Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
if Bybrook did own a majority of the Bonds shareholders would be in real trouble as they would accelerate, eliminate existing shareholders and then convert their debt to equity but only if there was a cap on claims, which of course there isnt which means they wont try that
It doesn't quite work like that. IF, and it is an IF because we just dont know right now, but if they have any ACCELERATIOn rights and ask for their money now because they didnt like the FCA comments and the risk this poses for them with just a floating charge and Amigo cant meet that demand, then they do have the right to put it in administration and exercise their security. The Court has no rights to stop a security holder validly and legally enforcing their security because they think Amigo has a future. Im afraid that doesnt come in to it.
For the FCA (Amigo's regulator) to go in to Court and even suggest Secured monies should be used for a purpose that in no way benefits the secured lender was shameful and in the bigger picture quite a worry. While the floating charge does technically allow Amigo mgmt to move the cash they do have a duty of care as the intention of the security is clear. By their own stupidity FCA have put themselves in a very difficult place. If I was a claimant (im not) and Amigo mgmt put Amigo in to insolvency ultimately or anyone else does over next couple of months I think their is a valid case against the FCA for the loss of compensation. Would be quite funny to see the CMC marshall a case against the FCA for lost compensation on the basis of their case in the HC. Not sure whether shareholders would have a case though but Claimants definitely could make an argument. More money for the CMCs
The Secured lenders won't take a haircut, why should they? They will get their money back in time and know it. The only issue for them is whether they let Amigo mgmt manage the cash realisation or force some type of administration to let their people manage the run down. The FCA comments have increased the risk of the latter if the Bond document gives them this authority as I think they could argue there has been a Material Adverse Change which can (not always) give you these rights. If the Court suggested Bond holders participate in the risk sharing (I didnt see that) but if they did, it again shows the lack of clarity on the funding.
Yes but I'm not picking numbers to suit my argument I am taking the actual 9 month figures as supported by the cashflow statement. I dont see a June label on what you reference but at the end of the day it is a forecast not reality. So to use the label lying with a forecast makes no sense to me. I dont expect god like qualities from this management team that their forecast will be 100% locked in stone correct. Court didnt believe them either. We will soon find out but if you think the Sterling secured bondholders are not doing everything they can to stop the utilisation of what they will consider their cash, I think you are wrong. Would you allow your cash to be used to settle an argument between two other parties that happen to be involved in the same situation. These guys are professional institutional investors and after the court hearing I am sure they are regreting only having a floating charge on £165m of THEIR cash , thats a certainty. What they can do about it is in the detail, detail we dont have
The biggest issue I have is the Court did not even discuss the temporary waiver to June 25th. This facility is effectively in run down and that means that lender is exiting he is after all asking for all the cash from any collections with nothing going to sub debt holders. This and fact FCA counsel was suggesting there was loads of cash and time which the judge did not correct. It was wrong of the FCA to suggest they can use the £165m of cash (or their estimate of £180M) to prolong further negotiations. Bottom line, I judge these people based on what they say, not their title. On some of this stuff they were plain wrong but the onus was on Amigo to prove it and they made no effort in this regard.
Yes I know but that is the best possible two dates. If you look at p.17 and go from March to Dec it is £13.33m average per month and that fits with p.16 cashflow where £119.5M was repaid (thats the securitisation facility) in 9 months. This will be getting harder as time goes on and thats why I think circa £10m a more realistic estimate, so by June I still think £60-70m drawings.
On the cashflow chart presented to HC you have to bear in mind they presented all cash collections and remember that only the securitisation pool of assets repays the securitisation debt.
You can see from cashflow statement that just over one third of collections are on the securitisation pool (120/314). So at 30m monthly collections and declining about 10 pays the securitisation so it wont be paid down by June from the £112m at Dec/20. If there is an event of default on any secured loan before Jan 2024 the secured lenders can take control through administration by putting their accountants in control of the collection process. Given what the FCA counsel said about using the secured cash for more negotiation this risk should not be overlooked.
Only cashflows from the securitisation pool repays securitisation facility. Nobody knows the breakdown of the source of the cashflow. You definitely can't assume all cashflow comes from securitisation pool if that wre case Amigo couldnt even afford to pay the operating expenses plus the ssecuritisation pool is the smaller of the two secured pools.
1.) Who says it will be repaid by June, nobody knows that. We know it was £112m at Dec
2.) Needed for the bal adjustments which Amigo said would be done in full
3.) Its £165M, FCA GUESSED £180m now
4.) That's not correct
At the moment there is only £165-180M so they cant get it all back and that is why they will just sit there and wait for the required collections to build this pot and agree to nothing and refuse all requests for meetings. My focus would be getting a fixed charge on a good part of the cash in the interim rather than the floating but in any event I would formally notify the Board they need to be very careful spending that cash as if there is a shortfall in Jan 2024 I would regard them as responsible, personally.
very few secured bond holders will sell. They can see the £165M which as FCA speculated as probably gone to Stg 180m or so, thats 77% of whats owed to them and this will grow further as collections are made and remember Amigo showed HC it will get to £235M by Jan 2024. They are sitting in a good place and all the time collecting their 7.625%. You cant get the bonds, a million here and there but basically nothing. They can do the maths its not hard. There is no way a HC will overturn fixed and floating charges they are fundamental to commercial law in the UK and if anything was attempted it would be chaos. If I was a Secured lender I would have no dialogue with Amigo other than to tell them where to make payments to.
They will extend, for one good reason. They are getting all the cashflows on their pool already this is what Amigo had to give to get their extension. They get nothing new by not extending but have extra costs because at the moment Amigo do the collections at shareholders expense. If the lenders don't extend they take control at their expense which is an unsecured claim against Amigo.