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I didn't expect much by way of response from Begbies Traynor, but here is the response I received today:
Thank you for your email, the contents of which are noted. The Joint Administrators will be undertaking investigations into the affairs of the Company.
You are not a direct creditor of the Company in Administration so please contact Audley Funding plc (directors@audleyfunding.com) for further information.
It is understood that the Trustee for the Audley noteholders is Truva Trustees Limited so you may wish to contact them also (info@truvatrustees.com).
Kind regards
Adam Shama
for Paul Cooper – Joint Administrator
Hi Bugerov,
I’ve sent a letter of demand to Audley Funding requesting this proof that voting has been informed to all bondholders, and they refused to provide that.
On top of that, I’ve just read their financial report, and they still lose money until June 2021. They haven’t made a single cent of profit since they issued the bond back in 2017 until now.
Link : https://www.nqminerals.com/styhugiw/2020/09/NQMineralsHalfYearly2020RNS-FINAL.pdf
So what we’re facing is a company without financial repayment capacity, and almost no collateral too, since it’s a subordinate on the collateral after ING took the big chunk. In the worst scenario, all debt will be converted to equity, and since NQ’s equity is minus (based on their latest financial statement), all bondholders will end up with nothing.
I hate to say this, and I don’t want to sound pessimistic too, but given the situation, I really don’t see any good outcome, unless we managed to get back the collateral and liquidate it while the collateral (Hellyer Mine) still has value in it. Because as of today, the Hellyer mine is still in operation but the proceed is not to pay the bondholder but instead goes to the company, and the company itself is hemorrhaging cash and over expanded.
So we stick to the bond covenant and the main reason why we all invested in the first time, if NQ Minerals (Audley Funding) can’t pay the bondholder upon maturity, then liquidate the collateral, and we get our money back,as simple as that.
Nick/Johanes et al,
E-mail sent today:
'As a holder of Audley Funding Plc 2017-F2 12% Fixed Rate GBP Secured Notes I read with concern that NQ Minerals Plc were placed into Administration on 9th August 2021. Whilst I appreciate no investment is 100% ‘safe’, I felt some comfort in knowing that I had invested in investment grade notes with senior security over the underlying assets. Indeed, without these risk-reducing factors, I simply would not have invested in them.
I was alarmed to read recent claims on a share discussion forum that the Audley Funding notes had been subordinated as part of debt restructuring in 2020. As I had previously heard nothing about this from Audley Funding nor NQ Minerals, I e-mailed both. I received a response from Audley Funding stating the notes had been subordinated at a meeting at Bedford Row on 1st May 2020. They provided a hyperlink to a letter dated 9th April 2020 from Mr David Lenigas asking noteholders to vote in favour of the debt restructuring to release asset security of existing notes. I never received any such correspondence, so never voted. It goes without saying I would not have voted in favour of a proposal to significantly increase the risk to my investment. Indeed, I find claims incredulous that 95-98% of noteholders allegedly agreed to this proposal.
Of the private investors on the discussion forum, none were informed of the debt restructuring proposal, none received the letter from David Lenigas, and none had voted. I genuinely cannot understand why anyone would vote to damage their own investment and, combined with the lack of awareness, I wonder how many investors were made aware and actually voted.
I respectfully request that Begbies Traynor investigates the minutes of the Bedford Row mtg on 1st May 2020, to:
1. Confirm a vote was taken to subordinate noteholder senior debt of Audley Funding Plc noteholders.
2. Confirm a quorum was present to constitute a legal vote, and
3. Confirm who voted, and did the votes equate to a legally defined quorum?
I ask all for the above because the lack of awareness brings into question whether due process was correctly followed in terms of communicating to noteholders. This further leads to questions in terms of; was quorum achieved of the voting members and who voted and agreed to the proposal?
I would respectfully ask that Begbies Traynor investigate the concerns I have highlighted to ensure the Administrators of NQ Minerals can be totally sure how assets should be assigned.'
HI Nick,
Thank you for the update. I've just tried and the link didn't work. I think Audley funding trying to remove its trace.
Please see below the link I got from my custodian regarding the information passed by Audley Funding on how we need to let go the collateral back in 2020 in order ING to finance NQ Minerals (I managed to save in my google drive )
https://drive.google.com/file/d/1yclXvMCJXzyy14wxs47BJWa9Jsptccv0/view?usp=sharing
We've also discussed this with our legal team and they suggested reporting this to the regulator because there's definitely market abuse behavior for this action.
