mikes1531
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Post by mikes1531 on Nov 26, 2014 16:31:11 GMT
It does concern me these days that so much of this followup activity which AC should be doing as a matter of course seems to happen after persistent nagging by observant lenders. Yes. There seems to be too great a focus on what's ahead, and not enough on making sure that what's behind is under control and working properly.
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Post by Ton ⓉⓞⓃ on Nov 26, 2014 16:34:05 GMT
I've just stuck the details of the new agreement struck between the Borrower of Falmouth and AC (us) on the Falmouth thread after they missed getting their own WT accredited. |
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Post by johnny on Nov 26, 2014 17:31:24 GMT
I understand that a further update on the 01 December will be announced, hopefully some pertinent question may be answered.
The turbine has been pre-accredited with Ofgem and is therefore eligible to receive the 18.53p FIT
provided it is commissioned before 30 November 2014. Why was this not picked up in the credit report before publishing.
In the Q and A on the 19th of November an observant lender pointed out the discrepancy of the commissioning dates in the valuation report and the credit report, why has it taken seven days to resolve.
What is your relationship with the sponsor and why have you allowed seven days to pass before releasing a statement.
Going forward, what changes to procedure and DD to you intend to implement to ensure that the unanswered questions and the embarrassing silence doesn't happen again.
Two Months ago I really thought AC was the future of P2B lending, the last seven days I wonder if AC has a future.
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pikestaff
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Post by pikestaff on Nov 27, 2014 9:14:32 GMT
I am less upset than some by the time taken to answer the question. I don't blame the parties for waiting until they had a better answer for us than just "yes, it's missed the deadline" which would not really have done anybody any good, and I'm pleased with the initial actions to be taken.
As regards LTV:
The reduction in income is not 28% (the reduction in FIT) but 21% (the reduction in FIT + PPA), so M*****f's expected valuation of £600k (vs the hoped-for £800k) is very plausible and may turn out to be conservative. We shall find out soon enough.
After the "repayment", which is really the return of funds in escrow, the amount drawn on the loan will be £421,231 which corresponds to an estimated LTV of 70%. That's a bit toppy for a wind loan at 9.75% on a refurbished turbine, and I would prefer to see the LTV brought below 65%. Depending on what the valuation turns out to be, this might well require a further repayment. Anyway, we shall know soon enough what (if any) further actions are proposed.
The wider issue remains. The actions taken so far are reassuring, but I assume that they are/will be funded by M*****f putting additional equity into the project co. Will all borrowers be in a strong enough position, or honourable enough, to take similar actions if simiar issues arise? Whether they are honourable enough may depend on whether they are hoping for repeat business!
We have a whole bunch of loans with looming FIT deadlines and some kind of statement from AC about these would be appreciated. I'd also like to know what went wrong to delay the commissioning in this case, and whether it's indicative of a general issue. Until we have these answers I think a lot of people will be sitting on their hands. I'm sure AC are keenly aware of this and will be working on something.
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jjc
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Post by jjc on Nov 27, 2014 12:34:10 GMT
Well explained pikestaffCouple of ideas to help minimize similar probs in future a. the epc should inform (asap once fixed) AC the date they have with the DNO for commissioning b. a copy of the G59 (which is signed by the DNO & confirms commissioning is complete) should be sent to AC within say 6-12 hours of commissioning a means AC will have forward visibility of when commissioning is due & hence could (themselves, or their nominated monitoring party) make a call to the epc a week or so before this date just to check all is in order. b means any probs get picked up quickly Would nevertheless strongly recommend AC appoint (or hire) someone to monitor these things for them. And absolutely essential to my mind on the deals where the borrower is also the epc/o&m. |
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mikes1531
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Post by mikes1531 on Nov 27, 2014 14:56:22 GMT
After the "repayment", which is really the return of funds in escrow, the amount drawn on the loan will be £421,231 which corresponds to an estimated LTV of 70%. That's a bit toppy for a wind loan at 9.75% on a refurbished turbine, and I would prefer to see the LTV brought below 65%. Depending on what the valuation turns out to be, this might well require a further repayment. Anyway, we shall know soon enough what (if any) further actions are proposed. : While you may "prefer to see the LTV brought below 65%", I note that according to the Credit Report one of the conditions of the loan is "Loan to value not to exceed 58%." As such, AIUI, if the revised valuation is £600k then the borrower is obligated to bring the loan balance down by a further £73k in order to not be in breach of the loan conditions. I do hope they have the resources to do that, as otherwise this will get very messy. If they do make the appropriate additional repayment, then AC and their lenders should be happy, and this will become a smaller loan on a smaller project, which is fine.
