tonyr
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Post by tonyr on Feb 19, 2015 2:29:48 GMT
20% isn't your maximum upside - there is in theory no maximum. 20% is the maximum discount you have on the price of shares when the convertible notes are turned into shares. As they intend to do that later this year, it is much more likely to be the stated 10% though. The upside, as you know from your other investments, mainly comes when your shares are sold several years down the line. Maybe I'm misunderstanding your point? I guess my point was that I didn't find any clear documentation and didn't really understand the offer. Thanks for the clarification, so the idea is to be a long term shareholder in AC (until an exit) and the 10% or 20% discount is just a rough means of achieving a valuation now. This makes much more sense - I'm tempted now but still disappointed that all the relevant information isn't in one place. I gather I have to hit "invest" before seeing more information (surely that's the wrong way around) and then have to email AC. I'd need to see all the tag along/drag along rights associated with whatever share class we are talking about here and I fear that I'm just not going to have enough time to understand this properly. As a founder of a company I've been burned once by investment that left me as a minority shareholder so know that there are a lot of details to get right.
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mikes1531
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Post by mikes1531 on Feb 19, 2015 4:57:57 GMT
3) A property loan for £1.9m where a sale of the property has not happened and the borrower has not been co-operative. The LTV is below 70% and a sale of the property will result in full repayment of capital and interest for our lenders.
IMHO, the most significant omission is the £1.96M loan that's tied to the third loan listed above.
Hi Mike, the one you refer to has first charge solid bricks and mortar on a modest LTV. that's what people like about lending through us, we usually have something very solid to go after if necessary. They are also earning 18% pa penalty interest which is why you don't hear many complaints. : Firstly, a lot depends on how you calculate LTV, and how you define 'modest'. I don't know where your sub-70% number came from, but the AC website shows both of these loans to have LTVs a bit above 70%. And those LTV's do not include the interest and fees that have been mounting up since the monthly payments stopped during the summer/autumn of last year. The AC website shows only the amounts due to lenders. From those I would guess the LTV would be more like 80% by the time the security actually gets around to being sold, presuming that happens in the next month or two. (But I probably also should note that one of these two properties is residential and apparently is occupied by the borrower now. AIUI, this tends to lengthen the time required to obtain the property with vacant possession so that it can be sold.) By the time AC's fees, legal and estate agent fees, and receivers' fees are added, I would not be surprised if the LTV number is more like 90%. Considering that assets sold in receiver sales typically sell at a discount to 'standard' valuations, 90% might not be achievable. I also note that you have fallen into the common trap of saying lenders are "earning 18% pa penalty interest". We are not earning that interest, we are accruing it. Whether or not we actually earn it depends on the outcome of the security liquidation, especially as lender interest is near the back of the queue when distributing the proceeds. All of the above relates to the numerator of the LTV calculation. Then there's the denominator... Some AC lenders have uncovered unsettling reports of earlier auctions where the other property (the student accommodation) apparently failed to sell at prices well below the stated valuation. Questions also have been raised regarding whether the rental income used for the valuation was appropriate. I have no idea whether any of these concerns are valid, and I certainly hope they are not. Only time will tell, and it would appear to be some considerable time at that. And, of course, the longer it takes, the more interest and fees will accrue and the harder it will be for the eventual sale proceeds to cover all that. I wish AC success with these recoveries, not least because I have a substantial investment in both loans. AC have an enviable recovery record so far, and they can be proud of that. Hopefully they can continue it. If they can, it will provide a real boost to their long term prospects. Good luck to you.
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Post by stuartassetzcapital on Feb 19, 2015 6:27:53 GMT
20% isn't your maximum upside - there is in theory no maximum. 20% is the maximum discount you have on the price of shares when the convertible notes are turned into shares. As they intend to do that later this year, it is much more likely to be the stated 10% though. The upside, as you know from your other investments, mainly comes when your shares are sold several years down the line. Maybe I'm misunderstanding your point? I guess my point was that I didn't find any clear documentation and didn't really understand the offer. Thanks for the clarification, so the idea is to be a long term shareholder in AC (until an exit) and the 10% or 20% discount is just a rough means of achieving a valuation now. This makes much more sense - I'm tempted now but still disappointed that all the relevant information isn't in one place. I gather I have to hit "invest" before seeing more information (surely that's the wrong way around) and then have to email AC. I'd need to see all the tag along/drag along rights associated with whatever share class we are talking about here and I fear that I'm just not going to have enough time to understand this properly. As a founder of a company I've been burned once by investment that left me as a minority shareholder so know that there are a lot of details to get right. Hi Tony Our articles of association have full drag along and tag along rights and you would be in the same share class as any large investors joining shortly and in the future with full voting rights and dividends. As one of our valued lenders just contact Mark Wardrop your Seedrs account email used to set up your account and we will advise the rest. We will keep a place for you if you need some time to read everything. Thank you for your interest.
