Philosoraptor
Well-Known Member
Down another 7% this morning.
There's a pretty complete analysis by Les Reid here:
EXCLUSIVE: Wasps ‘breach agreement’ with bondholders over Ricoh Arena value amid £43m debt
It's going to take some pulling apart this.
Again my gut feel is that it falls somewhere between the Telegraph's "everything is fine" minor rewrite of Wasps' own press release, and the "end is nigh" scenario (that I'm not-so-secretly hoping for!). It doesn't look great in that I think it would be unexpected news for bondholders, at the very least, and must cast some doubts on Wasps' own accounting procedures.
I look forward to OSB's thoughts in due course!
Make that down 12% and another 5% last night. Going to make some popcorn.
Wasn't that news brushed away at the time? Or is it a different breach?
Totally theoretical but lets say Joy owned 51% of the bonds and voted no to the amendments. What would happen then? Wasps are in breach and the Ricoh was the security so would that just get handed over?Prices dropping in todays's trades
Interestingly it looks like there was very little trading of the bonds in recent months until £8m worth were shifted in a couple of days at the end of November. Did the owner(s) of the bonds know bad news was on the way?
Bond price is still falling this morning.
No idea what is classed as insider trading. Probably just coincidence but it seems a bit odd for a large amount to hit the market right before this announcement after months of virtually no trading.Isn't that insider trading?
No idea what is classed as insider trading. Probably just coincidence but it seems a bit odd for a large amount to hit the market right before this announcement after months of virtually no trading.
Why would he pay money to lend to himself?Richardson himself might be a bondholder, who knows really. IF he was and I am not saying he is....could it be considered insider trading?
Then she just lost £1.5M. More her style to buy them at the bottom of the market.Totally theoretical but lets say Joy owned 51% of the bonds and voted no to the amendments. What would happen then? Wasps are in breach and the Ricoh was the security so would that just get handed over?
Why would he pay money to lend to himself?
I know cashflow is the key but can they sustain annual 7 figure losses. Sure it pales in to comparison with football but we all know that for some reason football clubs get treated differently.loss for year 1.5m (loss 2.3m)
3 posters do in fact. Interesting perception about importance of CCFC as well.
Interesting points raised.
The consent solicitation is (a) more than technical because Wasps are in default of the current bond terms and (b) certainly is not about moving stuff around for tax purposes
The asset cover doesn't require increasing valuations or improved financial performance the ratio is that the value of the charged assets (the long lease £60m) must 1.4 x the senior debt (the bond debt £35m) the current multiple is 1.71 so room for the asset value to actually decrease and still be ok. To meet that covenant then all that is needed is to maintain the lease valuation at anything above £49m
EBITDA is reasonably easy to pick out. Earnings Before Interest Tax Depreciation and Amortisation. The intention is that it is the figure before allocation to minority share holders (Compass and I assume the Wasps amateur club) but I am not sure the bond documents made that clear (the amendment does) From the summary above roughly that means EBITDA was £799k plus the depreciation add back of £1.602m (Taken from the consent doc cash flow statement) = 2.401m but it needed to be Interest £2.328m x 1.5 = 3.492. It was short by £1.091m which is why Richardson put in 1.1m of funding as the equity cure.
The statutory accounts are not available because Wasps are in breach of the bond terms. If the auditors issued a report now they would have to qualify it on a potential for not being a going concern. However following discussions with the auditors a remedy they are happy with has been agreed and this is what is put forward in the consent solicitation. Assuming the consent is granted I would expect a clean audit report in terms of going concern
The adding back of the minority shareholders bit seems reasonable to me and I am surprised that it wasn't clear from the get go. Compass can only be paid a distribution out of taxed income which is stated after the deduction of interest and depreciation so it should not affect the EBITDA calculation at all. I think that this is a technical amendment to make blindingly obvious what is and is not in the EBITDA calculation
The bit about CCFC I think in current circumstances overstates the reliance on CCFC. If you look at what CCFC brings in could they create that profit in a different way? It isn't about the CCFC turnover it is about the bottomline. So if there were not 23 CCFC games there could they put on other events in the halls and lounges to generate the same or better profit ? Could they have more hotel rooms available to sell? Things like that. If CCFC were successful started going up the pyramid then that's a different question the opportunities for CCFC & Wasps are greater, and possibly any deals very different.
I agree any reasonably competent bookkeeper should know the difference between income and a loan and where they sit in a set of accounts
Cashflow is the key to the success or failure of the business. Things are tight and that reflected in costs being cut etc. At the end of 30/06/2017 they had spent 1.8m more than they generated but this included investment in plant & equipment of 1.64m.
