JR2 - SISU's bargaining tool? (4 Viewers)

[wingy]

It was when he first came in, he said if legal action was dropped and all of the council's legal fees were paid he would help with the Wasps discussions. Previously he had distanced himself from them to say it was up to Wasps.

Don't get me wrong, if the judge says "pay £2m legal fees" then they should be paid. This was before anything was awarded.

Ta!

 

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[oldfiver]

A 3% contribution or is there more to that as my eyes hurt trying to read it?

Not sure what you are referring to

Ctrl and + will enlarge screen shot lol

 

[chiefdave]

View attachment 6039

I get that but isn't that just giving detail of how they arrived at the valuation. A couple of pages before that it states that the valuation is the amount they would expect if the lease was sold on the valuation date. Which would mean its not a random amount for accounting purposes or a potential future earnings figure.

So we know that in Nov 2014 ACL was worth £5.54m with the 50 year lease. We also know at that time a 200 year extension was worth £1m.

Then 4 months later the lease alone is worth £48.5m.

Now with the best will in the world there's no way Wasps turning up has added tens of millions to the value to the lease so the question is, when Wasps purchased ACL and a 200 year lease extension for a total of £6.5m what was the lease valued at?

ACL I presume had other assets and of course there was the loan of £14m.

So lets say Wasps paid £6.5m for everything and paid of the loan. That's £20m in total and in return they got 100% ownership of a company with an asset worth £48.5m?

It may well be all above board but it just doesn't seem right to me. Theoretically they could have sold the lease on the date of valuation, folded ACL and be £28m up!

 

[AVWskyblue]

I get that but isn't that just giving detail of how they arrived at the valuation. A couple of pages before that it states that the valuation is the amount they would expect if the lease was sold on the valuation date. Which would mean its not a random amount for accounting purposes or a potential future earnings figure.

So we know that in Nov 2014 ACL was worth £5.54m with the 50 year lease. We also know at that time a 200 year extension was worth £1m.

Then 4 months later the lease alone is worth £48.5m.

Now with the best will in the world there's no way Wasps turning up has added tens of millions to the value to the lease so the question is, when Wasps purchased ACL and a 200 year lease extension for a total of £6.5m what was the lease valued at?

ACL I presume had other assets and of course there was the loan of £14m.

So lets say Wasps paid £6.5m for everything and paid of the loan. That's £20m in total and in return they got 100% ownership of a company with an asset worth £48.5m?

It may well be all above board but it just doesn't seem right to me. Theoretically they could have sold the lease on the date of valuation, folded ACL and be £28m up!

Only problem with that theory Daventry is getting someone to buy at that price buddy

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[AVWskyblue]

Only problem with that theory Daventry is getting someone to buy at that price buddy

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Edit... Dave.... damn auto type

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[rupert_bear]

I get that but isn't that just giving detail of how they arrived at the valuation. A couple of pages before that it states that the valuation is the amount they would expect if the lease was sold on the valuation date. Which would mean its not a random amount for accounting purposes or a potential future earnings figure.

So we know that in Nov 2014 ACL was worth £5.54m with the 50 year lease. We also know at that time a 200 year extension was worth £1m.

Then 4 months later the lease alone is worth £48.5m.

Now with the best will in the world there's no way Wasps turning up has added tens of millions to the value to the lease so the question is, when Wasps purchased ACL and a 200 year lease extension for a total of £6.5m what was the lease valued at?

ACL I presume had other assets and of course there was the loan of £14m.

So lets say Wasps paid £6.5m for everything and paid of the loan. That's £20m in total and in return they got 100% ownership of a company with an asset worth £48.5m?

It may well be all above board but it just doesn't seem right to me. Theoretically they could have sold the lease on the date of valuation, folded ACL and be £28m up!

It's called business. Speculation, investment, some come off a little some a lot. Whoever at sisu decided not to get involved with the Ricoh cost their business and possibly investors millions. I wonder if the investor partners know ?