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Post by stuartassetzcapital on Feb 19, 2015 6:53:44 GMT
mikes1531 The team is working on this. We have a sister company with a list of student accommodation buyers looking for whole sites so it will be providing some of the interested party bids to whoever handles any potential sale. That business sold c £75m of student accommodation last year so plenty of demand so its just down to price and we will go all out as usual to get full recovery including the accrued interest. This is bridging and it's often a noisy business due to the timing and refinance challenges but security is helpful. We took future interest on account as cash within the original 70% LTV and this was paid to lenders monthly already in cash so it will be the capital and default interest now due from the first charge security and to get all original interest and capital repaid we need just over 60% recovery I estimate. We had several big name historic valuations on the student accommodation as well the final one we relied upon and the rents look fine at first sight to me (I am a student accomodation investor myself for 10 years). Also 60% is under a nomination agreement to the university and this is normally discounted to market rate. I too am seeking a good recovery as I have some of these too.
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tonyr
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Post by tonyr on Feb 19, 2015 8:24:11 GMT
I guess my point was that I didn't find any clear documentation and didn't really understand the offer. Thanks for the clarification, so the idea is to be a long term shareholder in AC (until an exit) and the 10% or 20% discount is just a rough means of achieving a valuation now. This makes much more sense - I'm tempted now but still disappointed that all the relevant information isn't in one place. I gather I have to hit "invest" before seeing more information (surely that's the wrong way around) and then have to email AC. I'd need to see all the tag along/drag along rights associated with whatever share class we are talking about here and I fear that I'm just not going to have enough time to understand this properly. As a founder of a company I've been burned once by investment that left me as a minority shareholder so know that there are a lot of details to get right. Hi Tony Our articles of association have full drag along and tag along rights and you would be in the same share class as any large investors joining shortly and in the future with full voting rights and dividends. As one of our valued lenders just contact Mark Wardrop your Seedrs account email used to set up your account and we will advise the rest. We will keep a place for you if you need some time to read everything. Thank you for your interest. Thanks Stuart, that's very good to know. Also, thanks in advance for your time on Tuesday evening (IIRC - I've spent 10mins and can't find the link) - I'm sure that will clear up a lot of details. Tony
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bigfoot12
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Post by bigfoot12 on Feb 19, 2015 8:51:14 GMT
I guess my point was that I didn't find any clear documentation and didn't really understand the offer. Thanks for the clarification, so the idea is to be a long term shareholder in AC (until an exit) and the 10% or 20% discount is just a rough means of achieving a valuation now. This makes much more sense - I'm tempted now but still disappointed that all the relevant information isn't in one place. I gather I have to hit "invest" before seeing more information (surely that's the wrong way around) and then have to email AC. I'd need to see all the tag along/drag along rights associated with whatever share class we are talking about here and I fear that I'm just not going to have enough time to understand this properly. As a founder of a company I've been burned once by investment that left me as a minority shareholder so know that there are a lot of details to get right. Hi Tony Our articles of association have full drag along and tag along rights and you would be in the same share class as any large investors joining shortly and in the future with full voting rights and dividends. As one of our valued lenders just contact Mark Wardrop your Seedrs account email used to set up your account and we will advise the rest. We will keep a place for you if you need some time to read everything. Thank you for your interest. I might have missed it in one of the other places, but I haven't yet found the exact definition of what triggers the conversion. I know it is the institutional fundraising, and I know that you are working on this in parallel. But what counts. If one institution buys one share will that trigger it? Does it have to be at least £1m? At least 2 institutions? How can people buy a convertible without knowing the terms of the converting event? I am pleased to see that eventually all shareholders will have pre-emption rights, but what about before conversion? I trust you (AC) to behave well, but I don't trust the institutions you are dealing with (I don't know who you are dealing with - I don't trust any of them). I am worried that they will invest £999,999 at a valuation of £20m in a mini non qualifying for conversion round and then £1m in the final round at £60m which triggers our conversion. Or something else which gives them a better average price at the expense of those invest in the convertible, without impacting the existing shareholders.
