Bob Ainsworth on ACL sale to Wasps (1 Viewer)

[Godiva]

Well why didn't they buy the share without the loan then? All the income servicing the 14m would go to them then.

Yes - that is actually the right question!
If they had the £14m they would be better off buying out the loan.
And if they didn't have the £14m the loan may be unsafe if ACL/Wasps does not produce an overall profit.

You could also direct the question to the council: Why did ccc not demand the loan cleared as part of the take-over?

 

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[Noggin]

I think Grendel is referring to the valuation placed on it by the council and ainsworth at 19m. Pretty certain Grendel understands that the amount actually paid includes an assessment of all ACL assets and liabilities.

I think people are talking cross purposes on a lot of this

Yes I think people are talking about different things.

I believe this is accurate.

The deal is was worth 5.5mill, ACL is worth 5.5mill (probably more now imo) That valuation takes into account that ACL has a 14mill loan liability, if ACL did not have a 14mill loan liability then it's value would have been much much higher, though not necessarily 19mill.

 

[oldskyblue58]

Ok basic company law

a limited company is a separate legal entity. It doesn't matter if it is a stand alone entity or a member of a group. In the eyes of the law each company is individual and its assets and liabilities belong to it. SISU relied on this fact when liquidating CCFC Ltd

When you buy a limited company shares you buy it warts and all. That means you buy control of its assets but also its liabilities or commitments as they stand. The liabilities can be forgiven in certain circumstances but they haven't been in this case. The price you pay for the shares in any company reflects the assets, liabilities or commitments it has at that time. That doesn't mean that you as an individual or a an other ltd company put yourself at risk to pay the liabilities of the company you buy unless you give guarantees or assurances in addition to the share price. No one has said such guarantees have been given and until they do the cost to London Wasps Holdings Limited is 5.54m

 

[oldskyblue58]

So if there was no loan what do you think the price would have been,

No idea it depends why there was no loan

The reason the loan didn't have to be repaid is that there was a legal contract in place that was being met by ACL

 

[Godiva]

No doubt Simon will ensure BA is updated...

I think he will first need to graduate from OSB's online course in forensic accounting.

Ok basic company law

a limited company is a separate legal entity. It doesn't matter if it is a stand alone entity or a member of a group. In the eyes of the law each company is individual and its assets and liabilities belong to it. SISU relied on this fact when liquidating CCFC Ltd

When you buy a limited company shares you buy it warts and all. That means you buy control of its assets but also its liabilities or commitments as they stand. The liabilities can be forgiven in certain circumstances but they haven't been in this case. The price you pay for the shares in any company reflects the assets, liabilities or commitments it has at that time. That doesn't mean that you as an individual or a an other ltd company put yourself at risk to pay the liabilities of the company you buy unless you give guarantees or assurances in addition to the share price. No one has said such guarantees have been given and until they do the cost to London Wasps Holdings Limited is 5.54m

There you go Simon!

 

[dongonzalos]

More spin.
Wasps paid £5.5m for the shares to take over ACL. The loan still remain with ACL and it's the business of ACL that will service the loan.
The figure £19.94m plus interests is pure nonsense in terms of take-over value.

Likewise many would say ignoring the loan, when you discuss the deal is just spin and playing with words. It cannot be ignored.

 

[martcov]

Ok basic company law

a limited company is a separate legal entity. It doesn't matter if it is a stand alone entity or a member of a group. In the eyes of the law each company is individual and its assets and liabilities belong to it. SISU relied on this fact when liquidating CCFC Ltd

When you buy a limited company shares you buy it warts and all. That means you buy control of its assets but also its liabilities or commitments as they stand. The liabilities can be forgiven in certain circumstances but they haven't been in this case. The price you pay for the shares in any company reflects the assets, liabilities or commitments it has at that time. That doesn't mean that you as an individual or a an other ltd company put yourself at risk to pay the liabilities of the company you buy unless you give guarantees or assurances in addition to the share price. No one has said such guarantees have been given and until they do the cost to London Wasps Holdings Limited is 5.54m

That is not to say that there are no guarantees. The future income of Wasps is however reduced by 14m in servicing the loan from what would otherwise be profit. So, at the end of the day they pay 5,54 cash and sacrifice future profits to the tune of 14m spread over many years. They may also have had to guarantee the loan in the case of ACL defaulting ( which would be the prudent course of action based on relatively low profit/ or loss in the hast couple of years ).