We will definitely right email to Begbies Traynor too, thanks Nick.
Have good one,
Cheers
I have just now written Begbies Traynor, Administrators of NQ Minerals. Here is part of what I wrote: "I am a noteholder of Audley Funding Plc. Over the last month and more, I have been trying to find out how the vote of May 1, 2020 turned out in favour of subordination of the senior debt of the Audley Funding Plc noteholders. I am in touch with a good few noteholders, and not one of them, not a single noteholder that I have contacted, received this notification of April 9, 2020: https://audleyfunding.com/onewebmedia/Audley%20funding%20plc%20-%20series%202017-F2%20-%20Notice%20to%20Noteholders%20-%2009.04.2020.pdf." I also questioned what logic would cause 95 to 98% of noteholders to destroy the value of their assets. It makes no sense.
I concluded by saying this "I respectfully request that Begbies Traynor examines the minutes of the May 1, 2020 meeting at Bedford Row 1 to see that 1) the vote was in fact to subordinate noteholder senior debt of Audley Funding Plc noteholders 2) a quorum was duly assembled to constitute a legal vote and 3) who voted, were there proxy documents and would this number constitute a legally defined quorum.
I ask all this because in the very near term you will be proposing a course of action with regard to the Administration of NQ Minerals Plc. If it is to sell off assets, I think you should know that there are some Audley Plc noteholders who believe the reassignment of senior debt to ING Bank may have been done in a manner that did not follow due process with respect to informing noteholders and in the manner of the vote by the Audley Funding Plc. I would respectfully ask that Begbies Traynor examine this issue so that the Administrators of NQ Minerals can be totally sure how assets should be assigned."
I would ask that any of you so inclined also write Begbies Traynor. Soon is best as they will put out their recommendations very soon.
Yesterday update from London Stock Exchange :
https://www.londonstockexchange.com/news-article/IRSH/audley-funding-plc-trustee-announcement/15160440
@nickkdog no worries.
I've emailed them from my advisor, but the response seems to be very slow. I think we need to write to FCA too, don't you think ?
So almost everyone is using Reyker, I think NQ and Bedfordrow really took the timing right and pull that action during Reyker went bust.
The other thing is, the director from ING Bank now works at NQ, I bet this guy related to approval for NQ financing back in 2020.
Nickkdog - thank you for sharing your research and thoughts.
Best wishes... Bugerov.
Johanes et al., Sorry to have been away from the site for a while. I have been doing more digging in the meantime however. Bear with me then as I may need to go on a bit. First I think the statement by Lenigas that 95 -98% (so which was it 95% or 98%)of bondholders voted is very very suspicious. And after looking into him a bit more I wouldn't believe a word that comes from his mouth. I would like to see the particulars or the minutes of the vote at Bedford Row 1 on May 1 where this supposedly unanimous vote took place.
Like others I don't know anyone who received prior notice including the company who introduced me to the Audley bonds. Meanwhile I contacted Hermione Markets who were the master distributor for Audley Funding Plc bonds. I did get good feed back including the following: "Most stockbrokers engage custodians to provide dealing execution and administrative services - Reyker used a company called Jarvis, many stockbrokers use Pershing. Audley are adamant that the proper procedures were followed and that all relevant information was sent out to the custodians. I know this was a problem as many actual investors did not receive any notification about the voting. We did notify intermediaries that the vote was taking place but some did not chase the custodians for the information or notify investors to contact the custodians for the information. I know it is of no benefit, but I have since discovered that many custodians do not as a matter of course forward information - a fact which I (probably like you) find incredible. "
Incredible indeed. Looks like a case of pass the baton. I find it astonishing actually that the UK FSA allows this. I also used Reyker as my broker. In the Administration process their support was very good, however, they never notified me about the NQ announcement of April 9, 2020 or the vote to subordinate on May 1, 20202, nor did the company mentioned Jarvis. The still held my bond at that time. I have written Reyker again to ask about Jarvis.
I have also written Begbies Traynor and intend to do so again. I think it may be important - although to what effect I don't know - to let my concerns known before their plans for NQ Minerals , whether its to wrap it up or seek to refinance, which will need to be published in October. At least for me I would like someone to hear that we noteholders take issue with handing our senior security to ING bank without any of us knowing about it or voting on it.