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pikestaff
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Post by pikestaff on Nov 27, 2014 15:14:21 GMT
After the "repayment", which is really the return of funds in escrow, the amount drawn on the loan will be £421,231 which corresponds to an estimated LTV of 70%. That's a bit toppy for a wind loan at 9.75% on a refurbished turbine, and I would prefer to see the LTV brought below 65%. Depending on what the valuation turns out to be, this might well require a further repayment. Anyway, we shall know soon enough what (if any) further actions are proposed. : While you may "prefer to see the LTV brought below 65%", I note that according to the Credit Report one of the conditions of the loan is "Loan to value not to exceed 58%." As such, AIUI, if the revised valuation is £600k then the borrower is obligated to bring the loan balance down by a further £73k in order to not be in breach of the loan conditions. I do hope they have the resources to do that, as otherwise this will get very messy. If they do make the appropriate additional repayment, then AC and their lenders should be happy, and this will become a smaller loan on a smaller project, which is fine. I assume AC will be putting the loan through their credit model to come up with a max LTV that they consider appropriate in the circumstances, and that this will be factored into any proposal that may be put forward. I expect that any proposal involving an increased LTV would have a supporting explanation and would be put to a vote, and this seems to be contemplated in David's email: "...Provide a full update with options to the lenders once all information is to hand." My personal view is that the loan is safer once construction is complete and the FIT is known, and hence a somewhat higher LTV (but not as high as 70%) would be acceptable.
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sqh
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Post by sqh on Nov 27, 2014 15:20:04 GMT
After the "repayment", which is really the return of funds in escrow, the amount drawn on the loan will be £421,231 which corresponds to an estimated LTV of 70%. That's a bit toppy for a wind loan at 9.75% on a refurbished turbine, and I would prefer to see the LTV brought below 65%. Depending on what the valuation turns out to be, this might well require a further repayment. Anyway, we shall know soon enough what (if any) further actions are proposed. : While you may "prefer to see the LTV brought below 65%", I note that according to the Credit Report one of the conditions of the loan is "Loan to value not to exceed 58%." As such, AIUI, if the revised valuation is £600k then the borrower is obligated to bring the loan balance down by a further £73k in order to not be in breach of the loan conditions. I do hope they have the resources to do that, as otherwise this will get very messy. If they do make the appropriate additional repayment, then AC and their lenders should be happy, and this will become a smaller loan on a smaller project, which is fine. An alternative is to increase the lender rate. Personally, I would like to see all Wind Turbines offered at a lender rate of 18% until commissioned. When AC receive proof of commissioning the rate would automatically drop to 8 or 9%. This would ensure that lenders filled WT loans quickly and encourage a fast installation. Borrowers would not need to seek refinance, because the long term rate is competitive.
