ptr120
Member of DD Central
Posts: 1,197
Likes: 1,346
|
Post by ptr120 on Aug 3, 2017 12:59:48 GMT
New loan going live today. Nice to see a new borrower on the platform, but I'm not quite sure if a debenture counts as an asset in terms of security. Will be interesting to read the details of this one:
Opportunity Overview:
****** Limited, the fastest growing water retail company in the newly deregulated UK water market, has a short term cash flow requirement to accelerate the growth of the business. The Company wishes to trigger an option within the regulatory water Wholesale-Retail Code (WRC) framework which will improve the Company’s cashflow by £1.2 million within 3 months.
****** Limited, which is regulated by Ofwat, is a licenced supplier of water and waste water services, to:
Scottish businesses, with the licence granted in October 2015 and
the English Market with the licence granted in March 2017 ****** is the UK’s fastest growing water retail company, with over 35% of customers that have switched since the English market deregulated in April '17 choosing ****** has their preferred supplier.
Loan Details:
Amount: Up to £450,000
Term: 9 months (6 months minimum term)
Rate: 14% - Interest Only
Security: Corporate Debenture over company & Personal Guarantee from each of the three Directors of the Company.
Instant Returns: Enabled
Loan Live: 4pm 3 August 2017
|
|
nick
Member of DD Central
Posts: 1,055
Likes: 825
|
Post by nick on Aug 3, 2017 13:38:37 GMT
The advantage of having a debenture vs just being an unsecured creditor is that you have priority claim in any assets the debenture covers (usually a floating charge over the company's which then crystallises in an insolvency event). Only a fixed charge on specific assets will take claim preference. Therefore, depending on the exact nature of the debenture, it reduces the dilution in payout of any recovery. That leaves the key question of the quality and quantity of assets the debenture operates and how quickly those values could deteriorate in the lead up to a default - I suspect that trade debtors and intangibles will make up the bulk of the asset value........
|
|
registerme
Member of DD Central
Posts: 6,193
Likes: 6,002
|
Post by registerme on Aug 3, 2017 15:21:39 GMT
I like the loan, but I can't actually find any of the details (excepting the disclosure of a link with #10000072) around the personal guarantees. Am I missing something?
|
|
ptr120
Member of DD Central
Posts: 1,197
Likes: 1,346
|
Post by ptr120 on Aug 3, 2017 15:34:23 GMT
I like the loan, but I can't actually find any of the details (excepting the disclosure of a link with #10000072) around the personal guarantees. Am I missing something? I thought the same thing. ablrate please can you advise on the worth of the individuals providing these guarantees? Also, if there are directors loans in the business, does the debenture have priority over such loans?
|
|
elliotn
Member of DD Central
Posts: 3,063
Likes: 2,681
|
Post by elliotn on Aug 3, 2017 15:45:01 GMT
The advantage of having a debenture vs just being an unsecured creditor is that you have priority claim in any assets the debenture covers (usually a floating charge over the company's which then crystallises in an insolvency event). Only a fixed charge on specific assets will take claim preference. Therefore, depending on the exact nature of the debenture, it reduces the dilution in payout of any recovery. That leaves the key question of the quality and quantity of assets the debenture operates and how quickly those values could deteriorate in the lead up to a default - I suspect that trade debtors and intangibles will make up the bulk of the asset value........ Company has net laibilities increased by further loss this year.
|
|
nick
Member of DD Central
Posts: 1,055
Likes: 825
|
Post by nick on Aug 3, 2017 15:51:52 GMT
ablrateP16, para 5 of the loan proposal states "The proposed loan features an uncapped corporate guarantee from the three directors of the Company......." - I assume this should read personal guarantees? Assuming this is the case, are the guarantees joint and several? It would also be useful to be provided an indication of the declared net worth of personal guarantors if possible (in particular any equity in property), even if this is given in aggregate if you can't state them individually given the public nature of this forum.
|
|
SteveT
Member of DD Central
Posts: 6,873
Likes: 7,918
|
Post by SteveT on Aug 3, 2017 15:55:14 GMT
This is one of the few SME loan summaries I've seen where there is a pretty clear commercial logic for the company taking out the loan and a sensible approach to its repayment. I doubt there's a lot in the way of tangible assets behind the PGs, but at least the Directors are putting their financial reputations on the line too. At 14% with a minimum 6 months interest, withheld at drawdown, I was happy enough to partake. Looking at the rate at which it's filling, others appear to feel the same.
