j
Member of DD Central
Penguins are very misunderstood!
Posts: 2,188 
Likes: 540
|
Post by j on Apr 17, 2014 18:45:30 GMT
I was actually thinking of putting a £20 bid at some point near auction end but, I might even forgo that having read the report properly now. Once again, a bit of a disappointing offer to what we've become used to. It might be a growing brand, but all that t/o & still loss making, by quite a bit. I'm also concerned by the fact that the originator bought it back after the purchaser ran into trouble only 18 months in. some things are not stacking up at all  |
|
|
|
Post by mrclondon on Apr 17, 2014 18:49:34 GMT
In all honesty, I was quite surprised to see the proposal on AC's platform, but good luck to all that have a more positive view and decide to jump in. I'm very surprised too - confused even. No asset security is not AC's style. Only eight bidders and less than £2k in the first two hours with cashback in operation???  The introducer, Ludgate, are of course prolific sponsors on TC, and rarely offer meaningful security. Recently even some loans with reasonable security have failed to fill on TC [e.g. Cust***** 4 for those following TC] and there are currently a number of large loans live on TC that I think will struggle to fill. This looks like a strategic move by Ludgate ... but misses the point that AC lenders expect Asset security. This one is likely to fail unless the underwriters can be persuaded to take it, despite the cashback promotion.
|
|
|
|
Post by Ton ⓉⓞⓃ on Apr 17, 2014 19:01:27 GMT
The problem now is; if people are talking about this one possibly not flying then because cash back only pays on successful loans people now might not risk putting any money into it. IN EDIT I think AC need to say now or soon if this is going to be u/w. davidricketts1 signed this off new man new ways. |
|
|
|
Post by mrclondon on Apr 17, 2014 21:26:49 GMT
After another read through the credit report, a few more observations: - Page 11 of the credit report states the net worth as £9.2m. The normal definition of net worth is shareholder funds (£9.2m) less intangible assets (£9.7m) giving a net worth of c. negative £0.5m
- Page 15 of te credit report states a first fixed and floating charge. This is very misleading given there will be a deed of priority with HSBC who have the first debenture.
- Page 10 of the credit report states there will be a covenant such that "Annual Accounts to be received by Assetz Capital within 270 days of year end to which they refer." But 270 days is c. 9 months which is the deadline for filing at Companies House - i.e. a meaningless covenant. A business of this size should have audited accounts by the 6 month mark, and should be aiming for filing at this point before the credit agencies start their automatic downgrades as the 9 month deadline approaches. Needless to say for the last 2 years accounts have been filed with Companies House at the 9 month mark.
- We are being targeted with funding tranche 2 to facilitate the fit out the 2nd Manhatten Island store in six months time, which will be before or at the same time as the 1st store has opened. So no trading history to judge the appetite for a 2nd Manhatten store
This strikes me as a business that really needs to be raising equity funding not debt given the agressive expansion that is being targeted.
|
|
mikes1531
Member of DD Central
Posts: 6,453
Likes: 2,320
|
Post by mikes1531 on Apr 18, 2014 2:59:39 GMT
With a low interest rate and no tangible security, I'm certainly not excited by this one. I suspect it will have trouble being funded. AC might even have trouble finding underwriters because a lack of enthusiasm for the auction would imply a lack of enthusiasm for loan parts on the AM, so the U/Ws might find themselves left holding a lot of parts for a long time.
I also think there's something wrong with the payment schedule -- I do not believe that the indicated payments are enough to completely pay off the loan in 36 months with 9% interest. Not to mention that most AC loans have a payment schedule based on an interest rate slightly higher than the rate to lenders so as to provide AC with a loan monitoring fee.
|
|
|
|
Post by cyrilmadrid on Apr 18, 2014 8:48:27 GMT
If the owner has 25 M GBP net worth, it would have been easier/safer to receive a guarantee on one of his assets, than a personal guarantee which is not always easy to enforce.
Indeed, with a poor credit score, loss making company, the interest rate looks weak.
On the other hand, I am not sure that HSBC will lend him at much more than 9 % (+AC fees), so if he has access to HSBC, he probably wouldn't come here for 12 %.
One good thing is the loan is fully amortizing.
One of the medium term issues I see coming is that progressively, banks are starting to lend again to SMEs, therefore it is probable that interest rates paid to lenders on AC will probably be lower than current rates, considering they are reasonably secure loans.
|
|
pikestaff
Member of DD Central
Posts: 2,187
Likes: 1,546
|
Post by pikestaff on Apr 18, 2014 9:48:22 GMT
As others have said, not really AC style.
The credit report looks like Ludgate first drafted it for a variable rate auction on TC (the executive summary says "Interest: 8-10% accepted"), but it has been listed on AC at 9%. I think this is far too low without specific asset security from the Chairman. Not for me.
