[overseas baggie]

It doesn’t seem to make sense that they would swap shares in holdings for share in group, or negotiate to give more based on them not calling in the loan. Just give the 2.35% if Warmfront want to call it and have done with it. You’ve already had Warmfront pants down with 2.35% being worth at least 40% less than the £2m you got for it.

If someone owns 2.35% of holdings, they pretty inconsequential are they not. Then if they want to sell, by selling their 97.65% of holdings, whoever buys can force through a compulsory acquisition of the remaining 2.35%, thus obtaining the full  88% of group?

Thoughts overseas?

I totally agree in principle, but I’m not certain whether compulsory acquisition of the 2.35% would necessarily apply as that depends on the provisions in the Articles.  However, I think it is far more likely that a sale of a majority interest in the club will be either (a) by Holdings selling its 100% interest in the Jersey holding company, or (b) the Jersey company selling its stake in Group.

[overseas baggie]

There is no logic to charging a 5% monthly default rate of interest if the borrower can simply surrender over valued security to discharge the loan. Equally there is no point in defaulting if the principal and interest can be discharged by surrendering 2.35% of the equity in Holdings which at the point of default would be worth less than the outstanding loan plus interest.

Without seeing the loan agreement it is impossible to say but given the actions of the parties to the agreement I have to assume Lai can't pay and can't simply discharge the loan by surrendering the security. Equally  Warm Front believe at some point the interest they are charging will be paid and if it isn't they have some remedy to secure payment, otherwise it is a charitable donation not a commercial contract.   

Agreed - something additional must have been negotiated between the two parties for when the 5% default interest came into effect, over and above the charge over the 2.35% share security.  We have no way of knowing what that is at this stage, but it is really just a private matter between them currently.

[Baggie Crosser]

Does Lai have any connection with this Chines Company on the brink of "BUST" - COUNTRY GARDEN?

[baggiejohn]

It doesn’t seem to make sense that they would swap shares in holdings for share in group, or negotiate to give more based on them not calling in the loan. Just give the 2.35% if Warmfront want to call it and have done with it. You’ve already had Warmfront pants down with 2.35% being worth at least 40% less than the £2m you got for it.

If someone owns 2.35% of holdings, they pretty inconsequential are they not. Then if they want to sell, by selling their 97.65% of holdings, whoever buys can force through a compulsory acquisition of the remaining 2.35%, thus obtaining the full  88% of group?

Thoughts overseas?

My opinion for what it's worth.

I think you've summerised there where the interpretation of the agreement makes no sense.

1 - The lender's security for  the loan is a fixed percentage of equity with a declining value.

2 - The penalty to the borrower for default is to increase the size of the loan by 5% per month. No penalty whatsoever if you can't repay the loan. You may as well just surrender the equity.

Surely a more sensible default agreement for both lender & borrower would be a 5% increase in the percentage of the equity per month.

So 2.35 x 1.05 = 2.47% after month 1
     2.47 x 1.05 = 2.6% after month 2
and so on.

Personally, I believe there's a lot more to this than an agreement with a heating company from Brierley Hill

[graka]

I’m no financial expert but we took out the MSD loan prior to selling Dara and we also received a million for the young lad to villa
So if the MSD loan was to subsidise this season and hopefully a little longer until we can shift another batch of higher earners at the end of the season wouldn’t it have made smart financial sense to clear the high interest warmfront loan or am I thinking too logical
Miles said we would have to sell to invest in new players yet we have done this and shipped out numerous loans and released a fair few players
Just from a logical management of my household funds I try to clear any debt costing me most interest wise first or did the MSD loan not cover the entirety of our shortfall for just this season?

[baggiejohn]

I’m no financial expert but we took out the MSD loan prior to selling Dara and we also received a million for the young lad to villa
So if the MSD loan was to subsidise this season and hopefully a little longer until we can shift another batch of higher earners at the end of the season wouldn’t it have made smart financial sense to clear the high interest warmfront loan or am I thinking too logical
Miles said we would have to sell to invest in new players yet we have done this and shipped out numerous loans and released a fair few players
Just from a logical management of my household funds I try to clear any debt costing me most interest wise first or did the MSD loan not cover the entirety of our shortfall for just this season?

