Mean while back in court (11 Viewers)

[italiahorse]

I think also the point of how much money was invested in ACL comes into it. If the council had 50 million of tax payers money tied up in ACL then it would be different, as they had put £0 into ACL.

And yes if they knew Wasps were buying when they took that step it gives them a bit more security. Surely that would mean they were selling to Wasps while we were still tenants, before Northampton etc. Would be a major contradiction to a lot of things said and justifications given. Especially as it is around the same time of the £2million charity offer for Higgs share, which was classed as disgusting. It would certainly explain why it was never going to happen with SISU or CCFC if it had already been agreed with Wasps. (and maybe why SISU suddenly got interested in the stadium after a couple of years of being here).

That situation would make CCC and Wasps look quite bad.

Although they effectively put zero in, the asset they have is probably worth £50M.
That's the value they are protecting.
As the judge said its the value of the asset not the amount put in or how they got there.

 

---

[Captain Dart]

Would they make a risky loan to that business in order to keep it afloat.

Ask ARVO about risky loans, how much have they lent to loss making CCFC, was that loan one a rational private investor should have made?
http://www.coventrytelegraph.net/news/coventry-news/coventry-city-owners-sisu-wipe-8777372

[h=2]But accounts show company made overall loss of £8.5m during time at Sixfields, compared to £7.1m the previous year and still owes £9.3million to parent company owned by Sisu[/h]

Otium’s accounts also show that debt to the owners now sits at £9.3million - but there is a note in the accounts which states the owners intended to continue to support the company and would not call in the debt for at least 12 months.

 

[chiefdave]

Although they effectively put zero in, the asset they have is probably worth £50M.
That's the value they are protecting.
As the judge said its the value of the asset not the amount put in or how they got there.

If they make that arguement they totally play into SISU's hands for JR2.

 

[chiefdave]

I think also the point of how much money was invested in ACL comes into it. If the council had 50 million of tax payers money tied up in ACL then it would be different, as they had put £0 into ACL.

Justice Tomlinson asks what investment the council had in ACL.
Council QC says he thinks that, other than development of the land to build the Ricoh Arena, there was no other investment in ACL prior to the loan.
Justice Tomlinson says: “At the moment it seems the council didn’t pay anything for their shareholding in ACL.”
Council QC says that’s irrelevant as once they have the shareholding it is of value. He adds giving away the shares would have been an “uncommercial and philanthropic act”.
Sisu QC intervenes to say that the shares would have represented a 50 per cent holding of a “negative equity” if they had been given away.
Council QC adds he will check if the council paid anything more for their ACL shares.

It was the judge who asked how much CCC had invested into ACL so he must think it relevant. If you've invested zero does making a risky loan of £14m make sense?

 

[italiahorse]

If they make that arguement they totally play into SISU's hands for JR2.

They still own the freehold although Wasps have the lease.
Sisu stated at one stage they were after the freehold.

 

[italiahorse]

It was the judge who asked how much CCC had invested into ACL so he must think it relevant. If you've invested zero does making a risky loan of £14m make sense?

So if I inherit a house worth £200K from my Mum and then seek a loan for £15K to build a conservatory it's a risky loan ?
Don't think so

 

[chiefdave]

They still own the freehold although Wasps have the lease.
Sisu stated at one stage they were after the freehold.

But if CCC are saying there was no risk to loaning ACL £14m as the value of ACL was greater than £14m (you put it at £50m) then when we get to JR2 they will be trying to prove that the sale price to Wasps was not poor value for the taxpayer. How can both be true?

Remember the councils own report says the lease is worth very little until the point that the lease is nearing an end.

 

[chiefdave]

So if I inherit a house worth £200K from my Mum and then seek a loan for £15K to build a conservatory it's a risky loan ?
Don't think so

Except that wasn't the situation. It would be like inheriting a house worth £200K and then getting a loan for £500K. On top of that when the bank who are thinking of loaning you the money look at your finances you're already struggling to meet your current commitments.

 

[olderskyblue]

Except that wasn't the situation. It would be like inheriting a house worth £200K and then getting a loan for £500K. On top of that when the bank who are thinking of loaning you the money look at your finances you're already struggling to meet your current commitments.

