More false Coventry council claims exposed over Ricoh Wasps deal-Les Reid (22 Viewers)

[Rusty Trombone]

Would they now have any justification in getting a loan through prudential borrowing to then loan to a totally private company?

Haven't read much about the prudential borrowing scenario so don't know, Councils can give loans to businesses though, and if they still have, and if it's still at 5%, then that appears to be at a commercial rate.

 

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[Nick]

I bet Sisu get comfort from this thread ?

Why? Because they are saving us?

 

[Mary_Mungo_Midge]

What are you on about? The point being made is CCC and Higgs repeatedly stated that ACL was profitable without CCFC, including during the period we were at Sixfields. They weren't. Yes the rent strike was ruled illegal but that's not really the point is it, statements were made that were clearly false. People on here questioned them at the time as is didn't seem to stack up that ACL could lose £1.2m a years from CCFC and be viable but apparently it wasn't obvious enough for anyone at the council to thing it was worth double checking what they were allegedly told by council officers.

In your example it would be like a housing association building a house and then claiming they didn't actually need the rent from it.

Are you deliberately missing the point? I'll ask again, simply. In what way is ACL's profitability relevant to CCFC's rent agreement?

And I stated diametrically the opposite with my housing association example; I was stating their whole business model is dependant on people paying rent. If they didn't, it'd fall on it's arse.

The world is full of relationships where the landlord/financier is reliant to a greater or lesser extent on income from the tenant. So the mutual reliance is not exclusive to the ACL/CCC model.

But why is it pertinent (except to the distressing process)?

 

[Rusty Trombone]

I had an almighty row with Maton about this as this is not what was voted on. He assured me at the time that the money taken from council reserves had already been replenished, the answers CCC provided to Reid state this not to be the case.

This does knock on to the local taxpayer, although we're moving into politics here. An argument is being made by some locally, noticeably Nellist, that council reserves should be used to cover this years funding shortfall, which I believe is £15m, while a campaign to have the cuts from central government is reversed. CCC have stated this is impossible as they don't have the money, why don't they have the money?

If it were my decision I'd keep the loan and take the £500k profit each year, that's surely better than using the whole loan balance to fund one years shortfall, you're just postponing the pain for a year.

 

[Godiva]

Haven't read much about the prudential borrowing scenario so don't know, Councils can give loans to businesses though, and if they still have, and if it's still at 5%, then that appears to be at a commercial rate.

What about risk assessment?

 

[chiefdave]

Haven't read much about the prudential borrowing scenario so don't know, Councils can give loans to businesses though, and if they still have, and if it's still at 5%, then that appears to be at a commercial rate.

There must be guidelines somewhere, although how straightforward they are is anyone's guess.

Part of the problem is that CCC have allegedly stated, not particularly in regard to the Ricoh or CCFC, that they would never risk taxpayers money (as the taxpayer would have to make the repayments if the business receiving the loan failed) and therefore would not lend to a business losing money. Both Wasps and ACL are losing money.

The obvious thing to do is for Wasps to get a commercial loan and pay back the council. While the argument can then still be made the loan shouldn't have been given in the first place the fact that it would have been paid back would somewhat mitigate that argument.

 

[chiefdave]

If it were my decision I'd keep the loan and take the £500k profit each year, that's surely better than using the whole loan balance to fund one years shortfall, you're just postponing the pain for a year.

It's not my argument! I said exactly the same thing to Nellist when he proposed it although he did come back with a fairly comprehensive response. The gist of it was that if the cuts were overturned the £15m would be replenished from central government.

 

[Captain Dart]

Surely if it was that simple that message would have been relayed and Lucas would have said that. And of course that sill implies that ACL need CCFC or at least money from CCFC. What is being disputed is the claim that ACL was profitable without CCFC, it wasn't. Saying it was only if CCFC were to pay £600K is actually proving the point!

Didn't Ray Ranson say "we have no debts".

http://www.skybluestalk.co.uk/threads/6212-An-interview-with-Ray-Ranson!

Who did that interview Nick?

 

[Paxman II]

I said way back when that a suitable long lease would be tantamount to freehold for the purposes of operating at football club.

