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Post by mrclondon on Jan 17, 2014 23:20:03 GMT
This borrower has just asked for a £1.5m development / refinancing loan (10% for 12 months) at Relendex, with relendex taking 1st charge security.
The brief details on the Relendex website are supported by a "dropbox" full of documents. The main document "Loan Summary" contains this statement on page 3
"There are two charge holders over the freehold at present in HSBC (1st charge and debenture) and Funding Circle (2nd debenture). HSBC requires £800k to release its first charge interest in the Tower but Funding Circle does not require any repayment of its debt."
1674 is an "All asset security loan" which fits the description of the 2nd debenture, but I'm not clear what the implications of this refinancing are for FC.
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Post by captainconfident on Jan 19, 2014 22:59:41 GMT
Thanks very much for this post, mrclondon.
As outlined above, the original first charge is repaid, and a new 1st charge created. However, the new first charge will lay claim to an additional £700k of assets which would previously have been 2nd debenture cover for FC investors. Is that right? Can FC make that decision without consulting their investors?
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Post by mrclondon on Jan 19, 2014 23:13:26 GMT
Probably not. After a bit more thought here is my best guess. At present the security held by HSBC + FC is an office building. The relendex loan is to refinace HSBC and finance the conversion into 9 appartments. The extra £700k is development finance which will be drip fed to the borrower as stage payments. So in theory as each slice of the £700k goes "on risk" the underlying asset (i.e. building) has gained a corresponding amount of value. During the development its a mess, but the relendex loan is to be repaid in full from the sale of the appartments so in the end FC will end up with an effective 1st charge.
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Post by mrclondon on Mar 12, 2014 14:02:19 GMT
The borrower has decided not to draw down the Relendex loan (apparently is now able to fund the devopment from other cashflows) ... so no impact on the FC security.
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