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Lack of revenues to service the debts, let alone profits to repay them is probably a fair starting point.
The collapse of GFG Alliance funder Greensill Capital must leave SAE, with its massive Uskmouth financing requirement, looking very shaky indeed.
The former titan in the working capital sector, formerly Softbank-backed former unicorn Greensill Capital has reportedly filed for insolvency protection in Australia.
I suspect the FCA will be taking a much closer look at all these alt-fi schemes going forward.
Competitor Morgan Sindall, +12.5% on very positive outlook. Market asleep on CTO.
For small or distressed firms it might be useful, but the abundance of accessible funding sources at present rules out a huge number of firms.
You might want to get out of this circlejerk and talk to people in industry.
I help run an engineering firm with a turnover of €1.02bn, operating profit €52.7m, net assets €362m. We have €150m of borrowings at an average rate of 0.84%. Average credit period on sales is 69 days, trade payables very similar. We have €178m of inventories- €42m Raw Materials, €18m WIP and €117m Finished Goods for resale.
Every year we look at working capital optimisation schemes like this and every year we decide they are a costly ‘solution’ to a problem that doesn’t exist. DYOR.
With loans available at incredibly cheap rates, why would any company with access to banks, non-banks or peer-2-peer lending groups bother with a high-cost controversial (from an accounting and tax perspective) solution such as SYMEs?
The idea seems OK, but I can’t see any large or even mid-sized company using this unless in dire straits.
Azets
https://www.azets.co.uk/media/unrduwts/azets_fraud_leaflet.pdf
Apropos of nothing.
https://m.dw.com/en/big-money-big-fraud-the-story-of-a-german-conman/av-52867537
The Germans were proper artists, getting an investment grade rating from S&P and even paying taxes on millions of fake profits. A class act.
There’s a reason why defamation lawsuits are quite rare. You have to prove that what was said was untrue, or that the defendant was reckless as to whether their statement was untrue. It’s very hard to do.
https://www.lexisnexis.co.uk/legal/guidance/defamation-defences
Greensill sued Reuters, dropped it before trial. All the dirty laundry gets hung out in court, which no company wants.
If the plan is to use a traditional ‘tranche’ structure securitisation, then the EU Risk Retention rules will apply, ie the sponsor/originator must retain a 5% economic exposure. This means quite a lot of balance sheet might be needed.
https://www2.deloitte.com/lu/en/pages/investment-management/articles/eu-securitization-regulation-2017-2402.html#
If Sky News is correct and this is just the latest of several approaches, why the silence from the company? Has there been a ‘false market’ in EQN shares over recent months?
Cenkos' forecast today is for 15.4p EPS this year, with a 4p dividend, against a 92.4p share price.
CTO have £10.2m net cash against a £40m m/cap, and most importantly the order books are still rising and now total £456m.
One to squirrel away in the SIPP
The company is clearly undervalued, expect several suitors to be flushed out
€1.2bn in the period 2021-25, €300m a year.. that seems very, very small. Very small indeed.
Greensill Capital are turning around $143bn a year of customer financing, generating $400m revenue and $40m profit.
Already a massive sector in the US market- they’re basically a utility, a play on volumes not energy prices.
Sorry mate, but you’ve been had.
I guess you guys aren’t aware that Working Capital Finance has been around a long time? Big companies don’t need or use it, other than to rip off their small suppliers. The SMEs that use it are high credit risk - Greensill has taken $700-800m credit losses since it started in 2011, only surviving thanks to GAM and Softbank.
The FCA never confirms or denies.
The RNS statement “The Company also confirms that no FCA investigation is underway.” should read “ The Company has not been informed that an FCA investigation is underway.”