That SISU would obviously consider such a long lease but one was not being offered at the time to anyone.

Freehold was out of the question the council said.

While Joy described anything other than freehold was no good you had to believe that was a statement made without the knowledge of a 250 year lease for comparative peanuts being available! Or in this case take on the existing debt and buy out ACL/Higgs for less than 5m.

Who in their right mind would not ensure the football club should be told this? Does anyone on here disagree that had SISU been given that opportunity they would not have pursued it? They would have been mad not to. SISU are mad but not that mad!

What went on behind council closed doors is nothing else but despicable.

I said many times in the past there are two sides playing this saga of deception and that many on here should be protesting what the council were doing as much as SISU. Well it seems that has come back to bite many of you who refused to see it.

It's a gross injustice by the council to have sold the arena from under the noses of the football club in such fashion.

It's not as if they simply did it to ensure they did not hand control of the Ricoh to SISU either.
Again I indicated many times that such arrangements could have been legally embedded that the Ricoh remain a right of the football club alone, for it's benefit with some restriction on what SISU could do with it. For example raise debateable loans against it. But what they could have done was allow them to assign the lease after a given time period which of itself gave tremendous value to the football club and ensured SISU had their exit strategy and a strategy for any new investor.

What went on between SISU and the council and Higgs etc previously has no bearing. What matters here is the councils indiscretion in not making clear to any interested party what deal was available, in particular the football club for which the stadium was designed for in the first place! Unforgivable.
The council were reacting to SISU and the bad blood spilled between them and in the process shit all over the historical football club and it's many supporters and local taxpayers.

I'd like to see the lease that WASP have, whether it is 'unfettered' and whether they can raise money against it etc because WASP are not CCFC and their tenure with mediocre crowds of some 6000 at best, I fear the worst in the long run for the stadiums survival.

The irony could be WASP sell it on to CCFC assuming they have an assignable lease.

 

[lordsummerisle]

Didn't Ray Ranson say "we have no debts".

http://www.skybluestalk.co.uk/threads/6212-An-interview-with-Ray-Ranson!

Who did that interview Nick?

Ray Ranson is still a hero to many.

 

[Rusty Trombone]

What about risk assessment?

If they still have the loan in place I reckon they will have done one. In all probability they will have security over the lease, maybe other things too. I also suspect ACL will be trading profitably now with the extra custiomers its getting, so doesn't look that risky to me.

SISU were willing to pay £14m to acquire the lease before, £5m for the loan and £2m to Higgs (and presumably the same value to the Council), Wasps paid £5.5m and took on a £14m loan, if the lease were sold again I suspect they are confident they could clear whatever loan balance remains.

 

[Mary_Mungo_Midge]

Part of the problem is that CCC have allegedly stated, not particularly in regard to the Ricoh or CCFC, that they would never risk taxpayers money (as the taxpayer would have to make the repayments if the business receiving the loan failed) and therefore would not lend to a business losing money. Both Wasps and ACL are losing money.

This is getting boring. The council decision was made in January 2013; at which point the last set of accounts would have been used as benchmark - which showed ACL Group accounts profitable to the tune of £1,086,886 (31st May, 2012 accounts). So, when they made their decision to make the loan, it was to a profitable company

 

[lordsummerisle]

If it were my decision I'd keep the loan and take the £500k profit each year, that's surely better than using the whole loan balance to fund one years shortfall, you're just postponing the pain for a year.

Not 500 k profit every year though is it?

Would assume that reserves are kept in some sort of interest yielding account?

Hopefully not Icelandic! To be fair, think CCC avoided that particular one.

 

[chiefdave]

Are you deliberately missing the point? I'll ask again, simply. In what way is ACL's profitability relevant to CCFC's rent agreement?

It's relevant because CCC categorically stated that the rent was not needed for ACL to be profitable, that while we were at Sixfields ACL were making a profit.

It also has an impact on the value of ACL, it's painting a false picture of the status of the company in order to artificially inflate it's value during negociations. The point being that if, when Fisher first made these claims, CCC had been honest we may (and none of us know how likely it would be) have had some open, honest and courteous negotiations.

