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If the current p/f valuation is so close to 100% LTV so an asset sale would basically just pay off the debt (which is what the Board are sort-of hinting at) then we have a rather interesting situation here. BREDS are a mezzanine lender and they are now on the hook for ALL of the shortfall until such time as they get zero repayment of the debt to them. Only then do senior lenders start to take a hit. Oops. Order of repayment of capital is: senior debt > mezzanine debt > preference shareholders > ordinary shares https://www.divestopedia.com/definition/785/mezzanine-debt "Divestopedia explains Mezzanine Debt Mezzanine debt is more expensive that senior debt, but less expensive than equity. The cost for this type of financing is in the range of 13% to 25%. Senior banks usually view mezzanine financing as equity for the purpose of calculating debt covenants. This is because the repayment of mezzanine debt is subordinated to the repayment of senior debt, but ranks above any repayments to equity holders. The preference of payment to debt holders is an important concept to understand. As a general rule, senior banks always get paid first, then mezzanine lenders, then preferred shareholders, and then common shareholders. Participants in MBO or LBO transactions need to understand their position in this repayment line-up. The risk of repayment increases as you move down the line, which is why mezzanine debt commands a higher interest rate for its holders."

And now my big question. WHO ARE THE PARTIES SITTING OPPOSITE BREDS IN THESE WEEKEND NEGOTIATIONS?? Ideas?

Now then, two questions. First, if the plan is to liquidate the entire o/f and repay the debt then why bother with the standstill letter? Option A to BREDS is to force an asset sale, so if that is going to take place anyway then why bother with the letter? That feels weird and wrong. Second, why not grant another 7 day letter? All the previous ones were for a full week. This time the first one was for a day (and interestingly, came later than usual and in fact there was a 1h12min period when the market believed one didn't existing during trading). And then it goes even weirder and we get one that is now just for the (non-working) weekend. Those three things have all the hallmarks of hard negotiations taking place and some hard-ball brinkmanship being played.

And these are some of the solutions being investigated - which include both asset sales to de-gear and re-financing (and a blend of the two). Don't forget that a general rise in asset values in the sector will also help the key LTV figure if they can get a re-valuation that BREDS will agree to. -------- "As it was stated in the Annual Report and Accounts 2014, the risk of such a breach was known in advance, and was considered at the time to be mitigated by a combination of potential waiver or standstill agreements from the Mezzanine Lender and the ongoing efforts to secure a capital investment that will bring about the Step Down interest rate (for a description of the terms of the Step Down, please refer to the Investment Manager's Report of the Group's Annual Report and Accounts 2014). These mitigating factors are still in existence, since the Mezzanine Lender has provided the Group with a Standstill letter, while the Group continues to pursue a long term solution that will repay the Mezzanine debt to the level that will unlock the Step Down interest rate. Internos Global Investors Ltd ("the Manager") has been in discussions with several parties with regard to an injection of new capital, and in Q4 2014 the Board agreed to appoint a third party to conduct a strategic review to assess all options that remain open to the Group, including a sale of the core portfolio of assets. The adviser that was selected is Eastdil Secured, which already had experience of the portfolio, having successfully marketed the senior portion of the BREDS loan for syndication to BAML in the summer of 2014. In February 2015 Eastdil approached potential investors to seek indications of interest in a sale of the entire portfolio or some form of refinancing. Following initial due diligence, serious expressions of interest have been received; the proposals being considered vary in structure and include a refinancing of a portion of the Mezzanine Loan with a new mezzanine facility, as well as the potential sale of subsidiaries which own the Group's underlying real estate portfolio. The Board of Directors is at present considering these alternative scenarios, the details of which are still subject to negotiation. In line with previous expectations and as a result of recent asset sales the Group is now in Default in relation to its Projected Interest Cover and Projected Debt Yield Ratio covenants. Nevertheless, the existing Standstill that has been provided by the Mezzanine Lender demonstrates their support for the current strategy. However, if the Mezzanine Lender does not continue to support the Group, the existing event of Default could either lead to an acceleration of the Mezzanine Loan or the application of a Default Margin. It is considered that the optimal course for the Group is to seek the fastest and most secure route to reaching the Step Down Event, through continuing asset sales and pursuing the process with Eastdil.&quo

