable staff as replacement.
What has happened to his 21.5% shareholding in the holding company?
The personal guarantor bought it.
The exact nature of the borrower's relationship with the the B******* group
J*** R***** is the sole director of the business. She is very experienced at the retail end of the leisure trade and is therefore the most appropriate person. The business is a 100% subsidiary of B********** ltd - companies house changes just don't reflect this yet. Even though the main directors aren't on the paperwork as directors of the business, they are de facto directors / managers by virtue of their 100% ownership of the company and all the guarantees that are in place.
Ablrate - happy to pass on any other questions - this will also be posted in the Admin section of the loan.