skybluefred
New Member
But ACL's only asset is a lease on the Ricoh which only has 40ish years left to run.
ACL has "net value of nil" (12 Viewers)
- Thread starter SimonGilbert
- Start date
But ACL's only asset is a lease on the Ricoh which only has 40ish years left to run.
Ian1779
Well-Known Member
So does CCC value their 50% share as zero or ACL as a whole (including the Higgs part)?
skybluefred
New Member
But wasn't the debt to ARVO written off during the admin?--and do Sisu not own Arvo?
chiefdave
Well-Known Member
It wouldn't be viewed as their only asset, their future bookings, customer base and that kind of thing would also be taken into account when valuing a business. What it really boils down to is does the seller think the price being offered is fair, if so they sell. That's why you will see takeovers put to a shareholder vote. There isn't a right or wrong answer, just this is what you are being offered do you want to accept it.
sky blue john
Well-Known Member
Arvo held a charge over Ryton just the same as a bank has a charge over your house if you have a mortgage.
Grendel
Well-Known Member
The valuation refers to the whole business Higgs will never in a million years get £6.5 million - why would they be worth that? Does that mean a councils share is the same? Hardly - the council valued it at zero - its zero.
oldskyblue58
CCFC Finance Director
CCC includes the cost of their investment in NCH at £1.758m but have taken a view that they would make a full provision against that cost of £1.758m so that the net value is shown £nil. It is based in part on valuations done in 2012 (I believe it was stated by CCC that none had been done since), decisions taken not to show any value from 2005 onwards in CCC or NCH accounts, and discussions with the auditors of CCC and NCH each year since 2005. Basically since 2005 (before SISU even got here) there has never been a net value to the investment in the CCC accounts.
Is that the same as valuing for loan purposes- no
Is that the same as valuing ACL as a business - no
Is that even putting any value on ACL that say SISU could rely on - no
If you look at the ACL 2013 Group accounts then including the full cost of the loan outstanding ACL group show a surplus of assets of £7.3m. The assets on the balance sheet include net values for the following
lease £18.7m
Fixtures & Fittings £5.9m
other fixed assets £150k
Debtors & prepayments £2.2m
cash £850k
creditors (£1.6m)
Loans (14.2m)
accruals & deferred income (£4.7m)
You could point to the above and say the actual value of the £1.758 invested is £50% of the £7.3m shown on the Balance Sheet
The loan as far as I understand is not made by NCH but by CCC directly. As such I think the comment about netting off investment against loan a bit misleading - it is two very different things and two different entities in same "group".
There may also be specific disclosure rules relating to Local Authorities that indicate a provision reducing the value to nil is the prudent thing to do. It might even be that taking profit on valuation would hamper rights to central government funding so they take the worst case view to avoid that.
The council can only include in their accounts that which they are entitled to - 50%
Is ACL worth nothing? Clearly the charity do not think so. The approach by CCC is to say there is no current value to the investment at 31/03/13 to include in the CCC accounts. That is not the same as saying ACL or 50% has no value in the market if it were to be sold.
They could have left it at the value of the shares in ACL that they bought £1.758m, they chose not to.
Bottom line is the value included in the CCC accounts is not the value of ACL, nor is it the value upon which any loan decision was made either by Yorkshire Bank or CCC.
Is that the same as valuing for loan purposes- no
Is that the same as valuing ACL as a business - no
Is that even putting any value on ACL that say SISU could rely on - no
If you look at the ACL 2013 Group accounts then including the full cost of the loan outstanding ACL group show a surplus of assets of £7.3m. The assets on the balance sheet include net values for the following
lease £18.7m
Fixtures & Fittings £5.9m
other fixed assets £150k
Debtors & prepayments £2.2m
cash £850k
creditors (£1.6m)
Loans (14.2m)
accruals & deferred income (£4.7m)
You could point to the above and say the actual value of the £1.758 invested is £50% of the £7.3m shown on the Balance Sheet
The loan as far as I understand is not made by NCH but by CCC directly. As such I think the comment about netting off investment against loan a bit misleading - it is two very different things and two different entities in same "group".
