Wasps downward spiral... (6 Viewers)

fernandopartridge

Well-Known Member
In essence, someone keen to sell, and not many people looking to buy.

The drop in price is potential buyers factoring in the risk of the bond not being repaid at the end of the term, against the interest payment (5-ish percent p.a, iirc), and the chance of the bond price rising at a later date.

From a cold, hard financial point of view buying the bond looks like a bit of a gamble to me. I still don't see how the valuation of the security stacks up if Wasps can't refinance the bond and/or go bust before or after the due date. I think that and the underlying financials at Wasps are why the price is heading south. All imho this, I should add...

What drives the actual value of the security? If Wasps can't repay the bondholders, they will be in a position of financial failure. There is no way the asset value of £48m would be obtained on the open market for an empty stadium, would the 250 year lease evaporate if Wasps Holdings did and revert back to 50 years?
 

chiefdave

Well-Known Member
What drives the actual value of the security? If Wasps can't repay the bondholders, they will be in a position of financial failure. There is no way the asset value of £48m would be obtained on the open market for an empty stadium, would the 250 year lease evaporate if Wasps Holdings did and revert back to 50 years?
This has never been clear to me. Read the relevant part of their prospectus several times and can't get my head around it. They need to cover £35m in security.

We all know they purchased ACL for £5.5m with one club in residence as a sitting tenant. So if Wasps get into difficulties and the extended lease falls away then you are back to ACL with one club, or potentially even no clubs in residence. How does it cover £35m?
Under the terms of the head lease granted by Coventry City Council (“CCC”) to Arena Coventry (2006) Limited (“ACL2006”) in respect of the Arena (the “Head Lease”), CCC have reserved the right to forfeit the Head Lease if ACL2006 becomes insolvent. Insolvency in this scenario means a situation where ACL2006 becomes unable to pay its debts, has a receiver/administrator/provisional liquidator appointed over its assets, has assets seized in order to pay debts of ACL2006 or has a winding-up order made against it. The effect of forfeiture would be that the 250 year Head Lease would fall away and that ACL would then become the tenant of CCC at the Arena for the remaining 38 years of its existing lease. However, the right of CCC to claim forfeiture of the Head Lease is not an automatic right. If CCC made a claim for such forfeiture, this could be contested by ACL2006, any third party that held security over ACL2006 and any subtenants of ACL2006 by making application to a court in England. Further, if an administrator was to be appointed over the assets of ACL2006, then CCC would not be able to forfeit the Head Lease without the consent of the appointed administrator or with the leave of the courts. If forfeiture was to take place prior to maturity of the Bonds, then U.S. Bank Trustees Limited, the entity that will hold the security on behalf of Bondholders, may not be in a position to assign the Head Lease for value in the event CCC forfeited the lease as described in the preceding paragraph. This may have an impact on the Bondholders’ ability to receive full repayment of their investment in the Bonds on the occurrence of such an insolvency event.
I've got pretty low expectations of the council but even by those low standards I was surprised that entire thing, both original and extended lease, doesn't revert back to the council in event of Wasps insolvency. The bit I don't get is how this can be challenged. Surely the terms are either in place or not?
if the Issuer or the Guarantors were to become insolvent or go out of business, the Bondholders may lose all or part of their investment in the Bonds and no governmental body would be required to compensate them for such loss.
So ultimately there is security but it might not be enough and you could lose everything.
 

CCFC54321

Well-Known Member
Heard a conversation today that the reason behind W**ps not putting in planning permission for the new training ground is they may be looking away from Coventry or not fully committing the long term future here. Made sense actually to hold off if they can’t turn the financial position around they would want to sell the Ricoh off and go back to London without anymore outlay and any established roots in the area....
 

SkyblueBazza

Well-Known Member
Heard a conversation today that the reason behind W**ps not putting in planning permission for the new training ground is they may be looking away from Coventry or not fully committing the long term future here. Made sense actually to hold off if they can’t turn the financial position around they would want to sell the Ricoh off and go back to London without anymore outlay and any established roots in the area....
If they can't afford a home in Coventry...how would they afford one in London?

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chiefdave

Well-Known Member
If they can't afford a home in Coventry...how would they afford one in London?
Personally don't believe they're going back to London imminently but you never know what's happening in the background.

For all we know the owner wants out, I've certainly heard that particular rumour from more than one person I would class as more reliable than most of the things you read on twitter, what happens if a prospective new owner believes they belong in London and wants to move them back? Happened with London Welsh and London Irish are due to return soon.
 