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mikes1531
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Post by mikes1531 on Nov 27, 2014 16:54:52 GMT
pikestaff: While you may "prefer to see the LTV brought below 65%", I note that according to the Credit Report one of the conditions of the loan is "Loan to value not to exceed 58%." As such, AIUI, if the revised valuation is £600k then the borrower is obligated to bring the loan balance down by a further £73k in order to not be in breach of the loan conditions. I do hope they have the resources to do that, as otherwise this will get very messy. If they do make the appropriate additional repayment, then AC and their lenders should be happy, and this will become a smaller loan on a smaller project, which is fine. I assume AC will be putting the loan through their credit model to come up with a max LTV that they consider appropriate in the circumstances, and that this will be factored into any proposal that may be put forward. I expect that any proposal involving an increased LTV would have a supporting explanation and would be put to a vote, and this seems to be contemplated in David's email: "...Provide a full update with options to the lenders once all information is to hand." My personal view is that the loan is safer once construction is complete and the FIT is known, and hence a somewhat higher LTV (but not as high as 70%) would be acceptable. An alternative is to increase the lender rate. I understand these possibilities, but I really don't think AC should change a loan agreement so easily. A lot of people have invested in this loan on the basis of the original terms, and if significant changes are contemplated, then AC ought to organise a replacement loan, offer lenders the option of rolling their investment forward into the new loan, arrange underwriting to cover those who don't, and then use the proceeds from the new loan to pay off the old one. This is what they did with SCP&M. Perhaps that's what they'd plan to do here as a matter of course. The main thing is that investors who don't fancy the new deal ought to be allowed an easy, effective, way out. Some might suggest that the Aftermarket provides that, but it doesn't seem to work that way for 'fresh' loans where underwriters still have significant holdings that they're trying to pass on to new investors. As an example, I built up a significant -- for me, anyway -- position in the No*** Lo***** WT loan, and subsequently decided I wanted to reduce my position. I reduced my target for that loan and AutoInvest put the excess units up for sale. That was back in July. Today, four months later, more than half of what I put up for sale still has not been sold. That isn't a complaint. It's simply an observation on how the Aftermarket works for 'fresh' loans. I would also point out that, while we know the commissioning wasn't done by the FIT deadline, we still don't know whether the commissioning has been completed since. Until it has, however, we won't know what the FIT tariff for this turbine will be, and any valuation will have to be made on the basis of an assumed commissioning date and FIT amount and therefore be subject to change when the commissioning actually happens. I expect AC are working hard to clarify the situation.
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Mike
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Post by Mike on Jun 18, 2015 7:59:00 GMT
Here's an interesting development (not sure how 'new' this 'news' is) www.bbc.co.uk/news/business-33177025Sorry to drag up an old thread but didn't think it was worth a new one and it's somewhat related, I suppose... Will this have a big impact on the GEIA? Seems it's days are numbered |
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Post by Deleted on Jun 18, 2015 8:24:25 GMT
Glad you raised this thread, certainly this will destroy further new on shore wind turbine development that cannot hit the final cut off date. Yet again the Nimbies of the UK ensure that their children live in a heating planet, or worse still put the country in the hands of foreign un-pleasant people. Still it is very unlikely that the UK renage on existing contracts (unlike the Spanish who did).
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ilmoro
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Post by ilmoro on Jun 18, 2015 8:37:46 GMT
Glad you raised this thread, certainly this will destroy further new on shore wind turbine development that cannot hit the final cut off date. Yet again the Nimbies of the UK ensure that their children live in a heating planet, or worse still put the country in the hands of foreign un-pleasant people. Still it is very unlikely that the UK renage on existing contracts (unlike the Spanish who did). Hopefully theyve read the recent court judgement in a relevant case. 
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pikestaff
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Post by pikestaff on Jun 18, 2015 8:42:26 GMT
The GEIA's days won't necessarily be numbered, but if it is to continue there will need to be a switch into funding other forms of green power, such as solar and anerobic digesters.
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Post by Deleted on Jun 18, 2015 8:42:48 GMT
go-on, go-on, give us a link  |
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duck
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Post by duck on Jun 18, 2015 8:51:17 GMT
Politics at its best.
However Nuclear will come to our aid, we were world leaders after all ..... Ahh, yes politicians broke up our industry some years ago and sold it to the USA, France, Japan etc so not much of it exists any more .....
Never mind the French will build Hinkley C with Chinese money ..... Ahh yes there are 'issues' with the reactor design and the operator is having to buy out the bankrupt reactor designer. Well Hinkley may not happen soon as the current residents of France and Finland are finding out with vast overspends and long delays connected to the two companies that form the politicians chosen option for the UK.
Never mind there are other approved sites, novel design (never a good idea when you need to generate quickly) by the Japanese at one and very strong 'rumours' that the Chinese are to be given another site lock stock and barrel (including the cash generating side!).
Yes I do have a lot of experience in the Nuclear Industry and to be honest unless the politicians are all shut up in the National Repository (oh yes they won't decide on that one either!) the defecit in electricity generation that is current in this country will continue to grow.
........................ whilst I have no great love of turbines (tidal barriers much better IMO) these 'cancelled' turbines will be needed.
<rant over>
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