webwiz
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Post by webwiz on Oct 29, 2015 18:40:11 GMT
Is this loan for 6 months as per email or for 68 months as per web site/ Or am I being stupid?
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Post by ablrateandy on Oct 29, 2015 19:02:35 GMT
The security is the control of shares over the SPV. The SPV contains the lease streams PLUS most valuably the right to buy a USD4.5mio aircraft for USD3mio.
It may be simpler to think of this as Phoenix effectively having ownership of a USD4.5mio aircraft and a USD3mio loan against it. Buy paying off the USD3mio loan they take ownership of the USD4.5mio aircraft. What our loan is doing is allowing them to pay off their current lender in chunks by borrowing the money from Ablrate lenders instead. So, if we lend them 300k, Phoenix will pay off 300k of the existing loan.
LTV = 3mio / 4.5mio = 66.7% imho.
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Post by ablrateandy on Oct 29, 2015 19:02:59 GMT
Is this loan for 6 months as per email or for 68 months as per web site/ Or am I being stupid? 6 months. Where did you see the 68 months!?
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webwiz
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Post by webwiz on Oct 29, 2015 19:10:20 GMT
Is this loan for 6 months as per email or for 68 months as per web site/ Or am I being stupid? 6 months. Where did you see the 68 months!? The only one I can see in Current Investments: ATR 42-500 TO GOVERNMENT OWNED AIRLINE TRANCHE 2 BORROWER PHOENIX MATURITY DATE 15/09/2020 It would help if each loan had a simple ID code. I guess I am looking in the wrong place
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Post by ablrateandy on Oct 29, 2015 19:16:29 GMT
webwiz Ah you want to be in "New Loans" (In the top area on the left hand side) where new opportunities are shown. "Current Investments" is investments that you have already made
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webwiz
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Post by webwiz on Oct 29, 2015 19:26:09 GMT
webwiz Ah you want to be in "New Loans" (In the top area on the left hand side) where new opportunities are shown. "Current Investments" is investments that you have already made Yes, found it and invested OK. But it would help if each loan had a simple ID code, and also if the 68 month one (with £0) could be removed from my "Current Investments" - I suppose I sold it on the SM some time ago.
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paulgul
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Post by paulgul on Oct 29, 2015 21:17:24 GMT
Whoops. Was that just the footer or did my html camouflage the whole thing??! The formatting of the email was a bit strange, looks ok in gmail on a browser with a small picture and text wrapped around and in portrait format but in my email client (Em Client) the photo appears large and all the text to the right of the photo making the message into landscape format. In Outlook 2013 its different again - massive picture with just the tail showing and text below
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Post by ablrateandy on Oct 29, 2015 21:39:57 GMT
Ah thanks. We have a bit of an odd set-up (html editor built into the system and routing through Sendgrid). I'll examine more tomorrow. Thanks for all the info!
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james
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Post by james on Oct 30, 2015 1:36:32 GMT
The security is the control of shares over the SPV. The SPV contains the lease streams PLUS most valuably the right to buy a USD4.5mio aircraft for USD3mio. Does the SPV have assured access to sufficient money to buy that asset if the borrower defaults and the security has to be realised? I suspect you and/or the SPV could find the money if needed and if Ablrate itself is still in business but it's good to know just what the security value is in dire circumstances. Phoenix has the right to buy. Is that right transferable and has it been transferred to the SPV, or will it be with certainty on drawdown?
