A Question for The Accountants (14 Viewers)

[hill83]

But that's not illegal, and if that's the strength of sisus argument the JR would be over in 5 mins.

Isn't it to do with state aid etc. I don't know enough about it to be honest it all winds me up.
Anyway, I'm just trying to explain the point Grendel is making as many are totally missing it.
I'm not here to argue Sisu's case.

 

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[bigfatronssba]

Isn't it to do with state aid etc. I don't know enough about it to be honest it all winds me up.
Anyway, I'm just trying to explain the point Grendel is making as many are totally missing it.
I'm not here to argue Sisu's case.

It's only state aid if the money is going to a completely separate private company.

The council handing the Ricoh over to sisu for free would be state aid.

What the council will argue is that they have protected their investment in one of their projects.

 

[GaryPendrysEyes]

The obsession with ACL is bizarre.
Sisu own the club and are responsible for it, understanding their finances and plans is what really matters for Cov fans.

 

[hill83]

It's only state aid if the money is going to a completely separate private company.

The council handing the Ricoh over to sisu for free would be state aid.

What the council will argue is that they have protected their investment in one of their projects.

Sorted. Nothing to worry about then.

 

[italiahorse]

Thought they got it at 1.2% and passed it onto ACL at 5%

 

[lordsummerisle]

Thought they got it at 1.2% and passed it onto ACL at 5%

OSB explained that he'd got the 1.2% guess wrong on the other thread and said more likely to be between 4.5 and 4.8%.

As far as I'm aware the exact terms of the loan that the council took out for ACL haven't been made public.

 

[smouch1975]

RFC will know the truth but can't tell us

 

[patccfc]

The obsession with ACL is bizarre. Sisu own the club and are responsible for it, understanding their finances and plans is what really matters for Cov fans.

It DOES if the fuckers make the team play 35 miles from home! SISU OUT

 

[italiahorse]

OSB explained that he'd got the 1.2% guess wrong on the other thread and said more likely to be between 4.5 and 4.8%.

As far as I'm aware the exact terms of the loan that the council took out for ACL haven't been made public.

Thanks. Can't follow all the threads.

 

[Grendel]

The obsession with ACL is bizarre.
Sisu own the club and are responsible for it, understanding their finances and plans is what really matters for Cov fans.

So anyone posting on the ACL thread is obsessing then?

 

[italiahorse]

So anyone posting on the ACL thread is obsessing then?

Its a shame you can't use your persistence on Sisu.
We would have been back at the Ricoh now with Sisu asking you what needs doing next.

 

[oldskyblue58]

I would hope that I would rather than laugh in a clients face ask why the client would want to do that, find out all the facts I could before advising that client. As I suspect your accountant would if asked as a serious question.

On the face of it the return you estimate is not a very good one and between two independent businesses would seem to be insufficient. However what is the purpose of the loan, does it protect other interests, are the two actually independent of each, is it a part of a bigger plan, does it ensure other returns etc..... Think you are wrong to insist in the example that the companies are independent very often such deals require a shareholding interest being taken if one did not exist in the first place..... otherwise the finance is sourced from financial institutions and the whole hypothesis is altered

We all know that this hypothetical situation is aimed at the loan relationship between CCC and ACL although the facts are changed in a way that suits a very hypothetical point. The council is not a business, we do not know the rate of return, etc . We do know the loan is tied to the length of the lease, it is secured on the assets of the business, the interest rate is 5% etc. Councils have a far greater social duty than an independent private or even public company. "Profits" to a council are not just monetary

Perhaps you could ask advice from your accountant about two other "clients"..... all hypothetical of course

1) first client wants to lend another company over £10m in various tranches of finance some at interest perhaps 10%pa. Client owns a minority share holding in the company taking the loan. These loans will be secured on the assets of the other company by legal mortgage. The company receiving the loans makes multi million pound losses and has done for years, it has no means of paying the interest let alone the loan capital from its own cash flow, repayment date on some of the loans is set within 12 months. The Company taking the loan has no permanent operating base. The assets providing the security have balance sheet values at less than £2.5m. Is that a good deal to consider?