I agree with mcrlondon, they really need equity. If the Chairman is unprepared to give up equity, and does not want to put it in himself, then he needs to provide some specific security.
|
|
|
|
Post by chielamangus on Apr 18, 2014 10:29:35 GMT
Hmmm. I've said elsewhere on this forum that AC has certain features that I like and that I see it as a continuing part of my portfolio. But not if this loan is a portent of the future.
|
|
merlin
Minor shareholder in Assetz and many other companies.
Posts: 902
Likes: 302
|
Post by merlin on Apr 18, 2014 11:38:54 GMT
 One good thing is the loan is fully amortizing. One of the medium term issues I see coming is that progressively, banks are starting to lend again to SMEs, therefore it is probable that interest rates paid to lenders on AC will probably be lower than current rates, considering they are reasonably secure loans. Yes some banks have started lending again but only to the really sweet, low hanging fruit.
I have seen plenty of cases where someone claims to have high net worth but is it real or just on paper? All to often when push becomes shove and just one of your businesses goes tits up, your book wealth can rapidly melt away to nothing as confidence is lost in you. As far as this business is concerned if I was in the mood to buy anything which I am not I would leave this one to others.
|
|
mikes1531
Member of DD Central
Posts: 6,453
Likes: 2,320
|
Post by mikes1531 on Apr 18, 2014 13:47:26 GMT
One good thing is the loan is fully amortizing. I accept that's what the Credit Report says, but I've been through the calculation myself and my results do not support that statement. My figures indicate that the specified payments would be enough to pay off the loan in 36 instalments only if the interest rate were to be 8%. With interest at 9%, there would be a remaining balance of just under £10k after the 36th payment.
|
|
j
Member of DD Central
Penguins are very misunderstood!
Posts: 2,188
Likes: 540
|
Post by j on Apr 18, 2014 17:57:53 GMT
I have seen plenty of cases where someone claims to have high net worth but is it real or just on paper? All to often when push becomes shove and just one of your businesses goes tits up, your book wealth can rapidly melt away to nothing as confidence is lost in you. As far as this business is concerned if I was in the mood to buy anything which I am not I would leave this one to others.
From experience with other loans of a similar nature (ie moderate loans for high net worth individuals) the excuse/reason tends to be that either their assets are high but fairly illiquid or take a long time to liquidate, or they have already invested large amounts into the business. My guess on this one is the latter as the credit report indicates a £3.4m figure already pumped into it by the owner. I'm way from being convinced on this one anyway & the only factor that would make me invest is a proper security (eg bricks & mortar) and a much higher rate of 15% or more & even then I would deliberate twice before committing.
|
|
koba
Posts: 45
Likes: 13
|
Post by koba on Apr 18, 2014 19:51:26 GMT
I might have considered an (EIS-qualified) equity investment in this company. Equity-like risk for a 9% coupon is altogether another matter.
|
|
spockie
Member of DD Central
Posts: 299 
Likes: 84
|
Post by spockie on Apr 18, 2014 20:02:18 GMT
I haven't invested either. It feels like they are testing the water with this loan, and were also probably reluctant to have nothing available over the Bank Holiday weekend. A recent email referred to some forthcoming Cornwall loan but it has presumably either fallen over or been postponed. They probably would have preferred to have a more 'standard' AC loan available over the weekend, and it looks as if they are probably going to get a clear message from lenders on this one.
|
|
|
|
Post by Ton ⓉⓞⓃ on Apr 18, 2014 20:04:58 GMT
The reason he is a HNWI is because he's made this sort of deal in the past and clearly has benefited. He knows that hanging onto the shares is the road to riches as long as he can make the co. successful. The owner hasn't been particularly generous with the shares to the other seniors in the business so far, but perhaps they still need to work for them. But of course part of the AC loan is meant to be spent on the management (so he has us paying them rather than giving them shares). He really is garnering all the best bits for himself and he has a perfect right to do that. The implication of mikes1531's calculation is that AC are paying for the pleasure of dealing with the HNWI. But it could be an error of school-boy maths at AC. The kind that I make regularly. Only if u/wer's are going to be used will I be putting in a few hundred but that doesn't mean I'll be holding it full term. Again everyone talks a lot of sense on this loan. IN EDIT The credit report reads like two or three different reports melded into one. |
|
|
|
Post by rudry2677 on Apr 18, 2014 20:14:14 GMT
I do hope that AC have not forgotten that one of the major pillars in the success of any enterprise is TRUST. Dabbling with potentially high risk deals has every likelihood of damaging reputation and any new or existing lenders will avoid that enterprise.
|
|