The problems they have are the EBITDA and the cash flow. They are redefining the EBITDA and putting in extra comfort for bondholders in cash deposit. The cashflow relies on Richardson, the additional income from the RFU, maintaining incomes, and cutting costs
Are they vulnerable yes but the business is benefitting from inward investment and heading in right direction (just not as fast as perhaps they planned). Will it succeed - I don't know
The general consensus from the professionals on that site seems to be keep calm and nothing to get too concerned about. The bond price is beginning to climb again if slowly
Do you think it will jump back to around par if the consent solicitation is approved?The general consensus from the professionals on that site seems to be keep calm and nothing to get too concerned about. The bond price is beginning to climb again if slowly
Do you think it will jump back to around par if the consent solicitation is approved?
My point on another thread carries through here. They took advantage when we were vulnerable, we should return the favour.
If CCFC and CRFC want to survive in this city, Wasps need to be starved and an alliance needs to be formed.
Butts Park for a bit, if there is any chance us not paying wasps rent will rock the ship enough for them to foxtrot oscar...
I think and it is only my own opinion that the benefit of Ccfc to wasps is overstated. What I think stops wasps saying enough is enough and go is (a) the PR damage it would cause and (b) being seen to be conciliatory whilst court case going on.
Financially what damage would Ccfc not being there cause? 100k in rent. I wouldn't think they make much on f&b might make a bit on match day costs but if Ccfc not there the cost to wasps isn't either. So in the scheme of things whilst the turnover/rent hit might be 600k even 750k the hit to the bottom line I doubt would be 200k including the rent. Easily covered by other events or the owner. Other than that how do Ccfc and crfc affect the wasps finances to make them vulnerable. Not to mention that over 50% of wasps turnover has nothing to do with sport at all. Ccfc account for somewhere between 2% and 3% of wasps turnover. What currently makes wasps vulnerable is not the turnover but the ability to make enough profit and net cash flow. What we know suggests Ccfc has little effect on that
Could wasps make the turnover up by utilizing the lounges for say Asian weddings at 50k+ a time ? For example.
Also i query whether there is no positive relationship between crfc and wasps. Would crfc throw that away if it exists to take temporary gain with Ccfc. Like it or not, but rugby is on the rise in Coventry and surrounding area and people are not only walking away from Ccfc but from football in general too. That benefits all rugby clubs in the area. What you are suggesting will require financial investment at BPA that you say would be only interim arrangement why would crfc do that when they are doing just fine with out Ccfc? Also crfc being in the championship actually makes closer relationships with wasps more attractive to wasps in things like loan players etc. Which would be attractive to crfc too. The premiership is still a long way off for crfc so no butting horns with wasps in that sense for a long time and to get there will need a lot of finance .
Not sure that the pressure would be on wasps financially brought by such an alliance. It might be on Ccfc though. Success of the ricoh/wasps and crfc actually seems to squeeze Ccfc unless they too become consistent and successful. At what point do crfc say we don't need Ccfc?
Wasps are vulnerable but have the capacity and backing to change things. They are reliant on many sources of income not just gate income or a second sports tenant. Crfc are becoming successful and as yet not got to the higher incomes and costs of being in the second division but they have plans to diversify their income sources to make their rise sustainable without Ccfc.
Then you have Ccfc with no pot to piss in, little success and unsupportive owners. Totally reliant on football related income. Is an alliance of Ccfc and crfc to work against wasps feasible? It might be attractive to Ccfc fans but would it be to crfc? I think wasps are vulnerable but not to things in the control of Ccfc or crfc
Ccfc remain between a rock and very hard place, the most vulnerable of the three teams. It is almost a case of Ccfc needs crfc and /or wasps but rugby doesn't need Ccfc to prosper. That I think is the real worry
I came to the conclusion a long time ago that the club is permanently screwed. Barring the unlikely scenario of Wasps failing there is no prospect of owning a ground going well into the future, irrespective of who the owners are. New owners with some goodwill behind them would be able to strike a better deal with Wasps but still only on favourable terms to them. New owners with more money than sense might be able to build a new stadium, but at what cost to the club all over again? The fumigators left the building in September 2014, the Wasps nest is here to stay. People in this city don't care about where clubs come from, they just care about the day out. Free flags and tickets in a ground where you aren't treated as a budding hooligan for showing up tend to do the trick.
I agree with a fair bit of what you're saying re CRFC, there is no need for them to rock the apple cart by joining up with perennial failures who have lost meaningful interest in success. I disagree though, that football is on the wane in terms of popularity-PL attendances continue to rise and the brand, if not the quality, seems only to get stronger. What makes less sense to me is SISU holding on to the club. It can't be that Joy is loving every minute of bad PR that comes from futile court cases and destroying a cherished football club.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?