Lucas sad that ccfc don't run ricoh (3 Viewers)

Godiva · May 17, 2015

James Smith said:
Thanks, so it could have taken account of the rent boycott, when coming up with that figure.

I am sure it did, but the circumstances were more complicated than just the rent strike.
The goal for all parties at that time was to have Yorkshire Bank write off a significant chunk of the loan. Was the valuation made to support that?
They also had to take into account that the deal would collapse - it was clearly what CCC aimed for from August 2012. That could potentially drive the tenant (the club) into liquidation, was that reflected in the valuation?
Alternatively the parties would agree to a significant lower rent deal which would drive down the valuation. Was that in there?

I can't remember if any details of the valuation (other than the amount) were ever disclosed. Perhaps someone with a better memory can help?

Grendel · May 17, 2015

A lot of money management articles say that the 6.5 % is actually more than the interest charged by the council.

Is that right? I thought someone on here said they were charging 11% - two articles I've found say 5%

Nick · May 17, 2015

Grendel said:
A lot of money management articles say that the 6.5 % is actually more than the interest charged by the council.

Is that right? I thought someone on here said they were charging 11% - two articles I've found say 5%

Wouldn't be right surely? Why would they refinance on a higher %?

Grendel · May 17, 2015

Nick said:
Wouldn't be right surely? Why would they refinance on a higher %?

Because they needed the cash?

singers_pore · May 17, 2015

In my opinion the valuation of 48.5 million for ACL is utterly crazy. It's totally unsupportable based on the combined reported financials of Wasps and ACL which have shown no improvement in the short period after the transaction and which are both loss making entities. It's also miles away from the sum paid by Wasps just a few months ago.

There's some other stuff in the prospectus which looks fishy, such as the disclosure of Wasps' increased attendances but no disclosure of the change in ticket revenues. A cynic may say that disclosure was omitted because loads of tickets were given away for free. I've already turned this into a case study for my Masters students in LA.

Grendel · May 17, 2015

singers_pore said:
In my opinion the valuation of 48.5 million for ACL is utterly crazy. It's totally unsupportable based on the combined reported financials of Wasps and ACL which have shown no improvement in the short period after the transaction and which are both loss making entities. It's also miles away from the sum paid by Wasps just a few months ago.

There's some other stuff in the prospectus which looks fishy, such as the disclosure of Wasps' increased attendances but no disclosure of the change in ticket revenues. A cynic may say that disclosure was omitted because loads of tickets were given away for free. I've already turned this into a case study for my Masters students in LA.

The valuation is based on future earnings many analysts are sceptical to put it mildly.

Godiva · May 17, 2015

Grendel said:
Because they needed the cash?

By 'they' you mean Richardson?

Grendel · May 17, 2015

Godiva said:
By 'they' you mean Richardson?

An article for Fixed Income Investor suggests that it's for part loan recovery to Richardson (total loans from him are £20 million) and there will be about £8 million left after Close and Council have been paid off for working capital.

Nick · May 17, 2015

Grendel said:
An article for Fixed Income Investor suggests that it's for part loan recovery to Richardson (total loans from him are £20 million) and there will be about £8 million left after Close and Council have been paid off for working capital.

Imagine if SISU had done that for Joy to get some cash.

singers_pore · May 17, 2015

Valuations are always based on future earnings (as well as net assets). With a discount rate of say 7.5%, future earnings would have to be around 3 million per year every year into perpetuity in order to justify that valuation. Given that the combined losses of Wasps and ACL are about 3 million per year based on the most recent financials, that means annual earnings would have to increase by about 6 million. It's pure fantasy in my opinion.

Godiva · May 17, 2015

Grendel said:
An article for Fixed Income Investor suggests that it's for part loan recovery to Richardson (total loans from him are £20 million) and there will be about £8 million left after Close and Council have been paid off for working capital.

Nice wording.
If sisu had done the same it would have been called 'asset stripping' - which would be fair I have to say.

singers_pore · May 17, 2015

Grendel said:
An article for Fixed Income Investor suggests that it's for part loan recovery to Richardson (total loans from him are £20 million) and there will be about £8 million left after Close and Council have been paid off for working capital.

No, it's even worse than that because a big chunk of the proceeds is set aside for the interest payments. So there really isn't much left over to finance the supposed future growth of the business. Without making any accusations, it looks a bit like a Ponzi scheme to me.

