ilmoro
Member of DD Central
'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
Posts: 10,787
Likes: 11,004
|
Post by ilmoro on Sept 19, 2017 20:26:05 GMT
Having gone through the convoluted structures the unencumbered assets just dont seem to be there to support the debenture, the XCG or the PG currently.
|
|
elliotn
Member of DD Central
Posts: 3,063
Likes: 2,681
|
Post by elliotn on Sept 20, 2017 1:10:46 GMT
I read it any bank finance, whilst potentially matching our loan amount, would be used for separately charged assets (ie not joint purchases with our acquisitions). ie 1.3M boaty assets (pending confirmation of AC charge) + 0.55M new assets (funded separately from any bank loans). How much is the AC boat valued at? If bank finance is used to assist with the purchase of new additional assets, the bank may ask to take a Charge over that particular asset and therefore remove it from the asset base available to Ablrate lenders. An acquisition portfolio may look like either of the two examples or a blend thereof: Cash & Bank Finance: Boat A - Under 10m scalloper - cost £120,000 (50% bank funding) £60,000 investment - annual yield £100,000 Sounds like joint finance and in that case, AB debenture not cover those assets (unclear why remaining equity not covered under debenture) Yes, we should at least keep the 2C, had initially taken the bank lending as a 3P vote of confidence, now they're just taking our assets, typical thieving banks!
|
|
elliotn
Member of DD Central
Posts: 3,063
Likes: 2,681
|
Post by elliotn on Sept 20, 2017 1:28:20 GMT
I like amortising loans. Somewhat reduced risk and more monthly returns for reinvestment. I didn't think twice investing a modest amount in it. I like amortising loans to the best, as it gives the borrower an incentive not to default longer the loan goes on, however no point if the security is not there and it is going to go into default in the first few months. I know what you mean ie larger monthly repayment although strictly you'll be earning less monthly return as you're simply getting your own money back rather than continuing to earn the the headline loan rate but you do reduce risk by having less invested (and if you manage to invest repayments at the same rate in a different loan you would then maintain your return while also potentially reducing risk via diversification). /pedant's hat off! Edit - sorry, df not ben 😊
|
|
puddleduck
Member of DD Central
Posts: 537
Likes: 489
|
Post by puddleduck on Sept 20, 2017 6:18:04 GMT
I am very surprised by this loan - brand new Ltd company, a director who has just led a previous company to a recent dis-solution, multiple loans across various P2P businesses to various related businesses.
The last thing this business needs is yet another high cost loan. I'm surprised this has been presented to us.
|
|
hazellend
Member of DD Central
Posts: 2,361
Likes: 2,179
|
Post by hazellend on Sept 20, 2017 6:43:56 GMT
I am very surprised by this loan - brand new Ltd company, a director who has just led a previous company to a recent dis-solution, multiple loans across various P2P businesses to various related businesses. The last thing this business needs is yet another high cost loan. I'm surprised this has been presented to us. I'm not surprised and have also invested Part of me thinks the owner will want to work hard not to destroy her ancestors legacy However, I'm aware there may be some additional information to come
|
|
SteveT
Member of DD Central
Posts: 6,871
Likes: 7,915
|
Post by SteveT on Sept 20, 2017 6:54:53 GMT
"High cost" is right. Page 20 of the Borrowing Proposal shows that fully £50k (9.09%) of the £550k loan goes to Ablrate as an upfront Administration Fee and then, in addition to the 14%pa (1.17%pm) that's payable to lenders there's also a platform Service Fee to be paid of 0.916%pm. So 9% upfront and roughly 25% per year for 3 years (paying something like £290k in interest and charges over 3 years on £500k advanced). It seems bizarre to borrow at this sort of cost simply to build a cash pile for acquisitions, unless these fishing boats really are money-making machines...
|
|
registerme
Member of DD Central
Posts: 6,159
Likes: 5,974
|
Post by registerme on Sept 20, 2017 7:25:37 GMT
It seems bizarre to borrow at this sort of cost simply to build a cash pile for acquisitions, unless these fishing boats really are money-making machines... Yes, I thought the same thing, unless "cash pile for potential future acquisitions" was really a coy way of saying "identified a target boat for purchase and need the funds now now", in which case why not say so?
