Member Info for smudgedan

Yes, we will see. My average here is around 2p, but think there should be decent upside providing they do as I hope!

It seems that this fund was set up to segregate the construction and post construction elements of the business and it looks like ASH are looking to divest the latter given their comment about owning less than 25% of the fund in the medium term. My take is that they want to focus on delivering on the ever increasing pipeline and the post construction element must be time consuming for a relatively small business. I may contact the company to see if they can expand on this, but it seems a logical approach to focus on where they can deliver value for shareholders

The Extra Care Fund AH Supported Living Limited ("AHSL") has been established as the investment vehicle initially as a wholly owned subsidiary of Ashley House plc. AHSL will fund the Extra Care schemes during construction and hold them once completed. Ashley House will act as the fund manager with an asset management agreement. M&G Investment Management Limited ("M&G") has provisionally agreed to provide an initial £100m of long term debt to help fund completed schemes. M&G is very supportive of the establishment of AHSL and our business model. We have co-developed a financial model and documentation. M&G has over £5 billion invested in UK social housing and as one of the leading funders in the sector, has extensive knowledge and experience. The Board is exploring routes to raise further equity and/or subordinated debt within AHSL, which may include listing that vehicle. We are currently holding discussions with a range of potential investors including those focused on social investment. Additionally other short term debt is being sourced to help fund the construction phase as the M&G funds will not be available until each scheme is completed. Completion of these funding arrangements is key to moving the Extra Care pipeline forward and we expect facilities to be in place to enable schemes to commence on-site prior to or around the year end. It is anticipated that Ashley House's equity in AHSL will reduce to a holding of less than 25% in the medium term, however, whilst AHSL remains a subsidiary, it is expected that the recognition of profits on schemes sold to AHSL will be delayed until completion of those schemes as they will not have been sold outside the group. This would impact on profit recognition in the short term although will increase long term value. When Ashley House dilutes its holding and therefore no longer has control of AHSL, it is expected that future profit recognition will revert to the current basis of recognising profits partly at financial close with the remainder across the construction phase. A number of national and local relationships have been created with established Registered Providers of Housing (RPs) to manage tenant relationships and these RPs are ready to proceed on a number of the pipeline schemes. In addition we have held discussions with the Government body, the Homes and Communities Agency (HCA), both to explore the grant regime which supports the level of rents payable by the tenants, and the feasibility of establishing AHSL itself as an RP in order to directly access grant funding for capital projects.

Cheers mate, well done. Quite excited about this one the more I look in to it.

Cheers, hopefully we will all do well here

Will post later mate

Yep, looking good for you there mate. Well done

No problem, struggling to find much of interest now!

Yep a 500% rise today may be a tall order!

Do with this cooling off a bit. Prefer gradual progress

Yep, had to go a way back to before they started struggling with timings, financing etc, but I think that should be a fair representation for going forward, albeit with the additional financing costs.

The best example I could come up with were the 2009 results where they had revenue of around £26m and a net profit of around £4m. Pipeline at that time was £264m which is where I reckon it is now given their comments about significant increases in the recent RNS. Lets hope it is a proper (non wsg esque pipeline!!)

Yep, a nice one to sit on this and let events unfold

like the overhang has gone.

Agreed, it is certainly at the riskier end of what I involve myself in, but taking everything in to account I am happy to take a punt, so, as ever, time will tell. ATB

Yep, results are going to be pretty dreadful, but am banking on people knowing this and the size of the financing deal and increased pipeline being the kicker.

Maybe will pop up later. Thought maybe listed on ISDX as well but doesn't appear to be.

a few more of these this morning in advance of the funding news.

Good post, summarises the situation well. I will try to fill in the blanks. From what I can work out You are right in your calculation that technically AIB are receiving shares at 55p a share, although this somewhat of a red herring as they are basically writing off £3m to guarantee they get their £9m. R4E have stated that this refinancing process will restore shareholder equity to a positive and give them sufficient funds to expand. This suggests to me that they would be looking for at least £15m in order to pay back AIB their £9m and have sufficient cash at hand. So the question is who is going to invest and how much are they going to pay per share? If I was Mr. Stoller who is by far the largest shareholder, so his interests are aligned with ours, I would want to present the company in the best light when discussing with new investors so would probably be citing the last results, specifically the improved EBITDA at £2.6m and that taking out the goodwill impairment and financing costs would have delivered FCF of around £1.5m. I would them argue that on a conservative PE of 10 this would value R4E at £15m, so a value of £6m for the current shares in issue versus a current mc of £1.7m. Clearly risky, but with I am happy to take a punt on this at this level as I think that the business will push on once free of the legacy debt. ATB

Afternoon, my take (and I could be completely wrong) is that this is effectively a debt write off of £3,155,000 (the difference between the £5,155,000 AIB are paying for the equity and the £2m put option. It's just another way of making R4E more attractive to new II's and guaranteeing that they get their £9m back. I guess this was agreed as a compromise after some negotiation. 1. AIB will convert an amount equal to £5,155,000 of the outstanding principal debt due under the Existing Facility into new ordinary shares of 2.5p each in the Company ("Settlement Shares"), with the number of Settlement Shares to be equivalent to 12.5% of the fully diluted issued share capital of the Company as at the Completion Date. 2. r4e will grant to AIB a European five year put option over the Settlement Shares (which can only be exercised on the date that is five years from the date of grant) (the "Option"), which, if exercised, will result in r4e acquiring the Settlement Shares from AIB for a consideration of £2,000,000 in cash.