SkyBlue_Bear83
Well-Known Member
The Richardson bit is there hidden as 'refinancing shareholder loans' I believe
Sounds better than Richardsons back pocket I guess, wouldn't want to turn anyone against Wasps
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Fantastic News - http://www.coventrytelegraph.net/news/coventry-news/wasps-rfc-looks-raise-35million-9121703
Copy and Paste Article.
No mention of it paying Richardson back too?
I believe the idea is you get an annual return which is greater than you would get from any offering where you were guaranteed to not lose your money.
I assume they are actually offering ACL but making it sound like the Ricoh as bricks and mortar offer more security than a failed company would be. I'm sure the council would have taken steps to ensure finance couldn't be raised against the Ricoh itself or the lease :thinking about: Presumably if it goes tits up and you can't cash out your bond, or whatever it is you do to get your initial stake back then ownership would change hands or they'd have to raise further cash to pay back the initial bond.
Oooooo. Another smoking gun. I'm salivating.
Ah, it's like one of those dodgy endowment mortgages from the 80's then?
Some interesting(?maybe?) figures in the prospectus, needs OSB to have a look at really, shows that ACL also made a loss for the six months to Nov 14. The money they raise from the bond will repay the Council, and up to £10m to repay loans given by Richardson, some other loans £4m, and then fund ACL running costs and wasps running costs.
If you were a potential investor alarm bells would ring straight away. They say they will pay back the bond in 5 years but need the cash to cover the running of ACL and Wasps for the next few years. Unless I'm missing something obvious (which is quite possible!) doesn't that require them to average £5m profit a year for the next 5 years just to pay back the bonds?
It amazes me the BBC have written such a gushing article, without really looking into the finer points of the deal.
They seem to ignore that the 35m is being used to service a lot of debt, and that it will have to be paid back with interest, but hey why let the facts get in the way of a story that wasps will be the richest clube in the world...well if you ignore there huge pile of debt.
Advert in the telegraph telling everybody to invest?
£35m at £2,000 each would require 17,500 investors.
7 years but no the plan certainly won't be to to save up 35 million to give back to people in 7 years time, it will be to lower running costs, and build the business, the plan being for it to be worth more in 7 years than now then they will refinance, ie borrow to pay back the original people.
This is how the country (the actual country) finances everything with bonds (called gilts) the country is debt to the tune of over 1 trillion pounds and running at a massive loss (the deficit) but they will still easily be able to lend to people and pay back other lenders.
Or half a dozen crazy arse hedge funds at £6M each.
£35m at £2,000 each would require 17,500 investors. That's a bit of a stretch, I'd say. I know there are a fair number of people who are happy to go and watch Wasps for free, or even for £15 a ticket - but asking people to put their hands in their pockets for £2,000 might be going a bit far.
I think the claim that the investment is secured against the Ricoh arena is a bit weak too - Wasps don't own the Ricoh Arena, and presumably if ACL becomes insolvent the lease reverts to the Council (at least that's what's we'd expect the Council to have agreed). What kind of security is that?
At 6.5%, Wasps will have to service this debt to the tune of £2.3m per year - and this for a company that can't show an operating profit but is entirely reliant on handouts from the owner. I'm guessing the owner would like some of his money back now, which again runs counter to what many have purported here.
Is anyone who supports Wasps here prepared to put their money where their mouth is, and buy one of these bonds?
ACL have the ricoh arena for 250 years which for the most part is as good as freehold (other than things like ground rents) and potentially needing permission for certain things. If ACL go bust today sure the council would likely get the leasehold (because they have a secured loan against it) once these bonds are issued that loan will be gone, the council would have no claim on the leasehold if ACL go bust, the ricoh would need to be sold to repay the bond holders.
or one investor at £35million, they don't need 17k people, nore do people need to have any affiliation to wasps in the slightest, if the market thinks the bonds are fairly priced then they will sell them easily, if not then they won't. There might be a few people to take up this offer because they are wasps fans but that isn't sensible investing. You won't be owning any of wasps by doing this so it doesn't even have the emotional attraction of buying some of your own clubs shares and owning a peice of your club.