|
|
stevio
Member of DD Central
Posts: 2,065
Likes: 894
|
Post by stevio on Aug 3, 2017 16:38:52 GMT
The advantage of having a debenture vs just being an unsecured creditor is that you have priority claim in any assets the debenture covers (usually a floating charge over the company's which then crystallises in an insolvency event). Only a fixed charge on specific assets will take claim preference. Therefore, depending on the exact nature of the debenture, it reduces the dilution in payout of any recovery. That leaves the key question of the quality and quantity of assets the debenture operates and how quickly those values could deteriorate in the lead up to a default - I suspect that trade debtors and intangibles will make up the bulk of the asset value........ Company has net laibilities increased by further loss this year. Yes, so debts rather than assets and a loss making business Loan solely based on net worth of customer base or else PG. However a customer base is very fickle - they need to substain low prices to continue to retain the customer, but that is loss making Money being used to restructure cash flow, but cant see how this will stop company being loss making, only delay the flow of losses In a price sensitive industry, they have gained market share by cutting price and paying brokers to refer custom. Presumably they will look to increase price once locked in customers. This business model does not look sustainable. This looks like a loan to dig them out of a whole, as they have no profits to finance it themselves Didn't partake in the other loan from the linked company and wont be in this one
|
|
|
Post by ablrate on Aug 3, 2017 16:40:41 GMT
To answer some of the questions set out in previous comments (in no particular order)
1. Directors loans will be subordinate to the Ablrate lender loan in event of a default
2. Uncapped Personal Guarantees are independent from each other so joint and several.
3. In relation to net worth , there is a combine free equity figure of £1.28m across the properties including 1 x 700K unencumbered.
|
|
SteveT
Member of DD Central
Posts: 6,873
Likes: 7,918
|
Post by SteveT on Aug 3, 2017 17:12:21 GMT
This looks like a loan to dig them out of a whole, as they have no profits to finance it themselves If they were indeed in a "whole" (sic), wouldn't they instead stick with the current pre-payment structure and avoid investing cash in the security deposit needed to access the more advantageous payment terms enjoyed by their competitors?
|
|
stevio
Member of DD Central
Posts: 2,065
Likes: 894
|
Post by stevio on Aug 3, 2017 17:37:48 GMT
This looks like a loan to dig them out of a whole, as they have no profits to finance it themselves If they were indeed in a "whole" (sic), wouldn't they instead stick with the current pre-payment structure and avoid investing cash in the security deposit needed to access the more advantageous payment terms enjoyed by their competitors? I understood (and didn't spend much time on this as it quickly wasn't of interest) was the purpose of the loan, although I believe they were investing some money themselves If you can borrow someone elses money to bail you out, why not Personally think it's delaying the inevitable, but obviously others disagree looking at the funding (or maybe are rate blinded or don't take the time to read the proposal)
|
|
hazellend
Member of DD Central
Posts: 2,361
Likes: 2,179
|
Post by hazellend on Aug 3, 2017 17:56:01 GMT
If they were indeed in a "whole" (sic), wouldn't they instead stick with the current pre-payment structure and avoid investing cash in the security deposit needed to access the more advantageous payment terms enjoyed by their competitors? I understood (and didn't spend much time on this as it quickly wasn't of interest) was the purpose of the loan, although I believe they were investing some money themselves If you can borrow someone elses money to bail you out, why not Personally think it's delaying the inevitable, but obviously others disagree looking at the funding (or maybe are rate blinded or don't take the time to read the proposal) It's an early stage, growth company which looks to be in a promising position. I would encourage you to read the proposal,
|
|
stevio
Member of DD Central
Posts: 2,065
Likes: 894
|
Post by stevio on Aug 3, 2017 18:20:31 GMT
I understood (and didn't spend much time on this as it quickly wasn't of interest) was the purpose of the loan, although I believe they were investing some money themselves If you can borrow someone elses money to bail you out, why not Personally think it's delaying the inevitable, but obviously others disagree looking at the funding (or maybe are rate blinded or don't take the time to read the proposal) It's an early stage, growth company which looks to be in a promising position. I would encourage you to read the proposal, I did, just without the rose tinted glasses 😉 Best of luck to those who do invest, I just prefer I guess a more definitive valued security from profitable companies that are not high risk
|
|
nw99
Posts: 340
Likes: 114
|
Post by nw99 on Aug 4, 2017 9:00:54 GMT
100% excellent good to see such quick demand for this loan
|
|
|
Post by everflow on Aug 4, 2017 9:34:19 GMT
Good morning, Firstly, thank you to everyone who invested. We were amazed to see such a quick uptake. Hopefully it is in some way a reflection of how well Everflow is doing. Secondly, to reassure investors: we are only loss making at the moment because we are growing incredibly rapidly having already secured £45M of profitable contracts already since April (commissions are front-loaded in the contracts, hence why it appears we are unprofitable at present) and spending money on acquiring customers. If we were to stop growing today, we would actually be quite profitable, in a year's time even more so. This investment, as no doubt people noticed is to make the company highly cash positive to fuel growth. As of next month this will be the case thanks to everyone who participated. Further several of my and the other Directors' family members invested as part of this process, which we certainly wouldn't be recommending them to do unless we were certain of the security. So thank you all again, and thanks to the guys at Ablrate for their help in using their platform, I cannot fault their customer service. Kind regards and have a great day. Josh Gill MD - Everflow. P.S if any investors wish to chat to me personally, feel free to drop me a PM, I'm always happy to chat about my company and business in general.
|
|