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guest1269
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« Reply #80 on: August 04, 2015, 10:21:07 am » |
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A company cannot legally continue to trade (without an insolvency procedure such as administration being effected) from the moment that it believes (or ought to believe) that there is no likely assurity of being able to pay all future debts as they fall due. At the moment there's no problem doing so as the takeover is providing that potential assurity. MD - good post (and I'm glad you read the Trust post in the same way as I did but hopefully you wont get the same abuse!) but I'm struggling with this part on a couple of points - "first believes (or ought to believe)" - how an earth do you prove that point in law? - the world is littered with companies that ultimately went bust, knew they were in trouble but carried on trading. Secondly I don't profess to know the full terms of the loan but just out of black humor lets say 50% of it has been lost/mispent/stolen, the other 50% could theoretically service the loan for several years could it not? Im not in anyway disputing the risk but given the (assumed) circumstances you kind of wonder why anyone in their right mind would even consider a take over! |
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LeeleeSTAR
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« Reply #82 on: August 04, 2015, 12:18:28 pm » |
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I can't remember the figures but the loan is divided into about 4 loans (I think, maybe more), the first 3 are due back in full over the next few years whilst the last one wasn't due for something like ten years, it's this last one that people believe is designed to be used to pay off the interest payments whilst the development was being completed and not earning the club any extra income.
All the figures were posted in the redevelopment thread a while back.
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everbrite
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« Reply #83 on: August 04, 2015, 12:32:09 pm » |
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I can't remember the figures but the loan is divided into about 4 loans (I think, maybe more), the first 3 are due back in full over the next few years whilst the last one wasn't due for something like ten years, it's this last one that people believe is designed to be used to pay off the interest payments whilst the development was being completed and not earning the club any extra income.
All the figures were posted in the redevelopment thread a while back.
Now that is very interesting information and if correct smacks a few opinions on payment of interest into touch. |
2020 Grand National S/S 3rd Place
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MD
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« Reply #84 on: August 04, 2015, 12:34:30 pm » |
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I'm struggling with this part on a couple of points - "first believes (or ought to believe)" - how an earth do you prove that point in law? - the world is littered with companies that ultimately went bust, knew they were in trouble but carried on trading. Secondly I don't profess to know the full terms of the loan but just out of black humor lets say 50% of it has been lost/mispent/stolen, the other 50% could theoretically service the loan for several years could it not?
You're absolutely correct - it's very subjective but like many things in English law, comes down to a test of "reasonableness" - ie the court would ask themselves "in the circumstances was it reasonable to assume solvency". This is completely objective and in truth only tested where a creditor feels sufficiently aggreived to challenge it after the bubble has burst, however the consequences for individuals involved can be serious. Just to be clear though - I'm not suggesting NTFC are in this position... just that should the takeover fall through (hopefully it wont!), with the overspend on the stand the obvious question is how they can possibly afford to service such a debt without making any return on the associated investment. I've not seen their cash flows of course so may be wrong, but looking in from the outside (though speaking as someone who has worked in corporate finance roles for the last 20 years) it sadly seems a fairly predictable position that we may find ourselves in. |
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MD
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« Reply #85 on: August 04, 2015, 12:48:26 pm » |
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I can't remember the figures but the loan is divided into about 4 loans (I think, maybe more), the first 3 are due back in full over the next few years whilst the last one wasn't due for something like ten years, it's this last one that people believe is designed to be used to pay off the interest payments whilst the development was being completed and not earning the club any extra income.
All the figures were posted in the redevelopment thread a while back.
None of us are privy to the loan agreement so 'never say never', but I'd be very surprised if this is true. The phasing of the capital repayments will be the mechanism to allow for the 'slow burn' of returns from the investment. I've never before seen a loan which is also designed to fund the interest - what you see much more commonly is for the interest accruing to be allowed to be rolled into the loan principal for a period rather than being payable in cash initially. Either way - we've borrowed 'X amount' to fund a development, presumably because we thought it would generate a return, but which undoubtedly is miles off-track in terms of both timing and budget, so common sense says that must place challenges on the ability to be able to service that loan now and in the future as things stand (though a takeover may change that) |
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TownOwl
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« Reply #86 on: August 04, 2015, 13:00:49 pm » |
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Why are people talking about income from the football/stadium servicing the loan? When was this ever a plan?
Can any of the experts advise me on the feasibility of flogging off the land behind the east to a housing developer and/or a supermarket, and perhaps chucking a hotel in too, in order to recoup the loan money? How much money would that generate?