There may also be specific disclosure rules relating to Local Authorities that indicate a provision reducing the value to nil is the prudent thing to do. It might even be that taking profit on valuation would hamper rights to central government funding so they take the worst case view to avoid that.
The council can only include in their accounts that which they are entitled to - 50%
Is ACL worth nothing? Clearly the charity do not think so. The approach by CCC is to say there is no current value to the investment at 31/03/13 to include in the CCC accounts. That is not the same as saying ACL or 50% has no value in the market if it were to be sold.
They could have left it at the value of the shares in ACL that they bought £1.758m, they chose not to.
Bottom line is the value included in the CCC accounts is not the value of ACL, nor is it the value upon which any loan decision was made either by Yorkshire Bank or CCC.
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Grendel
Well-Known Member
Would you recommend buying it for £20 million?
DazzleTommyDazzle
Well-Known Member
I refer you to "the first method" of valuation.
The lease will produce (hopefully) positive cash flows, which have to be discounted back to a current value to arrive at a valuation.
Whilst the business will be more valuable the longer the lease is - with a lease at 40 years plus - the impact of extending it is less than you might think.
It depends on what the "real" interest rate that you use to discount the future cash flows is, but if you assumed 7.5% (not too racy), the value of a pound in fifty years time would be one thirty fifth that of a pound in the current year.
Ian1779
Well-Known Member
So say if SISU had bought the Higgs share in 2012 for £5.5m would they have paid just that and taken on 50% of the mortgage on ACL?
I guess what I'm trying to ask is that if I sell my house for 200K it is worth the same amount regardless of whether I have £150k or £10k mortgage. Dependent on my mortgage is how much I get left over. So is it the same principle with a business like this or is it different?
I guess what I'm trying to ask is that if I sell my house for 200K it is worth the same amount regardless of whether I have £150k or £10k mortgage. Dependent on my mortgage is how much I get left over. So is it the same principle with a business like this or is it different?
DazzleTommyDazzle
Well-Known Member
With a private house purchase, pretty much invariably, any existing mortgage will be paid off by the vendor as part of the process, so that the house is sold "unencumbered" (to use a favourite word in these parts). As you rightly say, the vendor is then left with the net proceeds after paying off the mortgage.
With a business, it depends what is agreed.
If the purchaser simply buys the shares, then the ownership of the company changes, but everything else - including any debts that the company has - stays the same.
Obviously though, if you have two companies that are identical except that Company A has no debt and Company B has, say, £20m of debt - Company A will be worth £20m more than Company B.
Consequently, most - but not all - company purchases work on the basis of an unencumbered (there it is again) valuation of the company that is then reduced for any net debt taken on by the purchaser.
J
Jack Griffin
Guest
ARVO have a charge on that.
No and no.
http://www.skybluestalk.co.uk/threa...-amp-Leisure-2013-accounts?highlight=accounts
SBS&L accounts May 2013
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J
Jack Griffin
Guest
Or do they? my reference is OSB's report on ACL accounts 2013, what was your reference?
http://www.skybluestalk.co.uk/threads/42975-ACL-group-accounts-2013?highlight=accounts
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oldskyblue58
CCFC Finance Director
Just a thought on the loan deal ......but I am sure it will become clearer in June at the JR
Say SISU & CCC did agree to purchase the loan off Yorkshire Bank for 5m. Does that mean the loan in ACL actually decreases because SISU/CCC now own the loan? Not sure it does necessarily
The deal was for SISU/CCC to buy the loan not ACL.
The transaction has nothing to do with ACL as such ..... just different name on the loan agreement.
That could leave ACL owing a £14m loan that SISU/CCC had bought for £5m.
That could leave ACL paying back £14m capital and the interest on that capital (ie not on £5m).