Liquid Gold

Well-Known Member
I could imagine a scenario where their season ticket sales now are not what they want them to be and their social media is full of vitriol from city fans and the owner doesn’t see any long term future. A new owner might have this info and decide they would be better if in London where their support is.
 

chiefdave

Well-Known Member
I could imagine a scenario where their season ticket sales now are not what they want them to be and their social media is full of vitriol from city fans and the owner doesn’t see any long term future. A new owner might have this info and decide they would be better if in London where their support is.
You only have to look at the responses to their social media output to see how bad things are. They put out a tweet today about fathers day and literally every response is negative and telling them to get out of the city.

Now of course that doesn't mean there isn't people who will quite happily chuck their morals aside at the first sign of a free flag but its not a good look.
 

CCFC54321

Well-Known Member
The move to Coventry haven’t worked out as they planned.

Still no training ground or any plans to build one

All there best players left

Gates going down despite free tickets galore

No European rugby

Expected struggle next season to stay up?

£45m debt and increasing

£35m bond to pay that’s expected to be deferred

An investigation into books being cooked and possible fine and demotion to lower leagues

Hatred from the local community and a non acceptance to there presence in the city.

Not going great is it? Time to go Wasps your not wanted and never will be accepted in this city.
 

Liquid Gold

Well-Known Member
The move to Coventry haven’t worked out as they planned.

Still no training ground or any plans to build one

All there best players left

Gates going down despite free tickets galore

No European rugby

Expected struggle next season to stay up?

£45m debt and increasing

£35m bond to pay that’s expected to be deferred

An investigation into books being cooked and possible fine and demotion to lower leagues

Hatred from the local community and a non acceptance to there presence in the city.

Not going great is it? Time to go Wasps your not wanted and never will be accepted in this city.
£55m debt
 

SkyblueBazza

Well-Known Member
A cheaper one?
The Stoop holds 14800 & was last valued at £27m in 2010, AFC Wimbledon est at £25m for 10000 capacity...so after settling debts & bonds unless they actually got £60m from SISU (? Yeah right! Maybe £10m if they wanted out) then opted for something more akin to Kings Marsh Stadium (Sudbury) with about 2500 capacity I doubt they will ever afford to move back to London.

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CCFC88

Well-Known Member
The Stoop holds 14800 & was last valued at £27m in 2010, AFC Wimbledon est at £25m for 10000 capacity...so after settling debts & bonds unless they actually got £60m from SISU (? Yeah right! Maybe £10m if they wanted out) then opted for something more akin to Kings Marsh Stadium (Sudbury) with about 2500 capacity I doubt they will ever afford to move back to London.

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Wouldn't pay cash to build a new stadium though would they, likely financed through bonds, loans, grants etc
 

SkyblueBazza

Well-Known Member
Wouldn't pay cash to build a new stadium though would they, likely financed through bonds, loans, grants etc
Surely there is a limit to how many bonds they can issue? And definitely a limit on how many and at what price people will buy at? And given the track record...

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CCFC88

Well-Known Member
Surely there is a limit to how many bonds they can issue? And definitely a limit on how many and at what price people will buy at? And given the track record...

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In your scenario they have paid back the current 35m of bonds though? Would suggest that would increase confidence. If they want to move back to London finance is not something that will stop them
 

SkyblueBazza

Well-Known Member
In your scenario they have paid back the current 35m of bonds though? Would suggest that would increase confidence. If they want to move back to London finance is not something that will stop them
It doesn't help confidence if you know the only way they paid the last bond was by selling thier crown jewels. Good to know they would be prepared to pay out regardless...but it might be possible to transfer the bonds. That wpuld be essential to help fund a new stadium/purchase as if they do indeed have £55m debt they're a bit stuffed

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chiefdave

Well-Known Member
Ticketmaster have been knocking out buy one get one free tickets for Bon Jovi at the Ricoh.

Interestingly there's an article about it that's been pushed to lots of Trinity Mirror sites but doesn't seem to feature on the Telegraph site.
 

ccfcchris

Well-Known Member
A friend popped in today and mentioned wasps had a stall in Birmingham promoting themselves. Hope it means they're getting desperate.
 

chiefdave

Well-Known Member
A friend popped in today and mentioned wasps had a stall in Birmingham promoting themselves. Hope it means they're getting desperate.
Fingers crossed they want to move there when there’s a nice shiny new stadium leftover from the Commonwealth Games, well a refurbished stadium anyway.
 

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