ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Oct 2, 2016 12:52:20 GMT
I've read the F&P prospectus and the MT commentary text several times, and I still don't really understand this set-up. Am I correct in understanding that D***y themselves neither grow the grapes that are used in their product, nor do they actually manufacture their product? That the product is actually made by F***** P*** F*** (W***** E***** W****y) under contract? How is F***** P*** F*** in any sense a 'bonded warehouse'? Are D**** essentially just finance, brand-building and marketing, and wholly dependent on third parties for the quality of their raw materials and the quality of their finished product (and hence its reputation)? The fifth paragraph of the Sponsor's Report (page 5 of the Info pack) states (my boldening) "The loan will be secured by debenture of all the assets of D**** W*** L****** which is the manufacturer and an inter-company guarantee from D**** F*** E****** L******, the holding company. This secure method of storage will enable us to monitor and control the stock to ensure that the present loan never exceeds 50% of the value of the stock held by the company at any time. " What secure method of storage is being referred to? This statement is a complete non-sequitur. Indeed, I found most of the Information Pack seemed more designed to obscure the fundamentals of the borrower's operation and the nature of the lenders' security than to elucidate it. Is it just me, or does anybody else find it unclear? Could anybody (Moneything? pleeease?) shed some light. I am Ivor Freedman and my company F & P Sponsors Ltd sponsored this loan on Moneything 1) Not owning a vineyard. This is to me a distinct advantage. D**** have a contract with farmers to take their crops each year. That means that they only pay for what they receive and if any year there is a poor harvest then the risk is with the vineyard not D****. This set up us well known in the trade as "negociant" Some of the largest brands in the world operate this way. D**** have a contract with a winemaker to make and store the wine for them. The winery make their own wine and also offer this service to other winemakers. You can appreciate that there is a large capital investment in plant and equipment and this arrangement is economical for all parties and makes a lot of sense. 2) The wine is held in a Bonded Warehouse whereby the stock cannot leave without paying the excise duty or transferring to another bonded warehouse. HMRC require strict controls on the movements in nd out of the bonded store. 3) Our Information pack is intended to be read with a full document explaining the whole D**** proposition and prepared by them. If it has not been uploaded , I will ask Moneything to do so. Hope this helps Thanks and welcome. Always good to get input from the introducer. MT have only uploaded the financials from the full investment proposition not all the accompanying testimony (eg covering point 1)) which is available on your own site so would be good if this could be provided. {edit see Eds already on it] Incidentally should you wish to remove your two previous attempts to post, just click on the little cog displayed at top right of each post and select delete post from drop down menu.
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ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
Posts: 10,877
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Post by ilmoro on Oct 2, 2016 13:44:03 GMT
MoneyThing ivorf41 further to my earlier query regarding the apparent current equity raise here. There is also mention in the accounts of further debt funding planned for 2018. Can you provide any comment on this and what impact it would potentially have on the MT loans?
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stevio
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Post by stevio on Oct 2, 2016 14:30:37 GMT
MoneyThing - What assets do D**** F*** E****** Ltd have as there is fixed and floating charge over their assets too? - Is the SSAS loan the only other current debenture over the company? - Its mentioned that the loan will be used to purchase further stock, will that stock be purchased by one one of the two companies where there is a fixed and floating charge (hence further lowering the LTV), or another company? Thanks Thanks ivorf41 and MoneyThingI can see the SSAS loan in the new document However, would you mind answering the other two questions please?
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baldpate
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Post by baldpate on Oct 2, 2016 15:17:02 GMT
ivorf41 & MoneyThing - thanks for uploading additional document - it supplies most of the missing pieces I was looking for about company's operation.
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Post by Deleted on Oct 2, 2016 15:30:44 GMT
Surely the idea of the bonded warehouse is that the duty is not paid until it comes out of there in a couple of years time - seems unlikely to be in current "cost"? This+1 Duty is not payable whilst under storage at a bonded warehouse. Edit: The reassurance I would like is whether or not the proposer has insurance for the goods whilst in store, or whether they are reliant upon the (warehouse-keeper's liability) insurance held by the warehouse operators. I understand the way that "bonded" works however for us to be able to realise our asset if this all goes t@@@ up the things we would have to do is 1) First pay HMRC, its duty. Hence the cost of the asset to allow us to recoup potential loses should include duty. I note that M&S may pay duty up front, I'm not so sure we should be sharing their commercial deals so openly but that is certainly not the norm Being one of the best brands is of course meaningless. My concerns would be rather do they have good cash flow, and of course they always have a gap between when the wine is ready to stock (late autumn/ early winter) and when they sell it (three years or more later). Given that they have no humming equipment ready to shake the fizz to catch the dead yeasts, no hillsides bathed in autumnal mists, what exactly do they need this cash for? Are they funding additional stocks to increase their revenue?