 

[albatross]

The 14m loan has to be Paid

The purchase price and therefore the value of ACL at the time of purchase was 5.5M

Often the press , companies or individuals like to inflate the value of the takeover deals by including items such as the loan as it is real and has to be paid, its lazy and makes bigger headlines but they are not really fooling anybody. WASPS are not liable for the loan ACL is.

 

[oldskyblue58]

Whilst control of ACL through owning its shares cost £5.5m, a £14m loan to service is part of the purchase consideration, if WASPS had not agreed to service the loan or the council had written off the loan would it be the same deal. If you were putting together an investment project would you be looking for authorisation to spend just £5m

The loan was part of the valuation of ACL however it was not part of the purchase consideration. The loan cost Wasps nothing. The only thing they have and will pay out for is the shares. The loan was an existing liability of ACL and contributed to how the parties involved arrived at the 5.54m share value

As the charity or indeed CCC had fully paid for their shares they were not liable for any share of the repayment of the loan. That liability is for ACL which is a separate legal entity

 

[Godiva]

The 14m loan has to be Paid

But what if it isn't?
If sisu had made the exact same deal as Wasps did, I am sure many would expect them to default on the loan.

The purchase price and therefore the value of ACL at the time of purchase was 5.5M

Often the press , companies or individuals like to inflate the value of the takeover deals by including items such as the loan as it is real and has to be paid, its lazy and makes bigger headlines but they are not really fooling anybody. WASPS are not liable for the loan ACL is.

Did you read the thread?

 

[wingy]

It's semantics really isn't It?

 

[dongonzalos]

Coventry News
Ricoh Arena
Coventry MP Bob Ainsworth: Ricoh Arena sale to Wasps RFC 'made sense'
30 January 2015 01:02 PM Bob Ainsworth
City MP writes for the Telegraph on the conspiracy theories surrounding the sale of the Coventry stadium and the need for secrecy

Coventry North East MP Bob Ainsworth has his say on the conspiracy theories surrounding the sale of Ricoh Arena operating company ACL to Premiership rugby side Wasps...

“With all the conspiracy theorists and vested interests muddying the waters over the Ricoh sale to Wasps, it is not surprising that some football fans are confused as to what went on.

“The question posed to me by friends who are fans is ‘why were the Sky Blues not given a chance to equal Wasps' offer?’

“This question goes unanswered by the council who, because they continue to be threatened with legal action, feel that it is sensible to say nothing.


“In trying to understand what went on we should recognise that the council’s position changed over time. Before 2012/13 there was no desire to sell the Ricoh, a majority thought it best kept in council hands, however, over time and in response to the ongoing problems that opinion changed, and this was flagged up by Ann Lucas saying that her door was open to anyone with a serious offer.

“I can’t say, but I don’t think, the council ever received an offer for their share of ACL from the owners of the football club. Those owners took the council to court claiming that ACL was not worth anything like the £14.4 million that the council had loaned to the company to buy out the bank debt.

“So when Wasps offered to buy, agreeing to take on the debt, shorten the repayment period for the loan and pay an additional £5.54million – a total of £19.94m plus interest – the council had no reason to believe that Sky Blues’ owners, Sisu, would match the deal.


Ricoh Arena
“Additionally, and as is normal in these type of negotiations, they were bound by confidentiality agreements and, I believe, far from expecting that they might receive a matching bid, the council feared that if they confirmed, in any way, that a deal was being negotiated they might receive an injunction designed to scupper the sale to Wasps.

“Many members of the council are keen Sky Blue supporters. Despite the lack of trust that had grown between them and the club’s owners, in principle most of them would have preferred, in my opinion, to have sold the Ricoh to the football club.

“But they felt they could not afford to jeopardise a deal that would bring new sporting and economic activity to Coventry and give the council far more money for their shares than anyone else had offered.

“Finally, those searching for conspiracy should dwell on this. Ann Lucas and John Mutton voted for the sale. I don’t think I am betraying any secret to say they are not the very closest of friends.

“The Conservative opposition on the council decided, in the interests of the city, not to play politics with the issue but to support the sale.

“It was unanimous despite false predictions of widespread opposition. I can only assume it was unanimous because it made sense.”

