Well why didn't they buy the share without the loan then? All the income servicing the 14m would go to them then.
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
So if there was no loan what do you think the price would have been,
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
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.
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
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 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.
It's semantics really isn't It?
The 14m loan has to be Paid
WASPS are not liable for the loan ACL is.
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 ).
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
It depends how much you want to hang on itSome say 'semantic' - some say 'spin'.
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
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 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.
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?
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they werent
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
It is to spin it that it is £19.54m.
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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.
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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
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.
Then how does Fisher cite that as a reason for not wanting to co share ACL alongside Wasps?
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?
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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.
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.
Then how does Fisher cite that as a reason for not wanting to co share ACL alongside Wasps?
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?
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