Grendel · May 17, 2015

singers_pore said:
No, it's even worse than that because a big chunk of the proceeds is set aside for the interest payments. So there really isn't much left over to finance the supposed future growth of the business. Without making any accusations, it looks a bit like a Ponzi scheme to me.

Yes the first 18 months of coupons have been placed in an Erscrow.

James Smith · May 17, 2015

Godiva said:
I am sure it did, but the circumstances were more complicated than just the rent strike.
The goal for all parties at that time was to have Yorkshire Bank write off a significant chunk of the loan. Was the valuation made to support that?
They also had to take into account that the deal would collapse - it was clearly what CCC aimed for from August 2012. That could potentially drive the tenant (the club) into liquidation, was that reflected in the valuation?
Alternatively the parties would agree to a significant lower rent deal which would drive down the valuation. Was that in there?

I can't remember if any details of the valuation (other than the amount) were ever disclosed. Perhaps someone with a better memory can help?

Yeah I was thinking that there would obviously be more to it than that.

Sick Boy · May 17, 2015

I'm surprised that Italia, Tony and all their chums aren't going mad about this?! Weren't these their reasons as to why CCFC shouldn't own the ground? Surely it shouldn't be ok for Wasps to be doing it? Or as usual, they've been proven wrong yet again?

James Smith · May 17, 2015

Nick said:
Wouldn't be right surely? Why would they refinance on a higher %?

Desperation? Eastwood wanted to reduce his exposure to Wasps quickly?

lordsummerisle · May 17, 2015

singers_pore said:
No, it's even worse than that because a big chunk of the proceeds is set aside for the interest payments. So there really isn't much left over to finance the supposed future growth of the business. Without making any accusations, it looks a bit like a Ponzi scheme to me.

I'm assuming that CCC and Higgs got paid their £5.5million between them from Wasps at the time of the sale and not now out of the money raised by the Bond issue?

James Smith · May 17, 2015

lordsummerisle said:
I'm assuming that CCC and Higgs got paid their £5.5million between them from Wasps at the time of the sale and not now out of the money raised by the Bond issue?

Surely the bond prospectus would have had to mention that.

SkyBlue_Bear83 · May 17, 2015

Grendel said:
A lot of money management articles say that the 6.5 % is actually more than the interest charged by the council.

Is that right? I thought someone on here said they were charging 11% - two articles I've found say 5%

The original loan from council to ACL was 5.5% interest I think to be repaid within 40 years. The 11% comes from when the Wasps deal was done, they were supposedly paying the loan off in 20 years but CCC would still receive the amount of cash as if it was 40 years, so people just doubled the interest to account for paying it back in half of the time. (of course we now know that Wasps had no intention of doing this)

lordsummerisle · May 17, 2015

James Smith said:
Surely the bond prospectus would have had to mention that.

Would imagine so, not looked that closely at the actual prospectus to be honest, just a quick look at it set off enough alarm bells!

Rusty Trombone · May 17, 2015

Sick Boy said:
I'm surprised that Italia, Tony and all their chums aren't going mad about this?! Weren't these their reasons as to why CCFC shouldn't own the ground? Surely it shouldn't be ok for Wasps to be doing it? Or as usual, they've been proven wrong yet again?

I was under the impression the previous concerns were over what SISU may do if they got over the freehold, not over a long lease. If this financing deal goes bad it would appear that the Council remain in control of the lease, and therefore what happens at the stadium, if it were the freehold then that wouldn't be the case.

Rusty Trombone · May 17, 2015

lordsummerisle said:
Would imagine so, not looked that closely at the actual prospectus to be honest, just a quick look at it set off enough alarm bells!

Page 52.

http://www.wasps.co.uk/docs/default-source/default-document-library/wasps_prospectus2.pdf?sfvrsn=2

Using the majority for paying loans off, a bit for interest, a bit more for unspecified working capital.

lordsummerisle · May 17, 2015

Rusty Trombone said:
I was under the impression the previous concerns were over what SISU may do if they got over the freehold, not over a long lease. If this financing deal goes bad it would appear that the Council remain in control of the lease, and therefore what happens at the stadium, if it were the freehold then that wouldn't be the case.

Sisu were more than willing to take on a long freehold, despite constant shouts of "unencumbered" from many.