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Post by ablrate on Oct 30, 2015 10:26:37 GMT
The security is the control of shares over the SPV. The SPV contains the lease streams PLUS most valuably the right to buy a USD4.5mio aircraft for USD3mio. Does the SPV have assured access to sufficient money to buy that asset if the borrower defaults and the security has to be realised? I suspect you and/or the SPV could find the money if needed and if Ablrate itself is still in business but it's good to know just what the security value is in dire circumstances. Phoenix has the right to buy. Is that right transferable and has it been transferred to the SPV, or will it be with certainty on drawdown? Hi James Phoenix have the right to buy which follows through to the SPV so if the borrower defaults Ablrate would begin default procedures. The market for these aircraft is very buoyant as evidence by the fact that its Market Value now is $1 million over the based value (the residual value it was predicted to be from new to now). The reason for this are that lease rates are solidly above generic predicted lease rates, this one is out at $80k+ and would be a similar rate (maybe $5k less) then current. In fact there is a customer who wants to lease it for $80k but a sale is the preferred option. (so if you would like to join in a syndicate to buy it and lease out out again, do let me know!! lol) A dire situation would be where lease rates collapsed and values correspondingly went down also, known as a 'soft market'. Ascend soft market value (where market value premiums are wiped out and generic lease rates prevail) would be $3.04 million. The aircraft, however, would still get $60,000 (generic lease rate) giving a buyer a 1.9% per month gross return on their capital. So in reality the soft market value probably still too low and would likely see a higher value actually captured. Of course, there are risks inherent in the transaction. Regards Ablrate
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stevio
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Post by stevio on Oct 30, 2015 11:56:52 GMT
The security is the control of shares over the SPV. The SPV contains the lease streams PLUS most valuably the right to buy a USD4.5mio aircraft for USD3mio. Does the SPV have assured access to sufficient money to buy that asset if the borrower defaults and the security has to be realised? I suspect you and/or the SPV could find the money if needed and if Ablrate itself is still in business but it's good to know just what the security value is in dire circumstances. Phoenix has the right to buy. Is that right transferable and has it been transferred to the SPV, or will it be with certainty on drawdown? Hi Ablrate I don't think you actually completely answered James's questions? Security is shares in the SPV, not in Phoenix. However the borrower is Phoenix. If Phoenix were to default (however unlikely), would the SPV have sufficient funds to follow through on the purchase? Also, as Phoenix has the right to buy, will that be transferred to the SPV and if so when? Thanks
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Post by ablrate on Oct 30, 2015 13:19:34 GMT
Does the SPV have assured access to sufficient money to buy that asset if the borrower defaults and the security has to be realised? I suspect you and/or the SPV could find the money if needed and if Ablrate itself is still in business but it's good to know just what the security value is in dire circumstances. Phoenix has the right to buy. Is that right transferable and has it been transferred to the SPV, or will it be with certainty on drawdown? Hi Ablrate I don't think you actually completely answered James's questions? Security is shares in the SPV, not in Phoenix. However the borrower is Phoenix. If Phoenix were to default (however unlikely), would the SPV have sufficient funds to follow through on the purchase? Also, as Phoenix has the right to buy, will that be transferred to the SPV and if so when? Thanks Hi Stevio Sorry if I was not clear. The right to buy is within the SPV via assignment. The borrower, as per the loan docs, is the Labuan SPV. The transaction is a back to back sale/purchase with several potentials and one preferred buyer negotiating. In the unlikely event none of those buyers takes the aircraft, the borrower would arrange finance purchase it and, in all probability, lease it out again, but it does not have liquid funds right now to do that (or they would have bought the aircraft already). The mitigating circumstances against this risk is what I was attempting to do by explaining where the market is now and is expected to be over the term of this transaction. Something pretty dramatic would have to happen for that to change, but again, the risks are there and if you are looking at the loan, you need to take a view what you consider are the risks over the next six months. Hope that helps. Regards Ablrate
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jimbob
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Post by jimbob on Oct 30, 2015 14:33:41 GMT
Private message sent regarding the loan
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james
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Post by james on Oct 30, 2015 16:59:06 GMT
ablrate, it wasn't the value of the security that I was asking about but rather whether the SPV would be able to sell the security or not. That is, in part, whether it has the funds or could with assurance raise the funds to exercise the right to buy the asset so it can be sold, or whether the right to buy is assignable freely enough to allow another buyer to purchase the right from them at a value no lower than the required security value, and whether buyers with sufficient liquidity exist in that case.
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Post by ablrate on Oct 30, 2015 17:43:38 GMT
ablrate, it wasn't the value of the security that I was asking about but rather whether the SPV would be able to sell the security or not. That is, in part, whether it has the funds or could with assurance raise the funds to exercise the right to buy the asset so it can be sold, or whether the right to buy is assignable freely enough to allow another buyer to purchase the right from them at a value no lower than the required security value, and whether buyers with sufficient liquidity exist in that case. Hi James I was trying to explain (badly, sorry) about the viability of the asset as a saleable item.. so I apologise, as I now see where you are coming from (I hope). So let me try again and answer more clearly your perfectly reasonable question: The SPV has the exclusive right to buy the aircraft via assignment from Phoenix, so if anyone wants to purchase the aircraft they have to buy it from the SPV. Practically this means that they can freely market the aircraft to any potential buyer. They don't have to raise the funds to own the aircraft outright before being able to market it because it will be sold before they have to purchase, but if they do they capture more income during the current lease if they purchase it sooner. Its a bit like having a house, the bank has the mortgage, but it doesn't stop you putting it on Zoopla and selling it. The solicitors pay off the mortgage and send you the balance. In practice a buyer would be (and has been) found, they would typically pay a non-refundable deposit (usually $100,000 - $200,00 which is taken off purchase price when they buy) to send in their appraisal team to check conditions, there are usually some small things that the seller's appraiser and the buyer's appraiser differ on. These are then negotiated and when agreed encompassed in the delivery agreement (that a seat will be replaced, or a galley item will be replaced... or something will be repainted etc). Funds go to escrow, plane is delivered and items checked again. Sign off happens, funds are released to the SPV, and the payment made to purchase the aircraft outright. I hope that does explain it better..... otherwise I am calling in the cavalry.... Andy... Have a great weekend
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