In SISUs case that would have left an outlay of £2.5m for the loan plus £5.5m for the shares (only 1.5m in cash up front rest over 10 yrs) against which ACL would have repaid them £7m plus interest
Could that have got SISU 50% of ACL pretty much for nothing? because ACL paid for it in effect
Is this what CCC were not comfortable with? although it would seem to benefit them too despite costing another 2.5m...... all conjecture on my part, but :thinking about:
Say SISU & CCC did agree to purchase the loan off Yorkshire Bank for 5m. Does that mean the loan in ACL actually decreases because SISU/CCC now own the loan? Not sure it does necessarily
The deal was for SISU/CCC to buy the loan not ACL.
The transaction has nothing to do with ACL as such ..... just different name on the loan agreement.
That could leave ACL owing a £14m loan that SISU/CCC had bought for £5m.
That could leave ACL paying back £14m capital and the interest on that capital (ie not on £5m).
In SISUs case that would have left an outlay of £2.5m for the loan plus £5.5m for the shares (only 1.5m in cash up front rest over 10 yrs) against which ACL would have repaid them £7m plus interest
Could that have got SISU 50% of ACL pretty much for nothing? because ACL paid for it in effect
Is this what CCC were not comfortable with? although it would seem to benefit them too despite costing another 2.5m...... all conjecture on my part, but :thinking about:
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Ian1779
Well-Known Member
I was referring to physical assets (as in they don't own the stadium). So what form do these assets take?
What Is the current exposure to ARVO Jack?
J
Jack Griffin
Guest
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Potential for It I suppose OSB.
That would then leave ACL struggling along paying the original level with low to no rent coming In ,why would the CCC put that at risk /
Was the approach to be Joint /
I thought It was SISU, but an Invite to CCC If they so wished.
The Gentleman
Well-Known Member
As opposed to paying at least £30 million for an inferior stadium outside the city limits which we still won't own and have a far inferior attendance. Yes, in a fucking heartbeat.
oldskyblue58
CCFC Finance Director
I think there has been a lot said but very little real facts or detail so far around those SISU/CCC meetings and HOT's wingy. Clearly something changed for CCC and you have to assume hard nosed business people would seek to maximise returns for themselves in any deal
I think it has been said many times that the loan was to be bought (at a discount) and then discharged.
So no interest payments.
ACL would have no debt and have net assets of £14m more compared to now.
The club would own 50% of ACL - so it makes sense for sisu to spend £5m and gain assets worth 50% of £14m.
oldskyblue58
CCFC Finance Director
SISU/CCC buy loan at a discount say this mythical £5m....... that clears Yorkshire Bank. Who repays SISU/CCC their £5m? ACL didn't have the funds to do it, if they had that cash they wouldn't have needed it from SISU/CCC they could have bought the loan themselves. So that leaves some sort of loan on ACL books due to SISU/CCC..... and at least the potential for interest. Or are you suggesting that SISU/CCC would write off their £5m? and ACL could write down its creditors by £14m?
The book entries have to work
Don't forget the SISU definition of debt free is owing no one else but themselves ....... everyone else sees it as a creditor....... plus if not a debt how is interest charged on the items that make CCFC "debt free"?
The book entries have to work
Don't forget the SISU definition of debt free is owing no one else but themselves ....... everyone else sees it as a creditor....... plus if not a debt how is interest charged on the items that make CCFC "debt free"?
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From the court transcript and press releases by TF the loan was to be 'discharged'. In my understanding that is the same as 'written off' - so ACL would be free of that loan.
Would CCC have to 'match' the value increase? Yes, they should extend the lease to 125 yr - which would further increase the value of ACL.
You say the book entries need to work - and I understand the principle of double entry bookkeeping. But I am sure accountants can work out 'how' if CCC/Sisu could agree to the deal.
oldskyblue58
CCFC Finance Director
Think you will find the loan being discharged that TF was referring to was the YB one. As for the transcripts not got time to go through them again but if you can point to where it says the monies paid by SISU/CCC were to be written off I am happy to accept that
Being discharged could be paid up, written off or taken on by someone else or a mixture of those.