It's nothing like either of those analogies

 

[Nick]

It's nothing like either of those analogies

What would it be like?

 

[Astute]

What would it be like?

Grendel yesterday said that Wasps got the Ricoh for 10% of its value. Anyone want to agree with him as it is going against what is being said now.

 

[Deleted member 5849]

It's nothing like either of those analogies

tbf, I've yet to see an analogy crop up on these pages it's anything remotely like...

 

[Deleted member 5849]

The Ricoh is like making love to a beautiful; woman. You think it's all that, but she takes all your cash and disappears once you're a down and out wino drinking White Lightning from a brown paper back.

Before you know it, the beautiful woman's inviting you to watch her humping away with her new suitor, and offering free tickets to do so.

Although you get to keep the calendars and the do-it-yourself butt plug.

 

[Nick]

Grendel yesterday said that Wasps got the Ricoh for 10% of its value. Anyone want to agree with him as it is going against what is being said now.

Isn't there are few contradictions in it? If it is worth loads, Wasps didn't pay enough (and for the massive extension), if it isn't worth anything, the loan wasn't viable?

 

[Deleted member 5849]

This situation is like getting a valentine's card from Stalin.

 

[olderskyblue]

What would it be like?

As NW said, it would be difficult to find an analogy that fits this situation, but neither of those 2 are anything close are they?

 

[italiahorse]

Except that wasn't the situation. It would be like inheriting a house worth £200K and then getting a loan for £500K. On top of that when the bank who are thinking of loaning you the money look at your finances you're already struggling to meet your current commitments.

The loan was reduced from £1.6M to £800K per annum for ACL. More than enough to cover the deficit on accounts.
Next you'll be saying the banks are in it for the customers.

Some people are so anti CCC/ACL they can't work out the logic.
We are all pro CCFC but use a bit of common sense.

This needs throwing out as nonsense and people need to see it's exactly what a council should be doing.
We are a basket case and it's Sisu's fault for giving it a go and failing miserably.

 

[italiahorse]

As NW said, it would be difficult to find an analogy that fits this situation, but neither of those 2 are anything close are they?

I think the logic is, that it is irrelevant what you got it for, but it's the value now that is important.

Didn't the Ricoh project get European aid and now we are saying the CCC can't protect it because it's aid.

The laws is an ass, this European rule is an ass and now we have our own asses in Sisu.

 

[Specs WT-R75]

It comes down to this the application of the 'market investor test', which looks at whether a private investor would have acted in the same way

The defence say you can't just apply that because Councils have other responsibilities. However I get the feeling these judges will still take that as the overriding factor in their decision.

Would a private firm try and stop their tenant devaluing a business they have an interest in. When they same tenant is trying to buy that business.
Would they make a risky loan to that business in order to keep it afloat.
Then sell it off to someone else before it gets anymore devalued?

Or would a private firm just try and sell it to the company causing it's value to drop. Without having to do any loan deal.

Or would a private firm do a deal with the company devaluing their business to try and drive a deal out of the bank. Which means working with this company when the relationship isn't great

Very tough really. I am thinking 60-40 in SISU's favour.

The first hearing s lot if people actions and Behavioyr came into it. It seemed to be based more in common sense. I was 70-30 thinking the council would win for the reasons the judge explained.

However this is more technical it seems to be cutting out all the surrounding curcumstances. It just looks at was that loan state aid yes or no. Without looking at all the surrounding curcumstances it looks more like it is.

In a strange way if the council did know Wasos were going to bud when they took this step. That would be better for them. A private company may do that. If they saw SUSU as hostile and knew by making the loan they could negate their influence them pave the way for a smoother sake to Wasps whilst having minimal risk in the loan because it actually would only be temporary.
I imagine a private company may have taken that option.

A private company might well make such efforts, unfortunately that is not the question being asked. The question being asked is what terms would be offered on the open market... and clearly if you don't already have a vested interest in the company then nobody else would offer the terms that CCC did to ACL.

Whether or not SISU manufactured this situation is not really relevant here - I think nobody disagrees that SISU were trying to distress ACL - the question here is simply about state aid. To me it now seems pretty clear cut that it was state aid.