I would encourage others to write the brokers or custodians and anywhere else to ask what happened, did the custodian /stockbrocker have prior knowledge of the vote, etc. Somehow we need to get the word out that we don't believe proper due process was followed. To me this all is a con, what looks like the old "bait and switch" . We were sold one thing and delivered another as the time to cash in the bond came due, plain and simple in my view. Unethical and perhaps not entirely legal. Again, only my take on
Johanes - I was also using Reyker Securities as a custodian.
I'm not sure this helps in any dispute as with no custodian in place NQ Minerals could claim it was difficult to contact note holders. Conversely, note holders could legitimately claim being unsighted to any debt restructuring plans and not being able to vote. It would be interesting to hear from others whose notes where held with other companies to see if they were contacted about the restructuring.
I find it astonishing 95-98% of note holders would agree to a plan that subordinated their senior holdings, thereby dramatically increasing risk to their investment. That's just crazy.
Best wishes.... Bugerov.
@prads, so you never received yours ? Did you use Reyker as custodian ?
The issue we had, Reyker went bust during this event occurred. So bit challenging to get past information.
I really don't think that is true. I have not heard of any note holder resolutions being passed to investors. Subordinating existing note holders without a resolution is a serious "no no" as far as I'm aware. I suspect the ING funding line they took on meant that they (ING) insisted on being senior, presumably with full security over Hellyer however this should have been agreed by way of a resolution first!
@Nickkdog , From Bedfordrow side, and David Lenigas claimed that all the bondholders are already being given the chance to vote regarding this subordination on the collateral. David said the approval rate was 95%-98% from the bondholders (which I think its BS, since that subordination don't do any good to bondholder).
I have never received any of that information and they both blamed the investment platform that I used for not passing that voting information. I use Custodian Life Bermuda, whereby their custodian is Reyker Securities which went bust in 2020.
I'm wondering what investment platform did you use for this audley funding transaction ?
And did any other investment platform get that information or chance to vote ?
hi, I have just joined as a member, I noticed you were also a bond holder with NQ MINERALS through Audley funding. I have been treated appallngly by Audley funding, all phone call ignored and emails ignored. I wondered if you have any advice for us poor, shocked and disillusioned bond holders. kind regards, miss diane hughes.
Bugerov - thanks for your comments. I got the exact same automated reply when I wrote to ir@audleyfundingcom . To me this sums up the position of those who set up the subordination of Audley bonds and have moved on: your debt has been downgraded via a shareholder meeting, fait accompli! Unfortunately, I don't think any, or at least very many, of the noteholders knew about the shareholder meeting at 1 Bedford Row ahead of time. By the way, Bedford Row 1 is now vacant. According to someone who answered the door, Bedford Row Capital sends someone around once a week to pick up mail. If you look up Audley Funding Plc. on the FCA website you get a response that nothing can be found about this company. If you input Bedford Row Capital, the people who structured the Audley Funding bond, you get a notice they are no longer registered with the FCA and there is a warning. Not encouraging.
Prads - thanks again for your input. I believe Audley Funding Plc and Bedford Row Capital are the same bunch in fact. Bedford Row Capital and specifically, slevy@bedfordrowcapital.com and later directors@bedfordrowcapital were put forward by the Administrators as the contacts for the Audley Funding bond which I hold. Scott Levy, CEO, wrote back after the 3rd attempt and very curtly told me I had been misinformed by the Administrators, Begbies Traynor. Several emails to directors@ went unanswered.
I wonder about several issues but the most pressing for me is do we noteholders have any legal recourse. I was never contacted by Audley, Bedford Row or my broker who bought the bond for me about the resolution to subordinate the Audley debt. Two agents I know who were selling the bond had no idea about a resolution to subordinate the Audley debt either. I wonder if any noteholder was sent the proposed resolution (Apr 9, 2020) and notified of the shareholder meeting in advance (May 1, 2020). I wonder, is that required or is a public announcement via RNS enough to cover them legally? I believe Audley Funding / Bedford Row and NQ Minearals / Lenigas most certainly acted in an underhanded and unethical manner. Unfortunately, that is likely not illegal. However, if indeed due process was not followed because we and other noteholders were not directly informed in advance, is there some action we might take to reverse the subordination?