 

[lewys33]

We have been led up the garden path by all involved. The council have fucked up massively, but sisu haven't been angels at all in this process.

The only way anything would have been done was if fans stuck together and decided to threaten both sides. A boycott of all games and causing chaos outside the council house would have been a start. Instead too much time was spent bickering on twitter and online.

 

[lewys33]

As for Les Reid, I think his journalism is quite good. I have no respect for him mind. Funny how he has forgot to mention it was him reporting that it was freehold or nothing.

 

[Rusty Trombone]

Not 500 k profit every year though is it?

Would assume that reserves are kept in some sort of interest yielding account?

Hopefully not Icelandic! To be fair, think CCC avoided that particular one.

The judge said it was the profit amount, copied again below. I guess he's saying the loan interest charged is 5%, and the Council gets 1% on its reserves.

The Council’s net interest return whilst it uses its cash balances to fund the
loan (estimated to be for at least 3-5 years) would be about 4% or £500,000
per year.

 

[Rusty Trombone]

It's not my argument! I said exactly the same thing to Nellist when he proposed it although he did come back with a fairly comprehensive response. The gist of it was that if the cuts were overturned the £15m would be replenished from central government.

Not suggesting it's your argument Chief, apologies if you read it that way.

 

[Mary_Mungo_Midge]

It's relevant because CCC categorically stated that the rent was not needed for ACL to be profitable, that while we were at Sixfields ACL were making a profit.

It also has an impact on the value of ACL, it's painting a false picture of the status of the company in order to artificially inflate it's value during negociations. The point being that if, when Fisher first made these claims, CCC had been honest we may (and none of us know how likely it would be) have had some open, honest and courteous negotiations.

Again, why is it relevant to the rental agreement?

As for the valuation - come on, for God's sake. Anyone buying would base their valuation of the business on the value derived from the books. That's what Due Diligence is all about. Bloody hell. If you think anyone - SISU, Wasps, or Idi Amin for that matter - would base their valuation on the business on what Lucas said, as opposed to what their team of forensic accountants would tell them from the books (audited accounts and monthly management accounts for the current year), you're on a different planet to the rest of the commercial world

 

[Nick]

Didn't Ray Ranson say "we have no debts".

http://www.skybluestalk.co.uk/threads/6212-An-interview-with-Ray-Ranson!

Who did that interview Nick?

Would have been the telegraph.

 

[chiefdave]

Didn't Ray Ranson say "we have no debts".

There was an interview with Fisher at some point where he clearly stated all the money that had been put in had been converted to equity then when we went into admin we owned millions! Wish I could remember where it was, have a feeling it was CWR, would love to get his response to that.

 

[Rusty Trombone]

There must be guidelines somewhere, although how straightforward they are is anyone's guess.

Part of the problem is that CCC have allegedly stated, not particularly in regard to the Ricoh or CCFC, that they would never risk taxpayers money (as the taxpayer would have to make the repayments if the business receiving the loan failed) and therefore would not lend to a business losing money. Both Wasps and ACL are losing money.

The obvious thing to do is for Wasps to get a commercial loan and pay back the council. While the argument can then still be made the loan shouldn't have been given in the first place the fact that it would have been paid back would somewhat mitigate that argument.

ACL made a loss, I suspect they are making a profit again now, just as much a guess though as saying they are loss making now. If the loan is still there, and the security is deemed sufficient, I'd rather they keep the loan as it is, gets some money into the Council. Certainly it would be neater though, and would cause less arguments, if they arrange their own loan with someone else.

 

[chiefdave]

Again, why is it relevant to the rental agreement?

I'm really not sure what you're driving at here. The rent was too high, I think we all agree that. ACL were reliant on the rent, I don't think many dispute that. That's pretty much it.

