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Post by dan1 on Oct 10, 2018 9:25:32 GMT
New loan released this afternoon. Loan size: £1m Rate: 13% Structure: Interest only Payment frequency: monthly Term: 18 months (min 6 months) LTV: 25% Security: 1. Company Debenture over Borrower 2. Company Debenture over associated Company 3. Legal Assignment of key contracts 4. Corporate Guarantees from the Parent and associated Companies 5. Personal Guarantee from the ultimate shareholder I feel that seeing as Ablrate sponsor the PGA Europro Tour that I should issue the warning "fore!"
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Post by fatbritabroad on Oct 10, 2018 9:40:17 GMT
I feel we exhausted all the power generation puns last time. But this may still spark some debate
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SteveT
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Post by SteveT on Oct 10, 2018 10:00:49 GMT
Strewth, this really pushes "residual value" projection methodology to its limits. Two schemes requiring a combined upfront capital investment of circa £29million, with predicted operating profit stretching over the next 15+ years, discounted back at 13 - 14%pa cost of capital to deliver a combined NPV of circa (drumroll ......) £4million.
The only thing I deduce is that the eventual true value probably isn't £4m. Even modest tweaks to some of those assumptions could shift the NPV by £5m+. But "Which way?" is the multi-million pound question.
[Disclosure: despite the above, I will probably take up a modest slice but purely because the borrower strikes me as a smart cookie. His track record with the previous D project loans counts for a fair bit, in my book, but whether the contracts are worth anything if market conditions change significantly and/or the huge capital investment cannot be raised remains to be seen]
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IFISAcava
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Post by IFISAcava on Oct 10, 2018 10:06:48 GMT
I feel we exhausted all the power generation puns last time. But this may still spark some debate are you positive?
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gustapher
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Post by gustapher on Oct 10, 2018 10:55:14 GMT
Hope they don't overload the SM with too many of these battery loans.
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macq
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Post by macq on Oct 10, 2018 10:58:38 GMT
Hope they don't overload the SM with too many of these battery loans. Depends if they short the stock
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macq
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Post by macq on Oct 10, 2018 11:01:40 GMT
Not sure if bad puns work as well as DD but think i will have a small punt.But again i feel like its the same borrower syndrome holding me back a bit
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andy1
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Post by andy1 on Oct 10, 2018 12:24:09 GMT
I get that the energy sector is evolving and there is a market for this kind of stuff but I have a number of misgivings on this loan: - According to the cashflow projection it doesn't have positive cashflow for years, where does the repayment come from?
- Where is the £29m capital requirement to actually build the thing coming from?
- Why no finance costs in the cash flow projection - clearly there is going to be a buttload of debt?
- Why apply an "ungeared post-tax nominal cost of capital range of 13.0% – 14.0%" in the valuation analysis when this particular cost of capital is 23%? Is it because anything over about 17% would make it worthless even before the missing finance costs?
- Already got enough dosh tied up in Mr F.
- It just feels like something that could run out of cash and die very easily.
On the whole I think I'll pass but I might reconsider once I've slept on it.
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Post by Deleted on Oct 10, 2018 14:37:59 GMT
If you want to get picky he has valued the shares he received at the value put on them when they did the deal. Since the shares are in a private company, who knows? The whole deal does not make sense if he does not sell the site to a developer. Hence he has only salted the deal with his own money. The question you have to answer do you trust his ability to do deal over the downside of failure? He is a deal maker, but he also has a lot of irons in the fire at the moment.
Still just my opinion, there is no income stream to pay for this loan hence interest only. I'll be going low and consider flipping after 6 months.
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blender
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Post by blender on Oct 10, 2018 15:01:54 GMT
If you want to get picky he has valued the shares he received at the value put on them when they did the deal. Since the shares are in a private company, who knows? The whole deal does not make sense if he does not sell the site to a developer. Hence he has only salted the deal with his own money. The question you have to answer do you trust his ability to do deal over the downside of failure? He is a deal maker, but he also has a lot of irons in the fire at the moment.
Still just my opinion, there is no income stream to pay for this loan hence interest only. I'll be going low and consider flipping after 6 months. I remember flipping. In the present circumstances I'm looking only at risk rather than relying on liquidity. If you sell at 93.5% after 6 months you break even (approx).
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elliotn
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Post by elliotn on Oct 11, 2018 4:11:07 GMT
I feel that seeing as Ablrate sponsor the PGA Europro Tour that I should issue the warning "fxxx!" You’re a braver investor than me. I got an absolute b’llocking for punning on a borrower’s name. (So I have redacted your quote to avoid the same fate! )
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blender
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Post by blender on Oct 11, 2018 8:07:53 GMT
I feel that seeing as Ablrate sponsor the PGA Europro Tour that I should issue the warning "fxxx!" You’re a braver investor than me. I got an absolute b’llocking for punning on a borrower’s name. (So I have redacted your quote to avoid the same fate! ) It wasn't an electrical pun, then! Like 'fuse'. I must have wasted hours trying to work that one out. Concerning avoiding connected loans, resistance is futile.
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andy1
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Post by andy1 on Oct 11, 2018 11:03:51 GMT
If you want to get picky he has valued the shares he received at the value put on them when they did the deal. Since the shares are in a private company, who knows? The whole deal does not make sense if he does not sell the site to a developer. Hence he has only salted the deal with his own money. The question you have to answer do you trust his ability to do deal over the downside of failure? He is a deal maker, but he also has a lot of irons in the fire at the moment.
Still just my opinion, there is no income stream to pay for this loan hence interest only. I'll be going low and consider flipping after 6 months. I started off assuming that the site would be sold (which I agree makes sense) but then page 11 of the borrowing proposal says this: "These costs are all due within the next 3 - 4 months to keep the build on track. In early 2019, management believes the Company will be in a position to secure larger development funding to take it through the final stages to completion." That makes it sound to me like he wants to build the whole thing out.
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blender
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Post by blender on Oct 11, 2018 12:07:19 GMT
To find out how the principal is to be repaid we should read page 12 of the borrowing proposal 'How the loan will be paid'. It seems quite clear there that there is no answer offered to that question.
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Post by Ace on Oct 23, 2018 21:42:37 GMT
Just in case anyone missed the info on this loan at the bottom of today's new loan notice... "we have received confirmation that Loan #1000113 D************ P**** L****** is being fully underwritten and will close tomorrow. If you do wish to make a pledge, please ensure you do so by 12 noon tomorrow" So, better act quickly if you want some. Or, perhaps you're like me and have already taken a small bite and are now wishing that you hadn't bothered, as there is highly likely to be a fair amount available at a discount shortly on the SM as the underwriter attempts to offload!
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