Well technically that is correct. Audley is a creditor of NQ Minerals, as they have raised proceeds from the issuance and then lent the money to NQ Minerals. I still think however that, as the issuer of the notes, they have an obligation to communicate and agree changes in the security package with investors. The one thing that appears to be unequivocal however, is that the management team of NQ have acted without integrity (putting it mildly) and have ultimately prejudiced noteholders, by subordinating the Audley debt.
Good afternoon. I received an e-mail response from 'donotreply@audleyfunding.com'. I basically asked for confirmation of subordination, highlighting I was aware of the debt restructuring, but the circular I saw didn't mention any subordination. The response opened with apologies this is a standard letter. Rest of e-mail and link to the relevant doc as follows:
'The situation of NQ is far from resolved and remains in the hands of restructuring specialists who have an obligation to report progress as part of the administration process.
Audley Funding is a creditor of NQ minerals and will be in close contact with the restructuring team at Begbies as the matter works through the processes required to determine the future of the company.
Audley Funding will keep an eye on developments and be part of discussions as to the future of the company. At this point, it is too early to tell what the outcome will be for investors.
Investors in Audley Funding have the security set out as described in the most recent noteholders meeting'
https://audleyfunding.com/onewebmedia/Audley%20funding%20plc%20-%20series%202017-F2%20-%20Notice%20to%20Noteholders%20-%2009.04.2020.pdf
I'm no expert in these matters so can't really add any comment of value at this stage.
Regards..... Bugerov
Thanks Prads - your response was a very interesting take on things. I will see if I can find out anything from the FCA about their jurisdiction.
I guess the question is, what can or should one do in the face of this slight-of-hand subordination of our bonds?
Cheers
Burgerov - I will be happy to share what I can. I've only gone to their site to have a look and at the moment I'm considering what route to take to contact them. I may start with a call.
Have you had any experience contacting the FCA? I admit this will be my first time.
cheers
Unfortunately not sure this is under the FCA's jurisdiction so you may will not get any joy there. This is a legal issue. Audley cannot agree to their own resolution though. If you issue debt in the public markets and you want to change something material about the offer post-issuance, you would usually need NOTEHOLDER resolution which usually requires a quorum of 75% or more. It seems that Audley haven't followed due process here and that is the main issue.
Nickkdog - if you do contact FCA could you share your e-mail on here? I'd be tempted to use it as a template to write to them myself.
Best wishes.
Prads, I have done a bit more digging and it would appear that, unfortunately, it would appear the bond debt was subordinated prior to the ING loan. I only knew about the Resolutions of Mar /Apr 2020 after the fact, about the time the ING "restructuring" loan was announced . Audley knew and endorsed it but I never received anything from Audley or the broker who sold it to me. I'm considering contacting the FCA.
I found a shareholder resolution that was put forward in Mar and Apr of 2020. This called for subordination of the Audley Funding debt - endorsed it seems by Audley Funding PLC. The ING facility was July 2020 so it could be the loan came on the bank of the subordination. If so, it was in my opinion at least underhanded. Legal? No idea but I'd say the financial low life's behind this would have made sure there arses were covered. Indeed, if we have been subordinated - and I'm not 100% sure yet - then, indeed, appalling.
I have written, Begbies Traynor, Bedford Row Capital, Audley Funding Plc. as well as others and all I can say is that they have circled the wagons and are hiding behind the legal gagging caused by the administration process.
New to this forum but as a debt investor I am appalled with what's happened. When I initially invested, the bond had senior security over the underlying assets and somewhere along the line we seem to have been subordinated....I assume to ING when their debt facility came in. Now if something like that happened, surely this should have gone to a note holder resolution of some sort?! You can't just subordinate bondholders without notifying them!
The contents of the documents in the "standard letter" are shocking reading for me. Basically, it seems that Leni proposed subordinating all Audley claims to assets. Basically wiping out what we paid for and signed up for which was an "investment grade", "asset back" bond. What horrified me is that it appears (and I am no expert let it be said) is that the odious resolution was endorsed by Audley. I believe even with turning over / subordinating bondholder guarantees no bank would go along with it, hence, administration. A real lesson for me, this entire ongoing ....I'm at a loss as to what to call it ....at least on a public forum.