|
|
SteveT
Member of DD Central
Posts: 6,871
Likes: 7,915
|
Post by SteveT on Sept 20, 2017 7:42:14 GMT
It seems bizarre to borrow at this sort of cost simply to build a cash pile for acquisitions, unless these fishing boats really are money-making machines... Yes, I thought the same thing, unless "cash pile for potential future acquisitions" was really a coy way of saying "identified a target boat for purchase and need the funds now now", in which case why not say so? Indeed, and why not structure it as a bridging loan in the first place? Comparing against the other recent ABL boaty loan (a broadly similar size and also amortising), lenders are paid the same rate (14%pa) and have a shiny superyacht as first-charge security. The upfront lending fee to the borrower was just 2% and the servicing fee is just 0.375%pm. I know which of the 2 loans I'd rather be holding.
|
|
stevio
Member of DD Central
Posts: 2,065
Likes: 894
|
Post by stevio on Sept 20, 2017 7:50:48 GMT
"High cost" is right. Page 20 of the Borrowing Proposal shows that fully £50k (9.09%) of the £550k loan goes to Ablrate as an upfront Administration Fee and then, in addition to the 14%pa (1.17%pm) that's payable to lenders there's also a platform Service Fee to be paid of 0.916%pm. So 9% upfront and roughly 25% per year for 3 years (paying something like £290k in interest and charges over 3 years on £500k advanced). It seems bizarre to borrow at this sort of cost simply to build a cash pile for acquisitions, unless these fishing boats really are money-making machines... One of the examples given Total investment - £470,000 Indicative yield £340,000 pre tax. There is also a spreadsheet in the loan particulars titled Financial Model, it would be good if an ex accountant like elliotn could give an opinion on how viable this is However, none of these factor in the cost of "current" finance payments, that seem to be substantial and simply unknown at the moment
|
|
hazellend
Member of DD Central
Posts: 2,361
Likes: 2,179
|
Post by hazellend on Sept 20, 2017 8:52:36 GMT
The loan document points out that fishing quotas have laid waste to the weak hands in the industry and now the strong hands are in a favourable environment.
That makes sense to me.
Anyway, I've plaiced my bets and my chips are on the table.
If this loan defaults after a year or two a lot of the capital will have been returned already.
If it defaults before that I would see this as a fraudulent loan and would hold ABLrate to account
|
|
james100
Member of DD Central
Posts: 970
Likes: 1,183
|
Post by james100 on Sept 20, 2017 9:27:28 GMT
Well, if anything in the original borrowing proposal document (specifically regarding the "available" asset valuations and accounts) is not 100% accurate, particularly given the red flags raised on this thread well in advance of the loan being drawn down, then I assume ABL will simply cancel this loan. That's not to say they couldn't reissue an amended loan proposition with an different statement of security etc. at a later date. But now they have been notified of specific issues which potentially invalidate the borrowing proposal, unless those issues are completely disproven then it would not be acceptable for them to proceed on the current basis. Nor would it make good business sense to proceed IMHO - the reputational and legal liability fallout in event of default would be catastrophic. ablrate is probably my favourite platform and I'm confident they will sort this out, one way or the other, in their usual highly professional manner
|
|
puddleduck
Member of DD Central
Posts: 537
Likes: 489
|
Post by puddleduck on Sept 20, 2017 9:45:48 GMT
The loan document points out that fishing quotas have laid waste to the weak hands in the industry and now the strong hands are in a favourable environment. That makes sense to me. Anyway, I've plaiced my bets and my chips are on the table. If this loan defaults after a year or two a lot of the capital will have been returned already. If it defaults before that I would see this as a fraudulent loan and would hold ABLrate to account The borrower is not a 'strong hand' - completely the opposite. You cannot hold Ablrate to account - you seem to be reading the loan prospects a complete 180 to almost everyone else on this thread. albeit we all have the same information you do. I am not a betting man, but I will bet that there is a 99.99% chance this loan will be pulled - it's not viable or credible. High interest rates are meaningless if the debt is not serviceable. Your post somewhat reads as someone who wants to have their cake and eat it to an extent.
|
|
hazellend
Member of DD Central
Posts: 2,361
Likes: 2,179
|
Post by hazellend on Sept 20, 2017 11:11:01 GMT
I've asked ablrate to return my money until all the questions on this forum are answered
|
|
archie
Posts: 1,836
Likes: 1,841
|
Post by archie on Sept 20, 2017 11:21:21 GMT
This loan is a prime example of why we should be able to view the documents the day before it is live.
|
|
oldgrumpy
Member of DD Central
Posts: 5,087
Likes: 3,233
|
Post by oldgrumpy on Sept 20, 2017 11:36:19 GMT
I've asked ablrate to return my money until all the questions on this forum are answered Not much chance of that (if you have actually committed to invest). I "cocked-up" recently on a loan, told them within five minutes, and ABL said they could not reverse the investment.
|
|