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Post by stuartassetzcapital on Feb 19, 2015 9:20:20 GMT
We are preparing our own termsheet as doesn't seem to be standard and in advance for Seedrs. Will post here.
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Post by stuartassetzcapital on Feb 19, 2015 9:24:41 GMT
Hi Tony Our articles of association have full drag along and tag along rights and you would be in the same share class as any large investors joining shortly and in the future with full voting rights and dividends. As one of our valued lenders just contact Mark Wardrop your Seedrs account email used to set up your account and we will advise the rest. We will keep a place for you if you need some time to read everything. Thank you for your interest. I might have missed it in one of the other places, but I haven't yet found the exact definition of what triggers the conversion. I know it is the institutional fundraising, and I know that you are working on this in parallel. But what counts. If one institution buys one share will that trigger it? Does it have to be at least £1m? At least 2 institutions? How can people buy a convertible without knowing the terms of the converting event? I am pleased to see that eventually all shareholders will have pre-emption rights, but what about before conversion? I trust you (AC) to behave well, but I don't trust the institutions you are dealing with (I don't know who you are dealing with - I don't trust any of them). I am worried that they will invest £999,999 at a valuation of £20m in a mini non qualifying for conversion round and then £1m in the final round at £60m which triggers our conversion. Or something else which gives them a better average price at the expense of those invest in the convertible, without impacting the existing shareholders. I think I answered this on the Seedrs Q&A thread but yes it is a £1m investment in the equity by at least one institution or UHNW etc that triggers the Seedrs convertible equity to convert at the same time and with the discount. Seedrs have addressed the risks you list in the share issue agreement between us and them. Its got to be fair and also you know AC, that's what we stand for. We have kept the new ordinary shares very simple and you would be in the same class as institutions and wit a contractual 10% discount to the first one (or greater discount if they come in with a value the over £60m cap for Seedrs investors).
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Post by stuartassetzcapital on Feb 19, 2015 9:33:20 GMT
Right, try again. Here is the summary of fees and process from Seedrs' Chief Investment Officer Thomas Davies and with a couple of clarifications from AC in square brackets. I hope this helps. :
FEES
Seedrs charges 2 fees, an Upfront Fee and a Carry Fee.
1. Upfront Fee (charged to the company)
The standard Upfront Fee is 7.5% of the funds raised by the company. However if an investor has signed up to Seedrs using the relevant company’s referral [PROMO] code, then the fee [to AC] is reduced to 3.75% on that particular investment. [So anyone who has used our link from our emails (with the promo code at the end) to visit Seedrs and sign up has this. The code has been used to create interest in the account at our marketing expense rather than Seedrs and hence the discount to our fee.]
2. Carry Fee (charged to the investor)
The carry fee is 7.5% on any PROFIT that the investor makes in the future. If the investor does not make any profit, then they do not pay a fee. Seedrs charges this fee for their services as a nominee.
The nominee service provides investors with a full suite of protections under the Deferred Subscription Agreement which Seedrs will enter into, on behalf of the investors, with Assetz. Every investor, regardless of how small, gets full voting shares. All of this legal work is undertaken by Seedrs, and Seedrs will monitor and enforce the rights under such agreement on behalf of the investors. It is simply not possible to have such an agreement without a nominee as you can’t have hundreds, and sometimes thousands of investors all signing up to one contract. This contract ensures that the investors are protected and actually share in the success of the business.
In limited circumstances, we allow investors to be “Direct Investors”, who are outside of the nominee structure if the company allows it. These tend to be large angel investors who are paying external lawyers [or in AC case we have a standard agreement being drafted that will be the same terms as the Seedrs one for all direct investors but they may still seek paid legal advice] to create their own legal agreements with the company. A Direct Investor does not pay the carry fee because they are paying for their own legal work, as well as monitoring and enforcing their own rights under their agreement.
It is absolutely correct that Crowdcube does not charge a Carry Fee. And the reason is because the investors on Crowdcube are not afforded any legal protections. They are giving the investors non-voting shares with no investor protections, which will result in dilution and potential abuse from the majority shareholders. Seedrs will never agree to offer investors a deal where they are unprotected and wide open to abuse. [We prefer the Seedrs nominee approach for the majority of investors but we have accepted some larger investors/investments as direct investors and these people have contacted us before they invest to discuss this - Mark Wardrop is handling]
PAYMENT
You may invest on Seedrs without having to pay for your investment upfront. Once the Assetz campaign hits 100%, the payment due date is then set to be 7 days after it hits 100% and you will be sent reminder emails to pay at that time. You can of course pay for your investment at any time before that.