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Post by trentenders on Oct 2, 2016 16:45:23 GMT
We only need to pay duty if us lenders start drinking it or if we go into the wine retailing/wholesaling business. If MT do ever take control of the goods I would presume that they'll look for a buyer to take on the goods in their current 'bonded' state. Duty only becomes payable once it's ready, in the bottles and leaving the warehouse (unless it's being taken to another bonded facility).
If MT ever get to the stage of paying duty then at least we'll be guaranteed of having a saleable product. And duty payable would be included in the sales invoice.
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am
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Post by am on Oct 2, 2016 16:55:00 GMT
Being one of the best brands is of course meaningless. My concerns would be rather do they have good cash flow, and of course they always have a gap between when the wine is ready to stock (late autumn/ early winter) and when they sell it (three years or more later). Given that they have no humming equipment ready to shake the fizz to catch the dead yeasts, no hillsides bathed in autumnal mists, what exactly do they need this cash for? Are they funding additional stocks to increase their revenue? Stocks/WIP are projected to triple over the next 7 years. They are projected to be profitable this year (behind their hopes at the time of the Seedrs campaign when they expected to reach profitability in 2014). They are projected to be cash flow positive in 2018, and from 2020 onwards. It is because of the cash drain of increasing their stocking levels that they are looking for a loan (and a similar amount of equity investment). As I see it, there are three questions 1) Do you believe the business plan? (If yes, the security doesn't matter.) I'm not qualified to have an opinion either away. 2) What value can be extracted from the security in the event of the loan going wrong? The "true" LTV, against market value, seems to be pretty low (and will get lower as tranches are repaid), but we don't have much idea of the distressed sales value. 3) What happens if there is a disaster at the warehouse? One would expect that the borrower would ensure that insurance is in place, as loss of their stocks would otherwise bring down the company, but on the principle of trust but verify it would be nice to see that this addressed explicitly beyond the condition precedent of proof that the warehouse has insurance in place at the start of the loan. I do wonder how dependent they are on the winemaker, who seems to have a good record. What happens if the winemaker gets poached by Taittinger, or the borrower has a falling out with the winery? It looks quite good to me, but I get nervous with business plans that depend on large amounts of growth. (This is a rather AC type of loan - a stocking loan for a SME business.)
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jonah
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Post by jonah on Oct 2, 2016 17:41:11 GMT
I agree with am last point, this doesn't feel like an asset backed loan, more of a business working capital one. Which may not be a bad thing, however is MoneyThing appropriately geared up to monitor the company status etc against this loan?
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Post by ivorf41 on Oct 2, 2016 18:13:46 GMT
MoneyThing - What assets do D**** F*** E****** Ltd have as there is fixed and floating charge over their assets too? - Is the SSAS loan the only other current debenture over the company? - Its mentioned that the loan will be used to purchase further stock, will that stock be purchased by one one of the two companies where there is a fixed and floating charge (hence further lowering the LTV), or another company? Thanks Thanks ivorf41 and MoneyThing I can see the SSAS loan in the new document However, would you mind answering the other two questions please? Response by IvorF Not only de we have a debenture on the parent company but we also have a charge over the shares. The purpose of the debenture on the parent company and the share charge is control. The assets are in the D***Y W***E Ltd. Actually there were 2 SSAS loans one secured and one unsecured. The secured loan was repaid at drawdown and the other loan subordinated to the MT loan. The stock will be purchased by the subsidiary. All commercial activity is in the subsidiary.