 

[chiefdave]

Only problem with that theory Daventry is getting someone to buy at that price buddy

Surely if finding someone to buy at the valuation price would be a problem it would be an indication the valuation is too high?

 

[oldfiver]

I get that but isn't that just giving detail of how they arrived at the valuation. A couple of pages before that it states that the valuation is the amount they would expect if the lease was sold on the valuation date. Which would mean its not a random amount for accounting purposes or a potential future earnings figure.

So we know that in Nov 2014 ACL was worth £5.54m with the 50 year lease. We also know at that time a 200 year extension was worth £1m.

Then 4 months later the lease alone is worth £48.5m.

Now with the best will in the world there's no way Wasps turning up has added tens of millions to the value to the lease so the question is, when Wasps purchased ACL and a 200 year lease extension for a total of £6.5m what was the lease valued at?

ACL I presume had other assets and of course there was the loan of £14m.

So lets say Wasps paid £6.5m for everything and paid of the loan. That's £20m in total and in return they got 100% ownership of a company with an asset worth £48.5m?

It may well be all above board but it just doesn't seem right to me. Theoretically they could have sold the lease on the date of valuation, folded ACL and be £28m up!

The WASPs argument runs - they have created added value by their brand and additional long term income streams
However, this is totally predicated on forecasts prepared on Month 4 by WASPs directors

Your other point - A couple of pages before that it states that the valuation is the amount they would expect if the lease was sold on the valuation date - I think is a bit spurious as it has insufficient history to support the theory.What can you forecast based on 4 months figures and how far forward
Incidentally 50 years lease would not have valued any where near as high
It is not an accounting exercise but the Valuation was for the Bond issue. The auditors have relied on this in preparing the accounts having tested some of the numbers. But they do not have a crystal ball either!.

 

[Astute]

Surely if finding someone to buy at the valuation price would be a problem it would be an indication the valuation is too high?

It is valueless because nobody would be interested in the Ricoh

 

[oldfiver]

Surely if finding someone to buy at the valuation price would be a problem it would be an indication the valuation is too high?

But that premise was not tested so you have rely on good old fashioned theory !

 

[chiefdave]

Incidentally 50 years lease would not have valued any where near as high

Interesting. Would it therefore not have been in the council's interest to sell ACL a 200 year lease extension prior to the sale to Wasps?

Seems odd not to, especially as the extension was agreed in the same council meeting as the sale of ACL.

 

[AVWskyblue]

Surely if finding someone to buy at the valuation price would be a problem it would be an indication the valuation is too high?

Exactly my point Dave I was actually agreeing with you

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[Grendel]

Interesting. Would it therefore not have been in the council's interest to sell ACL a 200 year lease extension prior to the sale to Wasps?

Seems odd not to, especially as the extension was agreed in the same council meeting as the sale of ACL.

More to the point why didn't they extend the lease for the benefit of the charity involved.

It's almost like they wanted it to fail...

 

[oldfiver]

Interesting. Would it therefore not have been in the council's interest to sell ACL a 200 year lease extension prior to the sale to Wasps?

Seems odd not to, especially as the extension was agreed in the same council meeting as the sale of ACL.

Odd indeed!
It is also odd Higgs have not raised the issue

BTW: It is very difficult to get funding for any leasehold property with <50 years to run

 

[fernandopartridge]

Odd indeed!
It is also odd Higgs have not raised the issue

BTW: It is very difficult to get funding for any leasehold property with <50 years to run

The kind offer of the council to extend the lease before their debt was repaid got rid of that little problem.

 

[oldfiver]

The kind offer of the council to extend the lease before their debt was repaid got rid of that little problem.

You might think that but will the Appeal Court?

 

[skybluetony176]

More to the point why didn't they extend the lease for the benefit of the charity involved.

It's almost like they wanted it to fail...