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DrillingCobbler
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« Reply #87 on: August 04, 2015, 13:07:34 pm » |
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Its a shame that you didn't join in this debate earlier MD...you've made 3 fantastic posts in a short while and put your points across very elequently and in easy to understand terminology! My overriding concern about this takeover is that being someone is 'ok' with numbers (as a small business owner), it makes absolutely no logical sense for someone to come in and buy the club off of DC, take on the loan, the debts etc...when there is only 'outlining planning permission' to make that cash back from the land. Maybe that is what is holding things up, who knows? If thats the case it could drag on for another few years, or before whats left of the loan money runs out and its defaulted on. In other words...you've got to take on a minimum of a 10million debt (thats assuming DC writes all of his off!  ) to essentially take control of a field that you may or maybe not be able to make your cash back with. Oh yes, lets not forget...you've got to shell out at least 5 million quid on a new stand because quite clearly the council are not going to give out any form of planning consent before that happens! So thats 15million plus whatever DC gets out of it. Since DC made his announcement 6 weeks ago or whenever it was, Ive maintained that our only hope is that this person/people are a sugar Daddy wanting something to play with. Because if they are looking to make something viable out of it with the debts/mess that its in there is little chance that it will go through. If I won the 200million pounds on the Euro Lottery this week I wouldn't try and buy our football club now, I would wait until it goes into administration. I wouldn't give DC a penny for it or even try and negotiate with him... That land is going to generate a max 60 million in turnover (based on 300 cheap houses), and you've got to pay 15-20 million to get a stab at it? Whats the point?! Unless your heart bleeds football. And you've got billions. Billions. Thats our only chance folks, fingers crossed! |
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The 12th Marquis of Sixfields
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« Reply #88 on: August 04, 2015, 13:11:11 pm » |
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Perhaps what could be holding things up is maybe the prospective owner hasnt got the money yet? Like a property chain
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The Hotelend Grand National Sweepstake Champion 2023
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The 12th Marquis of Sixfields
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« Reply #89 on: August 04, 2015, 13:13:07 pm » |
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60,000,000? 300 cheap houses? What maths are you working to?
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The Hotelend Grand National Sweepstake Champion 2023
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DrillingCobbler
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« Reply #90 on: August 04, 2015, 13:31:09 pm » |
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60,000,000? 300 cheap houses? What maths are you working to?
300 x £200,000 = 60million quid... Complete guess work, but realistically...and you will know better than me...what turnover (not profit) could be expected from that land? |
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MD
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« Reply #91 on: August 04, 2015, 14:26:54 pm » |
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My overriding concern about this takeover is that being someone is 'ok' with numbers (as a small business owner), it makes absolutely no logical sense for someone to come in and buy the club off of DC, take on the loan, the debts etc...
If I won the 200million pounds on the Euro Lottery this week I wouldn't try and buy our football club now, I would wait until it goes into administration. I wouldn't give DC a penny for it or even try and negotiate with him...
Perhaps the 'elephant in the room', but if I was the consortium then that's exactly what I'd be looking to do... buy the 'trade and assets' (including the Football League 'golden ticket') into a newco, leaving the debt behind in the current company (via 'pre pack' administration). Not always the most 'sporting' way to do business, but many other football clubs (albeit with points deduction) and countless businesses have done just that. Whether there is enough 'upside' in it for DC to proceed down this route though may be another matter. Obviously also a worst case scenario for NBC too! Anyway, don't want to a scaremonger - I'm hoping the deal gets done as agreed in line with the Heads Of Terms, and whoever the buyer is, we can then hopefully look forward with some security and positivity! |
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MD
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« Reply #93 on: August 04, 2015, 14:47:24 pm » |
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Don't think that would work due to Football League rules
Obviously not the 'done thing' but been done many many times... Apart from points deduction, other FL rules as far as I know are pretty much just that you cannot normally start a season in administration (though can go into administration during it) and 'football creditors' (ie other clubs and players) have to be paid off (by newco if necessary). Many examples of this, not all with success (eg Pompey and Leeds), however happened to Crystal Palace in 2010 and Southampton in 2009 and didn't work out too badly for them... |
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Iest_ntfc
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« Reply #94 on: August 04, 2015, 14:48:48 pm » |
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None of us are privy to the loan agreement so 'never say never', but I'd be very surprised if this is true. The phasing of the capital repayments will be the mechanism to allow for the 'slow burn' of returns from the investment. I've never before seen a loan which is also designed to fund the interest - what you see much more commonly is for the interest accruing to be allowed to be rolled into the loan principal for a period rather than being payable in cash initially.