What's being discussed above is the £2 million loan from Warmfront Holdings taken by WBA Holdings. It will only directly impact WBA Holdings, not the football club.

On the other hand, it's WBA Holdings that are available for sale, so there are a number of nuances in the deal that could have an impact on the sale.

[overseas baggie]

What's being discussed above is the £2 million loan from Warmfront Holdings taken by WBA Holdings. It will only directly impact WBA Holdings, not the football club.

On the other hand, it's WBA Holdings that are available for sale, so there are a number of nuances in the deal that could have an impact on the sale.

Agreed - and this is where too many people are getting confused by the Warmfront loan (including Kieran Maguire).  You are correct that it’s not debt of the Group/Club, so doesn’t affect the MSD loan or indeed any cashflow of the Group/Club

[ashdoy]

Does anybody else ever read this topic and end up totally confused 😂

[Standaman]

Agreed - something additional must have been negotiated between the two parties for when the 5% default interest came into effect, over and above the charge over the 2.35% share security.  We have no way of knowing what that is at this stage, but it is really just a private matter between them currently.

Yes it is very much a matter between two corporate entities which if I were an occasional customer of either would not concern me at all. However this is football and what is at stake here is the future of my football club. That does not give me the right to know but it does give an interest and an emotional stake way beyond an everyday commercial transaction.

Without the loan agreement it is impossible to know, however at some point WarmFront will want to be paid and on the face of it Lai can't pay which would put Holdings into administration the consequences of which could be dire.

[costa blanca baggie]

Does anybody else ever read this topic and end up totally confused 😂

So much so, that I’ve started to skim read it.

[OldburyWBA]

Does anybody else ever read this topic and end up totally confused 😂

Every day 

[SedgleyAlbion]

Yes it is very much a matter between two corporate entities which if I were an occasional customer of either would not concern me at all. However this is football and what is at stake here is the future of my football club. That does not give me the right to know but it does give an interest and an emotional stake way beyond an everyday commercial transaction.

Without the loan agreement it is impossible to know, however at some point WarmFront will want to be paid and on the face of it Lai can't pay which would put Holdings into administration the consequences of which could be dire.

Agree with this entirely. All we ever try to do is protect the football club we love. My original point was that if I was Hearn, I’d know that I’ve got very little chance of getting my money paid back, and would try to enter negotiations that protected me more than he currently has in the 2.35% of Holdings shares. I don’t think that’s really that unlikely. Respect people have understanding of business law, but I don’t think the people involved are overly bothered about being ethical

[overseas baggie]

Yes it is very much a matter between two corporate entities which if I were an occasional customer of either would not concern me at all. However this is football and what is at stake here is the future of my football club. That does not give me the right to know but it does give an interest and an emotional stake way beyond an everyday commercial transaction.

Without the loan agreement it is impossible to know, however at some point WarmFront will want to be paid and on the face of it Lai can't pay which would put Holdings into administration the consequences of which could be dire.

If Holdings (not the group/club) went into administration then the administrator would look to sell its asset (the underlying shareholding ultimately being the group/club) on the market without the club suffering a points deduction.

[overseas baggie]

If Holdings (not the group/club) went into administration then the administrator would look to sell its asset (the underlying shareholding ultimately being the group/club) on the market without the club suffering a points deduction.

The more I think about it, maybe we should be encouraging Warmfront to call in the administrators of Holdings!

[baggiejohn]

The more I think about it, maybe we should be encouraging Warmfront to call in the administrators of Holdings!

In your experience, why would a Brierley Hill heating company, loan a Chinese football club owner £2 million anyway, especially when the loaner is an alleged STH for AVFC, &, if we've interpreted the deal correctly, he stands to lose money?

[johnny Cash]

In your experience, why would a Brierley Hill heating company, loan a Chinese football club owner £2 million anyway, especially when the loaner is an alleged STH for AVFC, &, if we've interpreted the deal correctly, he stands to lose money?

I’ve looked at the accounts for Warmfront holdings, investments and group and it doesn’t make sense for them to dabble. People are suggesting it makes sense that their are additional agreed terms in that apply now it’s in default, but I don’t think we can completely rule out the (I assume) generally bright guy at Warmfront has made a huge mistake.