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Post by ivorf41 on Oct 2, 2016 18:26:21 GMT
Being one of the best brands is of course meaningless. My concerns would be rather do they have good cash flow, and of course they always have a gap between when the wine is ready to stock (late autumn/ early winter) and when they sell it (three years or more later). Given that they have no humming equipment ready to shake the fizz to catch the dead yeasts, no hillsides bathed in autumnal mists, what exactly do they need this cash for? Are they funding additional stocks to increase their revenue? Stocks/WIP are projected to triple over the next 7 years. They are projected to be profitable this year (behind their hopes at the time of the Seedrs campaign when they expected to reach profitability in 2014). They are projected to be cash flow positive in 2018, and from 2020 onwards. It is because of the cash drain of increasing their stocking levels that they are looking for a loan (and a similar amount of equity investment). As I see it, there are three questions 1) Do you believe the business plan? (If yes, the security doesn't matter.) I'm not qualified to have an opinion either away. 2) What value can be extracted from the security in the event of the loan going wrong? The "true" LTV, against market value, seems to be pretty low (and will get lower as tranches are repaid), but we don't have much idea of the distressed sales value. 3) What happens if there is a disaster at the warehouse? One would expect that the borrower would ensure that insurance is in place, as loss of their stocks would otherwise bring down the company, but on the principle of trust but verify it would be nice to see that this addressed explicitly beyond the condition precedent of proof that the warehouse has insurance in place at the start of the loan. I do wonder how dependent they are on the winemaker, who seems to have a good record. What happens if the winemaker gets poached by Taittinger, or the borrower has a falling out with the winery? It looks quite good to me, but I get nervous with business plans that depend on large amounts of growth. (This is a rather AC type of loan - a stocking loan for a SME business.) Response by Ivor F As part of our due diligence, we had meetings with the winery and their concern was that the agreement would continue if we foreclosed. We have step in rights if we were to look to our security. I am very positive about the cashflow of the business. It is unlike a lot of businesses, in that you have to hold the stock for upto 3 years before you can sell it ( shorter for non-vintage). They have sufficient stock maturing to really ramp up the sales. The demand is strong and a lot of product will be going for export. We initially saw this proposition 2 1/2 years ago but it was a start up at that time. In the intervening period they raised capital, built up there stock and got the product into impressive outlets and this year became profitable. They are raising more equity at this time. Taitinger have already bought land in Kent and Pommery are looking to get into the English sparkling wine market. I am sure that D***y will be a target in the future, with its "English Chic" brand.
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DeafEater
Member of DD Central
Extremely Moderate
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Post by DeafEater on Oct 2, 2016 19:00:19 GMT
Bit of an aside while we're all discussing risk and security but I note that although the MT website says that lenders:
<mod removed link to introducer's website as it identifies the borrower> says that: I feel 5% less effervescent about this offering than I did.
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Post by Ton ⓉⓞⓃ on Oct 2, 2016 22:40:57 GMT
Not sure why but forum Users seem to keep id-ing the Borrower in the loan, it's happened three times now I can only think it's an effect of the W***. So put your glasses on and please just double check if your post names the Borrower or links to them.
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james
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Post by james on Oct 3, 2016 4:39:10 GMT
Not sure why but forum Users seem to keep id-ing the Borrower in the loan, it's happened three times now I can only think it's an effect of the W***. So put your glasses on and please just double check if your post names the Borrower or links to them. Undoubtedly accidental but this discussion is providing an excellent example of how the policies here are preventing lenders from doing proper cooperative due diligence checks by removing references to key information needed to properly understand the situation of the borrower.
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SteveT
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Post by SteveT on Oct 3, 2016 6:40:01 GMT
Not sure why but forum Users seem to keep id-ing the Borrower in the loan, it's happened three times now I can only think it's an effect of the W***. So put your glasses on and please just double check if your post names the Borrower or links to them. Undoubtedly accidental but this discussion is providing an excellent example of how the policies here are preventing lenders from doing proper cooperative due diligence checks by removing references to key information needed to properly understand the situation of the borrower. No, they're not. All registered MT lenders have access to the loan information provided and can easily decode the redacted names that need to be used here (in a public forum). Anyone who isn't a registered MT lender has no business knowing the identities of the parties involved. And anyone that can't use Google to find the introducer's website shouldn't be let loose with real money.
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Post by chielamangus on Oct 3, 2016 8:16:08 GMT
Undoubtedly accidental but this discussion is providing an excellent example of how the policies here are preventing lenders from doing proper cooperative due diligence checks by removing references to key information needed to properly understand the situation of the borrower. No, they're not. All registered MT lenders have access to the loan information provided and can easily decode the redacted names that need to be used here (in a public forum). Anyone who isn't a registered MT lender has no business knowing the identities of the parties involved. And anyone that can't use Google to find the introducer's website shouldn't be let loose with real money. What arrogance. You just want to waste everyone's time, with everyone doubling up on searches. Now "moderate" this!
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