Either way - we've borrowed 'X amount' to fund a development, presumably because we thought it would generate a return, but which undoubtedly is miles off-track in terms of both timing and budget, so common sense says that must place challenges on the ability to be able to service that loan now and in the future as things stand (though a takeover may change that)
Wrong MD, Some of us have seen the loan agreement thanks to the Freedom of Information Act. The money was drawn in 7 separate transactions over a space of a year. 6 were for £1.5m with interest rates of around 2.5% and due to be paid back over 5 years (the first due to be repaid in September 2018 and the last in August 2019) and 1 for £1.25m to be repaid over 25yrs with an interest rate of 3.82% |
I can't think of anything funny to write here
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Ralap
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« Reply #95 on: August 04, 2015, 14:52:31 pm » |
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Perhaps the 'elephant in the room', but if I was the consortium then that's exactly what I'd be looking to do... buy the 'trade and assets' (including the Football League 'golden ticket') into a newco, leaving the debt behind in the current company (via 'pre pack' administration). Not always the most 'sporting' way to do business, but many other football clubs (albeit with points deduction) and countless businesses have done just that.
Whether there is enough 'upside' in it for DC to proceed down this route though may be another matter. Obviously also a worst case scenario for NBC too!
Anyway, don't want to a scaremonger - I'm hoping the deal gets done as agreed in line with the Heads Of Terms, and whoever the buyer is, we can then hopefully look forward with some security and positivity!
My thoughts entirely right now.
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The 12th Marquis of Sixfields
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« Reply #96 on: August 04, 2015, 15:48:19 pm » |
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300 x £200,000 = 60million quid...
Complete guess work, but realistically...and you will know better than me...what turnover (not profit) could be expected from that land?
they don't get built for free! Plus, at Sixfields the land cost can be taken out. Or can it?Does anybody know if English partnerships are still involved anywhere? They did have signs up all over the site at one stage. |
The Hotelend Grand National Sweepstake Champion 2023
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MD
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« Reply #97 on: August 04, 2015, 17:25:00 pm » |
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Wrong MD, Some of us have seen the loan agreement thanks to the Freedom of Information Act.
The money was drawn in 7 separate transactions over a space of a year. 6 were for £1.5m with interest rates of around 2.5% and due to be paid back over 5 years (the first due to be repaid in September 2018 and the last in August 2019) and 1 for £1.25m to be repaid over 25yrs with an interest rate of 3.82%
Would be interested to take a read if anyone can let me know where I can get it? So £10.25m borrowed plus interest, of which £9m falls due over the next 4 years... for a business that currently has a negligible amount of profit (so negligible net cash generation), I hope there is a 'plan B' for repayment on the assumption that the East Stand won't be driving much income any time soon! (In fact, if you do the maths, exec boxes alone will make a very small dent in this anyway - eg 10 at say £15k each per year doesn't really get us very far!) |
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Manwork04
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« Reply #98 on: August 04, 2015, 18:38:15 pm » |
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MD welcome and what a pleasure it is to read a post that is intelligent. To answer your question, there was also the matter of a Hotel, Conference Center and £5m from the residential development to service the loan. As none have been delivered, the ground is in a terrible state, the loan which was drawn down over 12 months ago (the full amount)  Has to be serviced from the loan itself. All documents are in the public domain and I think it was Grange Park Cobbler that obtained them via FOI. The question I have is who the hell why want to take on this mess? I simply don't buy, excuse the pun, into a consortium wanting this, there is never going to be an ROI ever. I really hope this isn't a stalling tactic by the very desperate. |
Rule Britannia
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Kingsthorpe Cobbler
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« Reply #99 on: August 04, 2015, 18:55:57 pm » |
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MD welcome and what a pleasure it is to read a post that is intelligent. To answer your question, there was also the matter of a Hotel, Conference Center and £5m from the residential development to service the loan. As none have been delivered, the ground is in a terrible state, the loan which was drawn down over 12 months ago (the full amount) Has to be serviced from the loan itself. All documents are in the public domain and I think it was Grange Park Cobbler that obtained them via FOI. The question I have is who the hell why want to take on this mess? I simply don't buy, excuse the pun, into a consortium wanting this, there is never going to be an ROI ever. I really hope this isn't a stalling tactic by the very desperate. What ? a stalling tactic that's had meetings with the Council, do you think it was DC who dressed up like one of the consortium to fool them ? Oh, by the way i'm not a supporter of DC - but believe in fairness both ways. |
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