 

[dongonzalos]

The fact that this actually needed to be explained is the only real surprising thing.

 

[skybluedan]

Bob gives his views: http://www.coventrytelegraph.net/news/coventry-news/coventry-mp-bob-ainsworth-what-8549026

The whole fuckin fiasco is just bastard fanny batter, from sisu to the council to wasps to sp and all the usual bastards who keep popping up keeping there names banded, Bob,Ann,Les,mick Sinclair, the whole fuckin lot of them are a disgrace and are now on the list the fuckers, I hate everyone

 

[Godiva]

It's semantics really isn't It?

Some say 'semantic' - some say 'spin'.

 

[torchomatic]

Don't Wasps own ACL? If ACL default then the Coventry taxpayer is liable.

The 14m loan has to be Paid

WASPS are not liable for the loan ACL is.

 

[oldskyblue58]

That is not to say that there are no guarantees. The future income of Wasps is however reduced by 14m in servicing the loan from what would otherwise be profit. So, at the end of the day they pay 5,54 cash and sacrifice future profits to the tune of 14m spread over many years. They may also have had to guarantee the loan in the case of ACL defaulting ( which would be the prudent course of action based on relatively low profit/ or loss in the hast couple of years ).

no because profitability will only be reduced by the interest element not the whole payment. What will be reduced by both interest and capital is the cashflow. Still does not change that it is ACL not Wasps that is liable to pay the loan. Wasps could simply let ACL go bust and unless there are guarantees given that would be it and the loan would not be paid. There has been no details of any guarantees, there may be some, but there is only going to be a cost to London Wasps Holdings Ltd if those guarantees are called upon

 

[oldskyblue58]

Yes they got £2.5m in cash and off loaded 50% of a £14m debt that they were responsible for. If my house was for sale for £100k and I had a £25k mortgage, if you paid me £75k but took on the mortgage it would be the same as paying me £100k outright and me having to settle the mortgage, how much did the house cost £75k or £100k, I would say £100k every time

they werent

 

[wingy]

Some say 'semantic' - some say 'spin'.

It depends how much you want to hang on it
The loan will be either paid or not over 20 yrs due to the presence of Wasps

 

[Grendel]

Yes they got £2.5m in cash and off loaded 50% of a £14m debt that they were responsible for. If my house was for sale for £100k and I had a £25k mortgage, if you paid me £75k but took on the mortgage it would be the same as paying me £100k outright and me having to settle the mortgage, how much did the house cost £75k or £100k, I would say £100k every time

Wrong wrong wrong.

 

[oldskyblue58]

There may be guarantees though. I have a limited company and on some contracts I have to act as guarantor for my own company - thus doing away with the Ltd bit.

The ltd bit is still there you only act as guarantor to a specific liability of that company eg the bank. You are still "protected " by limited liability in respect of other creditors etc

 

[martcov]

The loan was part of the valuation of ACL however it was not part of the purchase consideration. The loan cost Wasps nothing. The only thing they have and will pay out for is the shares. The loan was an existing liability of ACL and contributed to how the parties involved arrived at the 5.54m share value

In other words the purchase price reflects the liabilities of ACL ( 14m outstanding loan ). The council will get / has got 5,54m plus the 14m loan repaid. That is all that counts as far as the council is concerned. Wasps bought a company that is paying the council 14m as per contract over 20 years. In the council's eyes that is 19,54m. Wasps will not get the benefit of the 14m ( through the profits of ACL), which they would have got without the loan - it goes to the council. In effect 19,54m goes to the council. It is spin to present the purchase price as merely 5,54m ( which it technically is ) whilst omitting the loan repayments out of Wasps profits.

 

[stupot07]

The loan was part of the valuation of ACL however it was not part of the purchase consideration. The loan cost Wasps nothing. The only thing they have and will pay out for is the shares. The loan was an existing liability of ACL and contributed to how the parties involved arrived at the 5.54m share value

In other words the purchase price reflects the liabilities of ACL ( 14m outstanding loan ). The council will get / has got 5,54m plus the 14m loan repaid. That is all that counts as far as the council is concerned. Wasps bought a company that is paying the council 14m as per contract over 20 years. In the council's eyes that is 19,54m. Wasps will not get the benefit of the 14m ( through the profits of ACL), which they would have got without the loan - it goes to the council. In effect 19,54m goes to the council. It is spin to present the purchase price as merely 5,54m ( which it technically is ) whilst omitting the loan repayments out of Wasps profits.