ACL have the ricoh arena for 250 years which for the most part is as good as freehold (other than things like ground rents) and potentially needing permission for certain things. If ACL go bust today sure the council would likely get the leasehold (because they have a secured loan against it) once these bonds are issued that loan will be gone, the council would have no claim on the leasehold if ACL go bust, the ricoh would need to be sold to repay the bond holders.
Yes they will (though half of that is already being paid with the loan to the council) and they quite possibly have other debts that are accruing interest. They obviously plan to build the buisness, doable? no idea, nore do I care honestly, I've not even read the prospectus.
You really shouldn't let your emotions run your investments. I won't be investing though I would have done at 11% like the council. (just to be clear I'm not a wasps fan, I don't care at all how they do, if anything a slight preference towards failure)
C'mon Noggin
- there is absolutely no comparison here. The UK is a sovereign state capable of printing its own money, and borrowing further funds at very low rates. There's little to no risk in government backed Gilts, which is why pretty much every western economy runs this way.
Since it's such a good deal, will you be buying one of these bonds?
Surely even our council are not dumb enough to have forgotten to put a clause in the lease that should an insolvency event occur the lease reverts to the freeholder?
If ACL go bust, I would imagine the leasehold reverts to the Council whether or not the loan is paid. That's the standard process with commercial leases.
As you've said, the bond is a poor deal. If it doesn't come off you have to wonder how much of a risk Wasps are to the Council's £14.4m.
I'm not but one of the recurring themes whenever SISU owning the Ricoh was ever mention was that there was no way it should be allowed as they'd go straight out and try and raise finance against it.
Wasps have had the Ricoh less than 12 months and they're trying to raise £35m against it. No doubt if it was SISU the forum would be in meltdown by now.
Thats not standard process at all, the lease is an asset of acl (their primary asset) and would be sold if acl go bust. We own multiple flats long leasehold, if we went bankrupt they would be sold to repay the mortgages, they certainly wouldn't return to the freeholder, the freehold for the property our flats are in is worth about 10 grand, the flats are worth a couple of mill (not suggesting I have millions in flats if thats how it reads, thats the total value of the flats in the building)
I don't think I've ever had a business lease that has allowed me to transfer ownership of the lease without the freeholders permission. When I've sold a business with a lease I've had to get it signed off by the freeholder and if any of my businesses had gone bust it wouldn't have ended up in the hands of the administrator. Don't think its that unusual and certainly something I would expect to be in place for an asset like the Ricoh lease.
Risks relating the head lease of the Arena granted to ACL2006
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 theHead Lease if ACL2006 becomes insolvent. Insolvency in this scenario means a situation where ACL2006becomes 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 offorfeiture would be that the 250 year Head Lease would fall away and that ACL would then become the tenantof CCC at the Arena for the remaining 38 years of its existing lease.
P22 http://www.wasps.co.uk/docs/default-source/default-document-library/wasps_prospectus2.pdf?sfvrsn=2
Seems Les was spot on then:
INDEBTED rugby club Wasps want to raise up to £30million including in loans from ordinary fans - partly to pay back a taxpayer loan from Coventry City Council, the Observer understands.
Our council sources say councillors have been briefed by senior council officers on Wasps' latest proposals to raise loans from a mixture of institutional investors, and fans - through a 'retail bond' scheme.
The 'retail bond' scheme would invite ordinary people, fans and possibly local companies to invest money as an "I owe you", with the expectation it would be returned by Wasps at some point in future.
I don't think anyone disputed that he was right with that article did they? it's an article full of shocking bias again which spoiled what would otherwise been an interesting exclusive.
So basically the security is about as useful as an IOU from Joy.
You're mistaken.
Fair enough if people thought he was wrong that there was going to be a bond issue they were mistaken but I thought it was common knowledge since that article that this is what was happening? or do you mean I'm mistaken that its full of bias?
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