In order to pay for your investment, you must first deposit your funds into your Seedrs account (which can be done by bank transfer or debit card), and then once funds have cleared, you simply pay for your investment using your Seedrs account funds.
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ramblin rose
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“Some people grumble that roses have thorns; I am grateful that thorns have roses.” — Alphonse Karr
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Post by ramblin rose on Feb 19, 2015 10:29:52 GMT
In limited circumstances, we allow investors to be “Direct Investors”, who are outside of the nominee structure if the company allows it. These tend to be large angel investors who are paying external lawyers [or in AC case we have a standard agreement being drafted that will be the same terms as the Seedrs one for all direct investors but they may still seek paid legal advice] to create their own legal agreements with the company. A Direct Investor does not pay the carry fee because they are paying for their own legal work, as well as monitoring and enforcing their own rights under their agreement. It is absolutely correct that Crowdcube does not charge a Carry Fee. And the reason is because the investors on Crowdcube are not afforded any legal protections. They are giving the investors non-voting shares with no investor protections, which will result in dilution and potential abuse from the majority shareholders. Seedrs will never agree to offer investors a deal where they are unprotected and wide open to abuse. [We prefer the Seedrs nominee approach for the majority of investors but we have accepted some larger investors/investments as direct investors and these people have contacted us before they invest to discuss this - Mark Wardrop is handling] Two points: 1) Seedrs are being a bit economical with the truth when they say that Crowdcube give investors non-voting shares. This is the case with some companies, some companies only give voting shares to larger investors, but some companies issue only voting shares. The vast majority of the shares I've invested in via Crowdcube are voting shares; the one company in which I did not receive voting shares was a small investment that I was taking a punt with and am not worried about that. 2) What you haven't clarified in this (excellent and clear) post, stuartassetzcapital is whether the minimum investment with which you can become a direct investor is £25K, or whether it can be lower - I think there was a bit of confusion about that earlier.
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Post by solicitorious on Feb 19, 2015 12:55:03 GMT
For those thinking of investing, and wondering about the maximum efficient investment, based on your tax position, there is a handy calculator here. eisguide.co.uk/In essence, the maximum is 3.333 times your tax bill for 2015/16. Remember your tax bill will include, aside from tax on earnings, etc:- Tax already deducted at source from bank deposit interest. Tax to be assessed on P2P interest. Since you may carry back all or part of the relief to 2014/15, you in effect have two years of tax * 3.333 to invest, should you wish. If you self-assess, you would have until 31/1/2017 to amend your 2014/15 tax return to backdate the relief, although of course you may well have decided what to do by the filing date of 31/1/2016. Not sure if you can amend it beyond that date. [Disclaimer: I am not an accountant. DYOR] |
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Post by stuartassetzcapital on Feb 19, 2015 16:21:44 GMT
In limited circumstances, we allow investors to be “Direct Investors”, who are outside of the nominee structure if the company allows it. These tend to be large angel investors who are paying external lawyers [or in AC case we have a standard agreement being drafted that will be the same terms as the Seedrs one for all direct investors but they may still seek paid legal advice] to create their own legal agreements with the company. A Direct Investor does not pay the carry fee because they are paying for their own legal work, as well as monitoring and enforcing their own rights under their agreement. It is absolutely correct that Crowdcube does not charge a Carry Fee. And the reason is because the investors on Crowdcube are not afforded any legal protections. They are giving the investors non-voting shares with no investor protections, which will result in dilution and potential abuse from the majority shareholders. Seedrs will never agree to offer investors a deal where they are unprotected and wide open to abuse. [We prefer the Seedrs nominee approach for the majority of investors but we have accepted some larger investors/investments as direct investors and these people have contacted us before they invest to discuss this - Mark Wardrop is handling] Two points: 1) Seedrs are being a bit economical with the truth when they say that Crowdcube give investors non-voting shares. This is the case with some companies, some companies only give voting shares to larger investors, but some companies issue only voting shares. The vast majority of the shares I've invested in via Crowdcube are voting shares; the one company in which I did not receive voting shares was a small investment that I was taking a punt with and am not worried about that. 2) What you haven't clarified in this (excellent and clear) post, stuartassetzcapital is whether the minimum investment with which you can become a direct investor is £25K, or whether it can be lower - I think there was a bit of confusion about that earlier. Hi Direct Investor status is only really intended for larger investors who know us (mainly our lenders and few business partners) over £25k as its separate legal paperwork for each one rather than the Seedrs nominee account being set up with just one agreement for everyone. If it was a bit less and people were happy with doing their own paperwork directly with us then just talk to us (Mark Wardrop) if you haven't invested yet. its definitely not economic if its £5k or less as that's what the Nominee account is for - hundreds of people under one agreement and paying seedrs to do everything. We arent a PLC (yet) so don't want to have to manage a large direct shareholder base and its communications workload ourselves but a handful of larger investors no problem. its take a while to get the structure and reasoning clear and I apologise !