It is to spin it that it is £19.54m.

Why don't you chuck in the lecci, gas and water rates, business rates over the next 250 years for good measure

If higgs hadn't sold their shares would you still being saying £9.77m? And higgs were were paying £7m for ACL?

Sent from my iPhone using Tapatalk - so please excuse any spelling or grammar errors

 

[wingy]

they werent

Then how does Fisher cite that as a reason for not wanting to co share ACL alongside Wasps?

 

[martcov]

The ltd bit is still there you only act as guarantor to a specific liability of that company eg the bank. You are still "protected " by limited liability in respect of other creditors etc

Yes, in this case it would be CCC protecting themselves and it is the bank or supplier in my example that wants me to guarantee myself in specitic contracts. I realise that the limited applies for others, but many companies ( suppliers or banks ) do this when there is no solid security in the Ltd company.

 

[Noggin]

It is to spin it that it is £19.54m.


Sent from my iPhone using Tapatalk - so please excuse any spelling or grammar errors

It is spin to use 19m (actually just wrong), it's also spin though to try and suggest that 5m is a pittance for the ricoh without mentioning that it has a 14m liability and it's spin to suggest sisus offer earlier was somehow equal when they required the liabilities to be paid off for just a couple of mill.

 

[stupot07]

It is spin to use 19m (actually just wrong), it's also spin though to try and suggest that 5m is a pittance for the ricoh without mentioning that it has a 14m liability and it's spin to suggest sisus offer earlier was somehow equal when they required the liabilities to be paid off for just a couple of mill.

But the liability is balanced by the assets. We should so mentioned the £xm assets then.


Sent from my iPhone using Tapatalk - so please excuse any spelling or grammar errors

 

[oldskyblue58]

you would have to ask him that wingy. There would be a risk but if no guarantees given by the shareholders the only financial risk would be the amount you actually paid for the shares.

 

[bigfatronssba]

Yes they got £2.5m in cash and off loaded 50% of a £14m debt that they were responsible for. If my house was for sale for £100k and I had a £25k mortgage, if you paid me £75k but took on the mortgage it would be the same as paying me £100k outright and me having to settle the mortgage, how much did the house cost £75k or £100k, I would say £100k every time

The situation you are describing there though, would be that your house was responsible for the mortgage (if that were possible), you are just the owner of the house.

 

[Grendel]

It is spin to use 19m (actually just wrong), it's also spin though to try and suggest that 5m is a pittance for the ricoh without mentioning that it has a 14m liability and it's spin to suggest sisus offer earlier was somehow equal when they required the liabilities to be paid off for just a couple of mill.

And yet most on here thought it perfectly acceptable they paid £6 million for the Higgs half share and yet also then had liability for half the loan?

 

[albatross]

Then how does Fisher cite that as a reason for not wanting to co share ACL alongside Wasps?

Spin to justify his position. saying to would expose the football club to liabilities.

If SISU own 50% of ACL its still ACL that are liable not WASPS, CCFC or SISU.

 

[martcov]

It is to spin it that it is £19.54m.

Why don't you chuck in the lecci, gas and water rates, business rates over the next 250 years for good measure




If higgs hadn't sold their shares would you still being saying £9.77m? And higgs were were paying £7m for ACL?


Sent from my iPhone using Tapatalk - so please excuse any spelling or grammar errors

They are also taken into account in the purchase price. Without all these outgoings, ACL would be a booming business and worth far more than 5,54m - even with the loan liability.

 

[wingy]

you would have to ask him that wingy. There would be a risk but if no guarantees given by the shareholders the only financial risk would be the amount you actually paid for the shares.

So although we've seen nothing
Him being closer to it
Does that suggest guarantees were required?

 

[skybluetony176]

Then how does Fisher cite that as a reason for not wanting to co share ACL alongside Wasps?

Because he's Fisher. Sometimes I wonder if he knows what day of the week it is

 

[martcov]

And yet most on here thought it perfectly acceptable they paid £6 million for the Higgs half share and yet also then had liability for half the loan?

Does ACL have to pay the loan? If so, then Wasps don't get 14m of ACL income over the next 20 years, but the council gets 14m.