2) second client is to lend another company over £20m with no security. Client did hold shares but unclear if still do as share holdings were transferred to a third party classed as the owner. Part of the loan will be interest baring. The client will give management of the money lent over to a third party. Again the company receiving the loans makes multi million pound losses and has done for years, it has no means of paying the interest or the loan capital from its own cash flow. The Company taking the loan has no permanent operating base. The assets balance sheet values are at less than £2.5m. Is that a good deal to consider?

When he has stopped falling off his chair laughing ...... his answer should be Why?

 

[magic82ball]

So to clarify, in the last two days we have learned SISU have run up debts of millions with not much hope to recoup and puts the future of the club in real jeopardy and CCC are only making 0.2% on a loan, and Grendel is outraged by the later. If I didn't know better I would think Grendel has a anti CCC-ACL agenda...

 

[lewys33]

How did I know I would open a Grendel thread and it would be about ACL?!

Anyway, despite that, he does have a point. IF the figures quoted (which are a guess) are correct of course!

I would imagine CCC would defend it by saying "well it was either let ACL go under and lose £millions or take out a loan for them and recieve a small return on the loan from them."

 

[lewys33]

I would hope that I would rather than laugh in a clients face ask why the client would want to do that, find out all the facts I could before advising that client. As I suspect your accountant would if asked as a serious question.

On the face of it the return you estimate is not a very good one and between two independent businesses would seem to be insufficient. However what is the purpose of the loan, does it protect other interests, are the two actually independent of each, is it a part of a bigger plan, does it ensure other returns etc..... Think you are wrong to insist in the example that the companies are independent very often such deals require a shareholding interest being taken if one did not exist in the first place..... otherwise the finance is sourced from financial institutions and the whole hypothesis is altered

We all know that this hypothetical situation is aimed at the loan relationship between CCC and ACL although the facts are changed in a way that suits a very hypothetical point. The council is not a business, we do not know the rate of return, etc . We do know the loan is tied to the length of the lease, it is secured on the assets of the business, the interest rate is 5% etc. Councils have a far greater social duty than an independent private or even public company. "Profits" to a council are not just monetary

Perhaps you could ask advice from your accountant about two other "clients"..... all hypothetical of course

1) first client wants to lend another company over £10m in various tranches of finance some at interest perhaps 10%pa. Client owns a minority share holding in the company taking the loan. These loans will be secured on the assets of the other company by legal mortgage. The company receiving the loans makes multi million pound losses and has done for years, it has no means of paying the interest let alone the loan capital from its own cash flow, repayment date on some of the loans is set within 12 months. The Company taking the loan has no permanent operating base. The assets providing the security have balance sheet values at less than £2.5m. Is that a good deal to consider?

2) second client is to lend another company over £20m with no security. Client did hold shares but unclear if still do as share holdings were transferred to a third party classed as the owner. Part of the loan will be interest baring. The client will give management of the money lent over to a third party. Again the company receiving the loans makes multi million pound losses and has done for years, it has no means of paying the interest or the loan capital from its own cash flow. The Company taking the loan has no permanent operating base. The assets balance sheet values are at less than £2.5m. Is that a good deal to consider?

When he has stopped falling off his chair laughing ...... his answer should be Why?

Yh .......... that's what I wanted to say. Honest.

 

[covcity4life]

corrupt council shown up yet again.

 

[lewys33]

corrupt council shown up yet again.

Your obsession is a little disturbing

 

[Brighton Sky Blue]

I am interested in a hypothetical situation here. If you have a business and you have another business that we are told is totally independant from the first and they ask you to get a loan for them for £14 million over 40 years and you managed to source this at 4.8% per annum would you advise your client to do this business and charge the totally independant business 5.0% per annum?

I today ran this by my accountant and he laughed his head off and said we all know the answer to that.

Now I did post this earlier and it was removed as people thought it was inappropriate on a thread which was heaping praise on an accountant. I would really appreciate the accountants view on this. If it contradicts mine I may seek a new one.