Anyone buying would base their valuation of the business on the value derived from the books. That's what Due Diligence is all about. Bloody hell. If you think anyone - SISU, Wasps, or Idi Amin for that matter - would base their valuation on the business on what Lucas said, as opposed to what their team of forensic accountants would tell them from the books (audited accounts and monthly management accounts for the current year), you're on a different planet to the rest of the commercial world

Due diligence is done after the acceptance of a bid. What I'm saying is that CCC's false stance had a negative impact on the ability to hold meaningful negotiations. If you have a business I think is worth £5m and you say is doing far better than I think is worth £40m its unlikely we'd ever get as far as me making a formal bid or reaching due diligence. Even more so if you said what I wanted to buy wasn't available.

If you then went and sold what I wanted to buy for £5m to someone else for £5m having told me it was worth £40m I'd be a bit pissed off.

 

[Godiva]

There was an interview with Fisher at some point where he clearly stated all the money that had been put in had been converted to equity then when we went into admin we owned millions! Wish I could remember where it was, have a feeling it was CWR, would love to get his response to that.

I think he said 'some' had been converted. He also said the investors had written off the loans, but he forgot to say that it wasn't reflected in SBS&L's books.
Wasn't it at the 'forum' in the summer 2012 - while they were still believing they were buying Higgs shares?

 

[duffer]

Because by 2015, the club's owners had categorically stated time and time again that they were building anew. In those circumstances, you can't criticise ACL/CCC for looking elsewhere. The issue here is Fisher's stance, because everything thereafter stems from that.

Now - the 'rebuilding bridges' statement; I totally and wholly agree with you on. That's seemingly duplicitous at best. I se this as being much more of 'a lie' than other actions I've seen folk getting uptight about. It looks like damn deceit, and really needs explaining

Appreciate that MMM. Let me lead you on a little more then - what if, instead of saying that time was needed to rebuild trust, the council had been honest and said,

"We've got a third-party interested in the stadium based on a long leasehold for around x amount. Would you like the opportunity to bid on this basis?"

Wouldn't that have been a better way to do it at least. Incidentally, when Eastwood was interviewed on CWR way back when, he seemed to imply that it was the council that wanted confidentiality agreements. I wouldn't be so certain that Wasps were the ones insisting on NDAs.

 

[chiefdave]

ACL made a loss, I suspect they are making a profit again now, just as much a guess though as saying they are loss making now. If the loan is still there, and the security is deemed sufficient, I'd rather they keep the loan as it is, gets some money into the Council. Certainly it would be neater though, and would cause less arguments, if they arrange their own loan with someone else.

It will be interesting to see how ACL perform now. With the NEC sold to LDC they will be far more aggressive in going after business, coupled with the refurb at Villa Park (a larger capacity venue) making it a good options for concerts and representative games ACL will have their work cut out. We're not paying a much lower rent, and possibly not here permanently. Wasps I assume don't pay rent at all and play a lot less games than us, not to mention have in excess of £3m a year losses to cover. Will be interesting to see what happens in the years to come.

On the one hand I would love the Ricoh to be a massive success for the city but the matter of it being owned by Wasps troubles me greatly.

 

[chiefdave]

I think he said 'some' had been converted. He also said the investors had written off the loans, but he forgot to say that it wasn't reflected in SBS&L's books.
Wasn't it at the 'forum' in the summer 2012 - while they were still believing they were buying Higgs shares?

I'm really not sure, it's a bit frustrating that statements like this get dropped out and then never followed up on. To me as soon as the amount owned in administration was revealed he should have had that clip played back to him and be asked to explain.

 

[Mary_Mungo_Midge]

I'm really not sure what you're driving at here. The rent was too high, I think we all agree that. ACL were reliant on the rent, I don't think many dispute that. That's pretty much it.



Due diligence is done after the acceptance of a bid. What I'm saying is that CCC's false stance had a negative impact on the ability to hold meaningful negotiations. If you have a business I think is worth £5m and you say is doing far better than I think is worth £40m its unlikely we'd ever get as far as me making a formal bid or reaching due diligence. Even more so if you said what I wanted to buy wasn't available.

If you then went and sold what I wanted to buy for £5m to someone else for £5m having told me it was worth £40m I'd be a bit pissed off.