I am sure the Telegraph will still spin the story that it was all Sisu's fault...

 

[fernandopartridge]

A private company might well make such efforts, unfortunately that is not the question being asked. The question being asked is what terms would be offered on the open market... and clearly if you don't already have a vested interest in the company then nobody else would offer the terms that CCC did to ACL.

Whether or not SISU manufactured this situation is not really relevant here - I think nobody disagrees that SISU were trying to distress ACL - the question here is simply about state aid. To me it now seems pretty clear cut that it was state aid.

I am sure the Telegraph will still spin the story that it was all Sisu's fault...

To build the story further, the fact that ACL were so reliant on CCFC and had a large loan to pay off in the first place is down to.................

 

[Deleted member 5849]

I think the logic is, that it is irrelevant what you got it for, but it's the value now that is important.

At the risk of throwing an analogy into the mix, but given you used a flawed one too I'll add it if you bought your old nan's house for £20k when she went into a home and its value was £250k, then if anyone brought this to the attention of the relevant authorities you'd have to pay the difference.

Therefore, having had it brought to the attention of the relevant authorities, we wait and see...

The Ricoh is like watching Bill and Ted's Excellent Adventure whilst eating a pizza covered in anchovies.

 

[skybluetony176]

At the risk of throwing an analogy into the mix, but given you used a flawed one too I'll add it if you bought your old nan's house for £20k when she went into a home and its value was £250k, then if anyone brought this to the attention of the relevant authorities you'd have to pay the difference.

Therefore, having had it brought to the attention of the relevant authorities, we wait and see...

The Ricoh is like watching Bill and Ted's Excellent Adventure whilst eating a pizza covered in anchovies.

I'd say it's more like watching groundhog day with a scratch on the DVD and everytime it's about to start on the day where Bill Murray finally gets the girl it jumps back to the start of the first Groundhog day while you're simultaneously shitting a porcupine backwards and being circumcised with a blunt chain saw.

 

[Astute]

Isn't there are few contradictions in it? If it is worth loads, Wasps didn't pay enough (and for the massive extension), if it isn't worth anything, the loan wasn't viable?

Exactly.

The same people that say that the loan wasn't viable have said in the past that Wasps got it cheaply. I am all for people to share their views. But not when they decipher what has happened depending upon what point they want to make.

 

[Nick]

Exactly.

The same people that say that the loan wasn't viable have said in the past that Wasps got it cheaply. I am all for people to share their views. But not when they decipher what has happened depending upon what point they want to make.

Yes, but the council are using both aren't they to suit?

 

[oldskyblue58]

This issue of did the shares cost anything.

The ACL accounts for 31 May 2003 indicate that the Council subscribed 6 times between October 2002 and May 2003 for its 2,000,000 shares totalling £1,758,256 at nominal value . The cashflow shows this money was used to pay expenses for that year. CCFC had at that time 200 shares fully paid for at the nominal value via Football Investors ltd

The following year Football Investors Limited bought shares in ACL on 23 December 2003. to match the council totals. On 19th December 2003 CCFC had disposed of its interest in Football investors to Alan Edward Higgs Charity

That left ACL with an issued share capital of £3,516,112 split equally between Council & Charity. It seems that the shares were indeed purchased for cash

In which case the Council made the following gain on the shares

Disposal 2.77m
cost 1.76m

capital gain 1.01m

What is being pointed to I think by the lawyers is that in the Coventry North Regeneration Ltd Accounts the Council have said that for accounts purposes they will show a value of nil............. that is not the same as its sale value or indeed its purchase value

 

[Astute]

Yes, but the council are using both aren't they to suit?

And that makes it OK to do it on here?

 

[Grendel]

Grendel yesterday said that Wasps got the Ricoh for 10% of its value. Anyone want to agree with him as it is going against what is being said now.

Er no the valuation is based on no club being there. So without a club the arena was not worth as much as the loan.

That is my point. The council were prepared to sell the asset to wasps on that basis but not the football club.