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Post by stuartassetzcapital on Feb 19, 2015 16:22:30 GMT
For those thinking of investing, and wondering about the maximum efficient investment, based on your tax position, there is a handy calculator here. eisguide.co.uk/In essence, the maximum is 3.333 times your tax bill for 2015/16. Remember your tax bill will include, aside from tax on earnings, etc:- Tax already deducted at source from bank deposit interest. Tax to be assessed on P2P interest. Since you may carry back all or part of the relief to 2014/15, you in effect have two years of tax * 3.333 to invest, should you wish. If you self-assess, you would have until 31/1/2017 to amend your 2014/15 tax return to backdate the relief, although of course you may well have decided what to do by the filing date of 31/1/2016. Not sure if you can amend it beyond that date. [Disclaimer: I am not an accountant. DYOR] Sounds logical yes.
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Post by Ton ⓉⓞⓃ on Feb 19, 2015 22:48:02 GMT
Does this mean that AC didn't anticipate that potential investors might like to see their business plan and financial projections before investing? If they had, they'd have prepared the NDA before the Seedrs campaign started. I am not impressed!  I'll let you know when my NDA drops in. I'm surprised that Seedrs or maybe AC would expect any investment prior to people having sight of these financial documents. Certainly no loan on the AC platform would take off without this information - surely this is no different. I'm just about to go to bed and haven't finished reading this thread yet, so this may've already been said... But AIUI you can put your "investment" in now and cancel if you don't like the details when they're revealed. Assuming you cancel before the cut off point, I assume this to be in 50+ days. Just so long as you "invest" before the campaign goes into 'Overfunding' if you invest after this point you are committed to making the investment. I've found that you can 'invest' in small blocks several times and then cancel them, they don't seem to get aggregated into one block. What I did was this; I typed in £250 as a single investment then cancelled it and put several separate £100 'investments' each of these are cancel-able. So I may cancel some if I think they're being over ambiguous. In Edit: I'm not guaranteeing the above; this is just what I've found and believe... I also should've AC or Stu could end this fund raising at any time this might also freeze your 'investments' as they stand and make them uncancel-able
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bugs4me
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Post by bugs4me on Feb 19, 2015 23:02:34 GMT
I'll let you know when my NDA drops in. I'm surprised that Seedrs or maybe AC would expect any investment prior to people having sight of these financial documents. Certainly no loan on the AC platform would take off without this information - surely this is no different. I'm just about to go to bed and haven't finished reading this thread yet, so this may've already been said... But AIUI you can put your "investment" in now and cancel if you don't like the details when they're revealed. Assuming you cancel before the cut off point, I assume this to be in 50+ days. Just so long as you "invest" before the campaign goes into 'Overfunding' if you invest after this point you are committed to making the investment. I've found that you can 'invest' in small blocks several times and then cancel them, they don't seem to get aggregated into one block. What I did was this; I typed in £250 as a single investment then cancelled it and put several separate £100 'investments' each of these are cancel-able. So I may cancel some if I think they're being over ambiguous. I would or am tempted but my accountant is insistent upon AC showing both current and projected financials to myself. I've registered my interest, sent a mail and was expecting an NDA by now but nothing has materialised. Whilst it may be tempting to jump in as it is claimed the institutions are doing or are going to do I'm not going to follow without the information. You are correct, you can 'pledge' money and cancel but I'm not sure why AC are not supplying the requested information. I'm sure any institution will have it in their possession. The tax breaks are tempting but they only act as compensation if it fails.
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