Think most agree that a 250 year lease effectively the freehold anyway, though the Wasps bond and most newspaper coverage of it seemed to intimate that the bond holders would have the Ricoh Arena as security, which as you properly say is actually owned by the council, Wasps merely hold the licence to operate it.

chiefdave · May 17, 2015

lordsummerisle said:
I'm assuming that CCC and Higgs got paid their £5.5million between them from Wasps at the time of the sale and not now out of the money raised by the Bond issue?

It's a question that has been asked before but from what I can tell so far nether CCC or Higgs have confirmed they received full payment at the time of the sale.

James Smith · May 17, 2015

chiefdave said:
It's a question that has been asked before but from what I can tell so far nether CCC or Higgs have confirmed they received full payment at the time of the sale.

I don't remember seeing the question in the Coventry Telegraph. Maybe Simon could ask them.

Rusty Trombone · May 17, 2015

lordsummerisle said:
Sisu were more than willing to take on a long freehold, despite constant shouts of "unencumbered" from many.

Think most agree that a 250 year lease effectively the freehold anyway, though the Wasps bond and most newspaper coverage of it seemed to intimate that the bond holders would have the Ricoh Arena as security, which as you properly say is actually owned by the council, Wasps merely hold the licence to operate it.

I honestly can't recall reading anything from SISU that clearly states that they would accept a long lease (with the usual restrictions leases bring), apart of course when they agreed to the principle of a 125 year lease as part of the failed Higgs bid.

The ownership part is the key difference though between long lease and freehold, so I think this bit cannot be wrapped up in the 'effectively freehold anyway' statement. Other then that I'd agree it is effectively freehold, which is why it's odd SISU didn't want it**

**pending someone posting a SISU statement to the contrary

Rusty Trombone · May 17, 2015

lordsummerisle said:
I'm assuming that CCC and Higgs got paid their £5.5million between them from Wasps at the time of the sale and not now out of the money raised by the Bond issue?

Page 266 of the prospectus shows wasps cashflow up to 31.12.14, this shows that the cash was paid to acquire ACL by that date, so I'd say it's likely they were paid upon sale.

italiahorse · May 17, 2015

CCFC said:
The original loan from council to ACL was 5.5% interest I think to be repaid within 40 years. The 11% comes from when the Wasps deal was done, they were supposedly paying the loan off in 20 years but CCC would still receive the amount of cash as if it was 40 years, so people just doubled the interest to account for paying it back in half of the time. (of course we now know that Wasps had no intention of doing this)

Where does it say they would get the same amount of cash?

Rusty Trombone · May 17, 2015

italiahorse said:
Where does it say they would get the same amount of cash?

http://www.coventrytelegraph.net/news/coventry-news/details-wasps-ricoh-arena-deal-8585198

The amount of the loan has not been reduced and the council will receive the same return over 20 years that it would have done if the previously agreed interest rate of five per cent had accrued over the original 41 year term.

Ian1779 · May 17, 2015

Rusty Trombone said:
http://www.coventrytelegraph.net/news/coventry-news/details-wasps-ricoh-arena-deal-8585198

The amount of the loan has not been reduced and the council will receive the same return over 20 years that it would have done if the previously agreed interest rate of five per cent had accrued over the original 41 year term.

You might have to wait for a reply... Wasps PR dept is closed till tomorrow.

SkyBlue_Bear83 · May 17, 2015

italiahorse said:
Where does it say they would get the same amount of cash?

Read the link posted, it was fairly public knowledge at the time.

Grendel · May 17, 2015

Rusty Trombone said:
http://www.coventrytelegraph.net/news/coventry-news/details-wasps-ricoh-arena-deal-8585198

The amount of the loan has not been reduced and the council will receive the same return over 20 years that it would have done if the previously agreed interest rate of five per cent had accrued over the original 41 year term.

How is that possible if they were still paying 5%?

Rusty Trombone · May 17, 2015

Grendel said:
How is that possible if they were still paying 5%?

I just copied out some of the article. If they were still paying 5% then it wouldn't be possible, and the article would be wrong. What have you seen to suggest it was still 5%?

Grendel · May 17, 2015

Rusty Trombone said:
I just copied out some of the article. If they were still paying 5% then it wouldn't be possible, and the article would be wrong. What have you seen to suggest it was still 5%?

An article by Fixed Income Investor reviewing the bond.

Rusty Trombone · May 17, 2015

Grendel said:
An article by Fixed Income Investor reviewing the bond.

You should just ask intheknow.

Lucas sad that ccfc don't run ricoh (3 Viewers)

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