 

[chiefdave]

The loan was reduced from £1.6M to £800K per annum for ACL. More than enough to cover the deficit on accounts.
Next you'll be saying the banks are in it for the customers.

No I'm saying the exact opposite, the banks are in it for themselves. CCC are saying this loan was made on a commercial basis. Try going to a bank and saying your worried about your business going under because your struggling to meet your financial commitments and ask them to refinance your loan at a lower interest rate over a longer term without enough security to cover the value of the loan. See what response you get.

 

[Astute]

Er no the valuation is based on no club being there. So without a club the arena was not worth as much as the loan.

That is my point. The council were prepared to sell the asset to wasps on that basis but not the football club.

The worm has turned again I see.

 

[Grendel]

This issue of did the shares cost anything.

The ACL accounts for 31 May 2003 indicate that the Council subscribed 6 times between October 2002 and May 2003 for its 2,000,000 shares totalling £1,758,256 at nominal value . The cashflow shows this money was used to pay expenses for that year. CCFC had at that time 200 shares fully paid for at the nominal value via Football Investors ltd

The following year Football Investors Limited bought shares in ACL on 23 December 2003. to match the council totals. On 19th December 2003 CCFC had disposed of its interest in Football investors to Alan Edward Higgs Charity

That left ACL with an issued share capital of £3,516,112 split equally between Council & Charity. It seems that the shares were indeed purchased for cash

In which case the Council made the following gain on the shares

Disposal 2.77m
cost 1.76m

capital gain 1.01m

What is being pointed to I think by the lawyers is that in the Coventry North Regeneration Ltd Accounts the Council have said that for accounts purposes they will show a value of nil............. that is not the same as its sale value or indeed its purchase value

I was trying to find an answer to a question - the answer to which clearly lies in here - somewhere.

Are you saying Higgs share purchase from the club was £2.7 million?

 

[Astute]

I was trying to find an answer to a question - the answer to which clearly lies in here - somewhere.

Are you saying Higgs share purchase from the club was £2.7 million?

You know that isn't true. They loaned our club money and put a total of 6m in. The lease was put up as collateral.

 

[fernandopartridge]

You know that isn't true. They loaned our club money and put a total of 6m in. The lease was put up as collateral.

Was Derek Higgs one of the FIL Ltd investors?

 

[Captain Dart]

I was trying to find an answer to a question - the answer to which clearly lies in here - somewhere.

Are you saying Higgs share purchase from the club was £2.7 million?

I think they put a lot more money in than £2.7M. More like £6.5M, though only £2M cash, the rest was was in the form of loans written off.
http://www.skybluetrust.co.uk/index...c-ltd-holdings-ricoh-build-years-1993-to-2007

2003
Accounts for CCFC Group show a net investment of £6,808,425 in the Arena Project which was then sold to the AEH Charity for £6,500,000. The balance of £308,425 was written off	Companies House CCFC Group Accounts 2003 & 2004
19[SUP]th[/SUP] December Alan Edward Higgs Charity acquires 50% of ACL from CCFC ltd. Shares owned by Football Investors Limited, which becomes a wholly owned subsidiary of the Charity. Cost to Charity £6,523,184 inc. fees. Payment made £2m cash £2.5m waiver of loan and £2m to two directors who had outstanding loans to FIL who then re loaned the money to CCFC ltd. CCFC Ltd acquires option to purchase shares back from the Charity.	CCFC H accounts, Judicial Review docs
19[SUP]th[/SUP] December Development agreement between ACL and CCFC signed

 

[Grendel]

The worm has turned again I see.

No I just think you struggle to read and digest information.

No one believes the nonsense valuation in the prospectus. It's based on future projections.

 

[oldskyblue58]

I was trying to find an answer to a question - the answer to which clearly lies in here - somewhere.

Are you saying Higgs share purchase from the club was £2.7 million?

From the accounts of CCFC and Charity no it was £6.5m - £2m in cash for finances, £2m for the club to pay three directors and £2.5m forgiving a £2.5m loan that was due for payment


The Charity via its ownership of Football Investors Ltd made the following loss on its disposal to Wasps. The Charity still owns Football investors

Procceds 2.77m
cost 6.50m

capital loss 3.73m