It was an action taken to safeguard a business which the council had a vested interest in, done to prevent a spurious third party from doing so. Right or wrong, that is the explanation that will be put forward.

 

[italiahorse]

corrupt council shown up yet again.

We have one guy giving a informed answer and then we have you calling a Council corrupt but unable to explain why.

 

[italiahorse]

Anybody with an ounce of intelligence would know why they needed to do it.

The alternative is that SISU (not CCFC) would obtain control of the Ricoh (To do what they want, including knock it down) and CCC would loose millions on a project that if they had not rescued would have seen CCFC homeless.

I personally would want the safety and security of CCC than the loose cannon of SISU.

 

[Brighton Sky Blue]

Anybody with an ounce of intelligence would know why they needed to do it.

The alternative is that SISU (not CCFC) would obtain control of the Ricoh (To do what they want, including knock it down) and CCC would loose millions on a project that if they had not rescued would have seen CCFC homeless.

I personally would want the safety and security of CCC than the loose cannon of SISU.

Unlikely. SISU need something on the balance sheet to help sell the club for more than the pittance they would get for it at the moment-a big stadium complex would fit the bill.

 

[hill83]

I would hope that I would rather than laugh in a clients face ask why the client would want to do that, find out all the facts I could before advising that client. As I suspect your accountant would if asked as a serious question.

On the face of it the return you estimate is not a very good one and between two independent businesses would seem to be insufficient. However what is the purpose of the loan, does it protect other interests, are the two actually independent of each, is it a part of a bigger plan, does it ensure other returns etc..... Think you are wrong to insist in the example that the companies are independent very often such deals require a shareholding interest being taken if one did not exist in the first place..... otherwise the finance is sourced from financial institutions and the whole hypothesis is altered

We all know that this hypothetical situation is aimed at the loan relationship between CCC and ACL although the facts are changed in a way that suits a very hypothetical point. The council is not a business, we do not know the rate of return, etc . We do know the loan is tied to the length of the lease, it is secured on the assets of the business, the interest rate is 5% etc. Councils have a far greater social duty than an independent private or even public company. "Profits" to a council are not just monetary

Perhaps you could ask advice from your accountant about two other "clients"..... all hypothetical of course

1) first client wants to lend another company over £10m in various tranches of finance some at interest perhaps 10%pa. Client owns a minority share holding in the company taking the loan. These loans will be secured on the assets of the other company by legal mortgage. The company receiving the loans makes multi million pound losses and has done for years, it has no means of paying the interest let alone the loan capital from its own cash flow, repayment date on some of the loans is set within 12 months. The Company taking the loan has no permanent operating base. The assets providing the security have balance sheet values at less than £2.5m. Is that a good deal to consider?

2) second client is to lend another company over £20m with no security. Client did hold shares but unclear if still do as share holdings were transferred to a third party classed as the owner. Part of the loan will be interest baring. The client will give management of the money lent over to a third party. Again the company receiving the loans makes multi million pound losses and has done for years, it has no means of paying the interest or the loan capital from its own cash flow. The Company taking the loan has no permanent operating base. The assets balance sheet values are at less than £2.5m. Is that a good deal to consider?

When he has stopped falling off his chair laughing ...... his answer should be Why?

There you go, valid question well and truly answered. Nothing more to see here.

 

[Astute]

There you go, valid question well and truly answered. Nothing more to see here.

Don't you think it should be worth a reply from Grendel now? You say his question was worth an answer. The answer must be worth at least a comment.

 

[magic82ball]

There you go, valid question well and truly answered. Nothing more to see here.

Was it a valid question though Hill? Sounded like just more anti-CCC crap from the same person it usually pours from.

 

[hill83]

Was it a valid question though Hill? Sounded like just more anti-CCC crap from the same person it usually pours from.

Well I'd say it was. It was a little cryptic, but I believe it asked the question as to whether the two companies are linked or not, and if due to this, the loan was fair.
And that is exactly the route Sisu are beleived to be taking with the judicial review. So yes. A valid question.