You request 'open book' to value the business. Audited accounts plus monthly management accounts for the current trading year to define the value. Make a conditional offer. Due Diligence then covers off everything to make sure there are no skeletons in the closet. That's how it's done. You wouldn't value a business in any way based on what someone may, or may not have said on a radio interview. Floated businesses, where a Director or company officer manipulate the share price based on false declarations are a totally different mechanism

 

[skybluetony176]

I bet Sisu get comfort from this thread ?

Between this and the on field issues they're getting a free ride at the moment. It's a good job we're here to address the balance

 

[Rusty Trombone]

It will be interesting to see how ACL perform now. With the NEC sold to LDC they will be far more aggressive in going after business, coupled with the refurb at Villa Park (a larger capacity venue) making it a good options for concerts and representative games ACL will have their work cut out. We're not paying a much lower rent, and possibly not here permanently. Wasps I assume don't pay rent at all and play a lot less games than us, not to mention have in excess of £3m a year losses to cover. Will be interesting to see what happens in the years to come.

On the one hand I would love the Ricoh to be a massive success for the city but the matter of it being owned by Wasps troubles me greatly.

A lot of any ACL success will down to the stadium naming rights, the timing of the renewal and obviously the amount involved. I don't think anyone has confirmed when the actual renewal year is.

 

[chiefdave]

This is getting boring. The council decision was made in January 2013; at which point the last set of accounts would have been used as benchmark - which showed ACL Group accounts profitable to the tune of £1,086,886 (31st May, 2012 accounts). So, when they made their decision to make the loan, it was to a profitable company

Come on MMM, if you have one set of accounts showing a £1m profit but you also know that your major tenant was not paying you don't just go, well it's making a profit that will be fine. The council made the loan once we had already stopped paying rent during a period in which ACL were making a loss. We are now told that the information supplied by the council's representatives on ACL was misleading. As the council would have made their decision based on that misleading information do you not think there are questions for the council to answer?

 

[chiefdave]

You request 'open book' to value the business. Audited accounts plus monthly management accounts for the current trading year to define the value. Make a conditional offer. Due Diligence then covers off everything to make sure there are no skeletons in the closet. That's how it's done. You wouldn't value a business in any way based on what someone may, or may not have said on a radio interview. Floated businesses, where a Director or company officer manipulate the share price based on false declarations are a totally different mechanism

But again why would you get to that open book stage if the asking price is a million miles away from what you are prepared to pay? Many people have asked why didn't SISU just submit a bid even if CCC weren't or wouldn't talk to them. How could they have done that with any degree of accuracy?

 

[Godiva]

Come on MMM, if you have one set of accounts showing a £1m profit but you also know that your major tenant was not paying you don't just go, well it's making a profit that will be fine. The council made the loan once we had already stopped paying rent during a period in which ACL were making a loss. We are now told that the information supplied by the council's representatives on ACL was misleading. As the council would have made their decision based on that misleading information do you not think there are questions for the council to answer?

Nah, in January 2013 when they bailed out ACL we were still playing there. But after the loan was given they did everything possible to drive the club into administration and possibly out of existence.

 

[duffer]

Again, why is it relevant to the rental agreement?

As for the valuation - come on, for God's sake. Anyone buying would base their valuation of the business on the value derived from the books. That's what Due Diligence is all about. Bloody hell. If you think anyone - SISU, Wasps, or Idi Amin for that matter - would base their valuation on the business on what Lucas said, as opposed to what their team of forensic accountants would tell them from the books (audited accounts and monthly management accounts for the current year), you're on a different planet to the rest of the commercial world

In fairness MMM, you won't get to due diligence if one side thinks that you're looking for massively beyond what you see as the true value of what they are trying to sell. Due diligence is an expensive process; if i remember correctly one of SISU's claims was that they thought they were being hampered in terms of this the first time around. I'm not saying that's necessarily true mind, but the council's recent behaviour does make me look at those negotiations in a slightly different light...

 

[chiefdave]

Nah, in January 2013 when they bailed out ACL we were still playing there. But after the loan was given they did everything possible to drive the club into administration and possibly out of existence.

We were still there but not paying rent weren't we? Which surely would at least raise a concern.