£2m is a massive amount for company of their apparent size

[Standaman]

I don't think we can be  relaxed about Holdings going into administration.

There is no guarantee that the club would be effectively ring fenced. We have no idea what an insolvency event would trigger. I am sure at least one club's parent company went into administration without putting the club into administration and the EFL took the view that the insolvency rules applied to the club. Equally we have no idea as whether or not MSD would be spooked, they ask for their money back and the club is in administration regardless.

[overseas baggie]

In your experience, why would a Brierley Hill heating company, loan a Chinese football club owner £2 million anyway, especially when the loaner is an alleged STH for AVFC, &, if we've interpreted the deal correctly, he stands to lose money?

That’s anybody’s guess.  Makes no commercial sense whatsoever.

[overseas baggie]

I don't think we can be  relaxed about Holdings going into administration.

There is no guarantee that the club would be effectively ring fenced. We have no idea what an insolvency event would trigger. I am sure at least one club's parent company went into administration without putting the club into administration and the EFL took the view that the insolvency rules applied to the club. Equally we have no idea as whether or not MSD would be spooked, they ask for their money back and the club is in administration regardless.

That’s a valid put but I think the club to which you were referring (I can’t recall which club it was) was 100% owned and there was lots of inter-company loan debt (not the same here).

It is hard to see why MSD would be concerned as they are fully secured by their debenture over Group’s assets (including Group’s shares in Club) and the stadium. MSD are not at risk of losing money.

[overseas baggie]

I’ve looked at the accounts for Warmfront holdings, investments and group and it doesn’t make sense for them to dabble. People are suggesting it makes sense that their are additional agreed terms in that apply now it’s in default, but I don’t think we can completely rule out the (I assume) generally bright guy at Warmfront has made a huge mistake.

£2m is a massive amount for company of their apparent size

What’s very odd is that the loan from Warmfront to Holdings was made in September 2021.  It is included in the July 22 audited accounts of Holdings as a loan liability, but I cannot see it included in the Warmfront accounts to June 22 as a loan asset.   How odd!

[baggiejohn]

What’s very odd is that the loan from Warmfront to Holdings was made in September 2021.  It is included in the July 22 audited accounts of Holdings as a loan liability, but I cannot see it included in the Warmfront accounts to June 22 as a loan asset.   How odd!

Yes, I looked at that too, but there is a catch-all entry of investments, so I assume it's included in that.
Aren't Warmfront accounts "truncated" as they don't meet the turnover requirements for full accounts?

[phbaggies]

Anybody watched/ watching the Burnley documentary? They have new American owners/ investors who are very hands on, attend all matches home and away, even watching matches at daughters wedding  What a difference it makes compared to ours!! They are fully invested in the project, and absolutely romped the Championship with all on board! Depressing reality for us really 

[overseas baggie]

Yes, I looked at that too, but there is a catch-all entry of investments, so I assume it's included in that.
Aren't Warmfront accounts "truncated" as they don't meet the turnover requirements for full accounts?

They are indeed truncated accounts.

The loan definitely isn’t included in the “fixed asset investments” in Note 4, but could be included in the “other investments” in Note 6.  A loan is not usually classified as an investment, but where it’s linked to equity (which is here due to the 2.35% share collateral) I guess it’s possible. 

[SmethDan]

What’s very odd is that the loan from Warmfront to Holdings was made in September 2021.  It is included in the July 22 audited accounts of Holdings as a loan liability, but I cannot see it included in the Warmfront accounts to June 22 as a loan asset.   How odd!

Not bad going for a team of 'Domestic Energy Assessors' established in the summer of 2019. Lagging must pay well if they can make a legal leap into the loans business in just over two years. Not that I'm implying there's anything remotely dodgy about them (for legal reasons) of course.

[Albionic]

Not bad going for a team of 'Domestic Energy Assessors' established in the summer of 2019. Lagging must pay well if they can make a legal leap into the loans business in just over two years. Not that I'm implying there's anything remotely dodgy about them (for legal reasons) of course.

Not HQ'd anywhere near the ex Crooked House are they??