Either that or they knew it wouldn't sell will the extended lease so not adding it before the sale did benefit the charity as they overloaded something that they no longer wanted for a couple of million rather than have it around their necks like a millstone.

 

[skybluetony176]

You might think that but will the Appeal Court?

I love the smell of a non smoking gun in the morning. I think the appeal courts are still laughing at SISU aren't they? Not as much as they're lawyers though. SISU are money for old rope for them.

 

[oldfiver]

I doubt they are laughing - have you seen that lot doing the BREXIT appeal?

 

[skybluetony176]

I doubt they are laughing - have you seen that lot doing the BREXIT appeal?

SISU are behind the brexit appeal?

 

[oldskyblue58]

Interesting. Would it therefore not have been in the council's interest to sell ACL a 200 year lease extension prior to the sale to Wasps?

.

I discussed that very point years ago with Paxman.neither could understand why longer leases were not in place.

Sorry not come back on any of this earlier.... had other hip replaced on Saturday so busy getting better. All went well was home Monday and had a couple of short walks outside on my crutches already.

Any way points to make not just to you
If Sisu challenge the value of ACL in October 2014 it will be as things stood at that date. ACL short of cash making losses no major sports tenant and a short lease valued in the accounts at 18m.
What Wasps got the lease valued at later in their accounts and bond purposes doesn't really count for much. Certainly doesn't directly affect the share price on council sale unless it can be proved the lease at that date was grossly undervalued - short lease regularly valued trading problems case flow problems renovations needed etc Makes nice headlines to spin sold for 5.5m but lease worth 40m but in law courts am not sure that carries any weight..... the headline doesn't actually match the facts. Other than to have any effect other than background. The nature of the lease had changed, not just in length and therefore value but there was a major sports franchise with a lease to play there. I do not mean the main lease I mean one for wasps rfc Two different scenarios.
Could the strutt Parker valuation Indctate a problem possibly but the uplift wasnt 40m More like 20m
When you buy shares then the price reflects the control you sell on.the council owned 50% so an element of discount would/could have been used.
This was not a new business it had financial history well defined systems and records it had financially aware management it had its own plans and budgets and that was before wasps investigation and due diligence.the figures didn't just appear month four.... there were events in place contracts leads tenants going forward..then there was what could be planned and added by wasps. If it existed at sale date Council sold they were relevant to the value of the ACL shares if not then they influence nothing.
Was there a legal contract at date of sale to extend the lease to 250 years that is something that needs clarifying. If not then it can not affect the share value materially....how do you value an intention? The 250 year extension didn't exist until January 2015
But that's another point its an extension of an existing lease. ACL owned the lease who else could extend it ? ACL still own the lease. Isn't the logic that to extend the lease you have to own it in the first place and doesn't that restrict market and value?? So the lease extension could not meaningfully be offered to Ccfc could it ?
Auditors have to form an opinion of fair value on any asset under IFRS or FRS 102 that means forming an opinion on future income streams and other professionals valuations it is not an uninformed guess. Or for that matter just accepting what someone else says
Strangely both Yorkshire bank and the council found a basis by which to finance a loan based on under 50 years

Sisu will need to reject much of what they argued in JR1 argue greater value existed that they under bid for before even beginning to form a case for compensation. Prove they had the right to be offered a lease extension on something they had no element of ownership. if they win JR2 I am not sure I see much value but to be honest I don't see them winning. .the council officers are clearly no fools but the wasps team seem very sharp and planned. Both used to disputes

Guess we wait to see where it all goes from here

 

[Captain Dart]

Sisu will need to reject much of what they argued in JR1 argue greater value existed that they under bid for before even beginning to form a case for compensation.

This is what makes me laugh most, JR2 and JR1 have seemingly contradictory arguments.
Which make me think this is litigation for litigations sake not to resolve mistreatment or unfairness.

 

[shy_tall_knight]

Thanks OSB58, informed response with no need to snipe at fellow fans.