Somewhere down the line the settlement of £14m, and ramifications of how it was to be settled, have to be reconciled.
perhaps SISU were originally expected to settle the loan as payment for the 125 year lease ..... in which case why did CCC need to share the settlement?
Like I said to wingy ...... there has been a lot said about the discussions in October through to December 2012 but so far not a lot of proper detail eg copies of the HoT's
Being discharged could be paid up, written off or taken on by someone else or a mixture of those.
Somewhere down the line the settlement of £14m, and ramifications of how it was to be settled, have to be reconciled.
perhaps SISU were originally expected to settle the loan as payment for the 125 year lease ..... in which case why did CCC need to share the settlement?
Like I said to wingy ...... there has been a lot said about the discussions in October through to December 2012 but so far not a lot of proper detail eg copies of the HoT's
duffer
Well-Known Member
A good plan at face value; it looks like a runner but in truth it fell at almost every hurdle.
First off, there's no evidence that suggests that YB would ever have sold the loan for £5m. Even at the low point of the process, with the club in admin and not paying the rent, it seems that YB weren't budging far.
Then there's the shenanigans with AEHC and the buy-now, pay later thing.
At least two of the critical strands in the roadmap were destined to fail - Higgs weren't going to sell on SISU's terms, and neither in all probability were the bank. The plan though, imho, has merit. I'd like to see it looked at again, but sensibly.
If SISU have really got £20-£30m to spend on a new, smaller, stadium then how much better off would everyone be if they were to put something like that into getting a 50% (or larger) proportion of the Ricoh income streams, and a long, low rental deal for the club (or maybe even a peppercorn rent).
There's a deal there to be done, but everyone has to move past these 'trust' issues, forget about all of the recent bullshit, and start talking proper figures, imho.
Look at transcript for day 2 - the questioning of PWKH. From about p. 60 (my copy) and forward is a lot about the loan, the discharge and how it is connected to the extension of the ACL lease.
I know PWKH does his best to not understand the questions put to him, or remember the right context or know which document to look at etc (quite funny actually), but sisu barrister is very patient and make sure the concept is made clear for the judge.
Como
Well-Known Member
ACL's assets are essentially the lease it has, a diminishing asset. Assuming of course the lease makes money.
ACL has already had one sub tenant pay them to get out of their lease so the value of its lease has to be open for debate.
The lease comes with costs, maintaining the structure and paying off loans being the obvious one.
It has a sizable loan to the Council, that has to be paid off out of its not very large net income.
I can see why CCC do not see their shares holding has much or any value, more interestingly is how secure the loan is. The Bank did not think the loan was that solid, things have got worse since then.
ACL do not have 14m to pay of the loan, I seriously wonder if anybody else would step in.
Would not be the first time that a so called asset (ACL Loan) has proven to be worth not that much.
ACL has already had one sub tenant pay them to get out of their lease so the value of its lease has to be open for debate.
The lease comes with costs, maintaining the structure and paying off loans being the obvious one.
It has a sizable loan to the Council, that has to be paid off out of its not very large net income.
I can see why CCC do not see their shares holding has much or any value, more interestingly is how secure the loan is. The Bank did not think the loan was that solid, things have got worse since then.
ACL do not have 14m to pay of the loan, I seriously wonder if anybody else would step in.
Would not be the first time that a so called asset (ACL Loan) has proven to be worth not that much.
Rusty Trombone
Well-Known Member
It appears you haven't read any of the thread before posting.
bigfatronssba
Well-Known Member
There is no evidence that the bank were seriously concerned about the loan.
Also turnover has apparently increased since then.
stupot07
Well-Known Member
Turnover doubled, profits down by 30%.
Sent from my iPhone using Tapatalk - so please excuse any spelling or grammar errors
bigfatronssba
Well-Known Member
Turnover doubled, profits down by 30%.
Sent from my iPhone using Tapatalk - so please excuse any spelling or grammar errors
Cost of staging the Olympics wasn't it?
Grendel
Well-Known Member
No that was the added turnover you fool.
bigfatronssba
Well-Known Member
cloughie
Well-Known Member
At times ?????