 

[italiahorse]

Unlikely. SISU need something on the balance sheet to help sell the club for more than the pittance they would get for it at the moment-a big stadium complex would fit the bill.

The knocking down, bit as you say, is unlikely but demonstrates a risk that would be there.
Agree that they have (A) devalued the complex by taking the team away and need to make there gain by buying the Ricoh at it's devalued price, bringing the team back resulting in (B) up-valuing the Ricoh.

Their profit will be (B) - (A).

 

[hill83]

Don't you think it should be worth a reply from Grendel now? You say his question was worth an answer. The answer must be worth at least a comment.

Not bothered if he does or not. I'm sure you'll be hitting F5 all day though
And I didn't say it was worth an answer, just that it was a valid question.

 

[magic82ball]

Well I'd say it was. It was a little cryptic, but I believe it asked the question as to whether the two companies are linked or not, and if due to this, the loan was fair.
And that is exactly the route Sisu are beleived to be taking with the judicial review. So yes. A valid question.

Of course their linked, CCC have a vested interest in ACL being a shareholder in the Ricoh, that's not new information. I honestly thought every one already knew that but apologies if yourself and Grendel did not.

 

[Astute]

Of course CCC and ACL are linked. Just like SISU/Otium/CCFC LTD/ARVO/whatever they call each section presently.

To me this is a good enough reason to look after their own interests. And it is what they have done.

 

[hill83]

Of course their linked, CCC have a vested interest in ACL being a shareholder in the Ricoh, that's not new information. I honestly thought every one already knew that but apologies if yourself and Grendel did not.

This is where you are missing the point of his question.
I know they are linked.
Grendel knows they are linked.
Most people know they are linked.

The point was, if they are linked then there could be a problem. Demonstrated in his question. That's it really.
Which was then answered by OSB. End of thread.

 

[Astute]

Not bothered if he does or not. I'm sure you'll be hitting F5 all day though
And I didn't say it was worth an answer, just that it was a valid question.

So a valid question isn't worth an answer? :thinking about:

 

[Astute]

This is where you are missing the point of his question.
I know they are linked.
Grendel knows they are linked.
Most people know they are linked.

The point was, if they are linked then there could be a problem. Demonstrated in his question. That's it really.
Which was then answered by OSB. End of thread.

How do you see a problem if they are linked?

I would think there would be more of a problem if they were not linked and CCC had provided funds to stop SISU from ripping off a private company and charity.

 

[hill83]

So a valid question isn't worth an answer? :thinking about:

I also didn't say that. You are good at putting words into peoples mouths.

Of course it needed an answer, but I didn't say it should like you said I did.
Of course a valid question is worth an answer, but I didn't say it wasn't.

 

[Grendel]

Of course their linked, CCC have a vested interest in ACL being a shareholder in the Ricoh, that's not new information. I honestly thought every one already knew that but apologies if yourself and Grendel did not.

Many people on here have maintained that these two companies are independent. For example when the rejection of the CVA was made many posters differentiated between the two organisations and stated that ACL were independent and had a duty to their shareholders and not the council or the club.

At least we now acknowledge that this is hogwash. ACL is a council quango.

The loan deal if the terms are as suggested proved this. Why was it done? OSB’s health check on ACL’s accounts is very positive and the cash flow doesn’t appear to be an issue at all. The payback on the loan now is upwards of £32 million based on the assumed interest rate so the Yorkshire Bank loan would have had to have had an interest payment in excess of 13% to even match the capital outlay.

As a commercial loan the council will at the estimated rate profit by around £880,000 which means ACL must exist as a going concern for some 38.5 years to avoid a loss. As a return it is not an investment worth pursuing.

So a healthy company is given a revised loan from a public body that owns the company and clearly dictates strategy.

I am sure some people will be happy with this and I suspect some others may not.

 

[Astute]

I also didn't say that. You are good at putting words into peoples mouths.

Of course it needed an answer, but I didn't say it should like you said I did.
Of course a valid question is worth an answer, but I didn't say it wasn't.

I thought that was Grendels and your job After all it is what the original and following questions were about getting from people on here.