The main A v B options for BREDS. Basically they can take control and sell the assets, or add another 5.38% interest to the existing 7.7% interest rate. ------------- "If further Standstills are not granted, BREDS would have the following options: a) Enforce their security over the Group, thereby taking effective control of the Group and possibly initiating a sale of the assets. It is likely that this course of action would result in a significant reduction in the proceeds received from the accelerated sale of the Group's property assets and consequently the amount of equity returnable to shareholders. b) The Mezzanine Facility Agreement includes a provision for a Default Rate of interest, which can be applied in the event of such a breach, at the discretion of the Mezzanine Lender. This would mean (at current debt levels) an additional 538 basis points ("bps") of interest on top of the current margin of 770 bps. In the event that the Group is unable to support this additional interest cost, a mechanism exists whereby it is possible that the Mezzanine Lender may (but is not obliged to) allow unpaid interest to be treated as an accruing liability on the balance sheet of the Group, thereby reducing the Net Asset Value."

Have a look at the HY interims and in particular the options BREDS have. I really don't think I understand quite what is happening here (to put it mildly). here's the link - I'll post the text in subsequent posts. We can then see if we can tease this opaque situation apart. http://www.lse.co.uk/share-regulatory-news.asp?shareprice=IERE&ArticleCode=2ekfx6ot&ArticleHeadline=Half_Yearly_Report

From the very beginning several people have made it very clear that the most likely outcome was (and is) total wipeout for the ordinary shareholders. That however was more than offset by the upside in the rare event that they pulled it off. Think of the maths. Let's say you roll a die and have to pay £1 for each roll. You get nothing back unless you roll a six, in which case you get £10. Most rolls you get wipeout. Overall (multiple rolls == big portfolio) you make money. "punt" may not be the word but 'risk-reward special situation' is too much of a mouthful!

My thought is a deal is being thrashed out this weekend. Any better suggestions for this otherwise-bizarre letter of extension from Sat morning until Sunday night. If there wasn't a load happening this weekend then the last RNS is pointless bizarre and weird. If however they are locked in critical talks all weekend that's a very plausible scenario. So, any better ideas as to the weird 4th RNS?

This is starting to feel like back-covering (precautionary suspension) while an 11th hour deal is thrashed out over the weekend. Only non-mind-bending answer I can think off.

Not on this side of the fence, no! But an extension only until Sunday night - someone expects someone to be pulling all-nighters. Why? If we were doomed they'd take the weekend off and just do asset disposals in the working week. This sounds like something frantic is happening behind the scenes (and suspension a cautionary step given the sudden interest in the stock).

Until Sunday night? When already suspended? Just. What.The. Flip. My head hurts. And it's not even gin-o'clock yet.

that was very funny :)

whining not wining (mote dust planks etc)

And some decent sized buys as well (~£20k) Funds managers and IIs back from their summer holidays!

It had good risk/reward but the most likely outcome was always overwhelming this. As part of a bigger p/f it still remains a good punt. 50x return but 90% chance of wipeout? yes I'll take that any day. On to the next one!

Even as I typed that volume increased to 14m

13m already and we're less than 2 hrs into the day. That's already more than all of yesterday, and double the hourly volume we saw on the three big days last week. Currently outstripping all previous volume by 2-fold.

The weird thing though is that all the other Standstill Letter Extension RNSes have been issued the day the previous letter finishes. We were all therefore expecting the RNS yesterday. Thus we have two or three weird things. a) The RNS is later than unusual, and there were 1h 12mins of trading today when (formally speaking) the market was unaware of whether or not a Letter was live. The previous one finished yesterday and it was 09:12 we got told this new letter exists. b) If that wasn't weird enough, the letter (as written) states a one day extension. That's not one but three intriguing things. You almost get the sense of frantic negotiations and running around of headless chickens in a high-energy deal-making room somewhere. BREDS playing hardball and brinkmanship Would love to be a fly on the wall.

Oh and as fonters says, it def is NOT Option C (go bust).

Option A. Deal almost done, but need last signature and that will happen today. RNS thus just to over their legal back regard debt contract Option B. Typo. One would hope a €200m REIT would take care with RNS releases (this isn't some amateur AIM company after all)