Eur.Conv.Dev Share Discussion Threads

[smithie6] 09/2/2014 17:13

Oradea
75% to 92% occupancy !

fingers crossed that one or two of the Mall investments might survive

Cascade looks to me to have already turned the corner...since now paying down debt...
if it pays down 1/2M or 1M per year...its a large amount relative to small cap. value of ECDC
----

apparently the smart money got in to ECDC around 3.5p as it rose from the low
;-)

what is your average price ?

[smithie6] 09/2/2014 17:10

....maybe

some shareholders voted no to share buy back...since perhaps they saw it as immoral and perhaps like tricking an old retired lady to sell her shares for peanuts when on a risk/reward basis they were worth much more....

and as a vote of no confidence in the bod

(which would also have my vote....I'm not a fan of Charlemagne nor of James Mellon, owner of 20% of Charlemagne, ...dubious or immoral corporate actions imo at MFX where he is an exec...and questionable conduct at Rivingtonstreet Holdings (non-exec. chairman)...50% dilution with him being able to buy shares at 4p via convertible loans, use of convertible loans which convert at a low share price by directors to shaft their shareholders, a forthcoming financial news scandal imo, might take 1 or 2 years before it explodes in the press)

but hey, financial sector people are not famous for winning awards for scruples !

[smithie6] 09/2/2014 16:40

hxxp://www.argocapitalproperty.com/news-details/52/ARGO-shopping-center-performance----top.html
Bucharest , September 17
"Era Shopping Park Iasi has the highest occupancy rate, with 97 % rent surface;

Era Shopping Oradea Park with about 75% currently – expected to increase to 92% by the end of the year.

rental income in the first semester October 2012 - March 2013 , ....; the second was Era Shopping Park
Iasi , with 2.8 million net , cut

and Era Shopping Park Oradea with 1.7 million."

----

Oradea
75% to 92% !

fingers crossed there.....that could mean the difference between loss making and the value being worth X million more than the loans !

[smithie6] 09/2/2014 16:36

Shedlin 04.08.2010. 1.7ME

18 months planned loan duration.

Its now 2014.

so, perhaps the loan has been paid off.

---

this could be why ECDC has been involved with Shedlin and Argo

"DENNIS SELINAS
CEO - ARGO CAPITAL MANAGEMENT PROPERTY LTD.
Dennis has executed several property investments in Eastern Europe, Brazil and China. Prior to joining Argo, he was Head of Property at

Shedlin Capital AG,

an EM asset manager focused on real estate, healthcare and renewable energy. Prior to Shedlin, Dennis was Head of Romania at


Charlemagne Capital,

an EM asset management firm, where he was responsible for the firm's private equity and property investments and managed the successful exit of all fund assets with IRR's in excess of 50%. He holds a Masters in Finance degree from London Business School."

[smithie6] 09/2/2014 16:16

From ECDE interims

"In Romania our investment in Cascade is performing well, the building is fully let and meeting all of its banking covenants. The debt is being amortised and rental levels are holding up whilst investment yields are basically static - value is being maintained/enhanced through debt repayment."

"value is being maintained/enhanced through debt repayment"

which if the NEF3 loans have not already been fully paid off then they should be now

(if there is any NEF3 loan on Cascade still in place....then we need to ask ECDC why they havent paid taken over the loan ..to obtain a good interest on the ECDC cash....ECDC has 3ME cash and more inside Sliven doing nothing

if they havent paid off the Shelden loan then imo it looks like gross misconduct of ECDC at first sight....)

[smithie6] 09/2/2014 15:43

btw
says that CAscade has been paying down debts...

one assumes that paying down any high % rate debts first...specially since they have first call

[smithie6] 09/2/2014 15:19

Maybe C or one of its funds or business contacts might buy Cascade....

and now that C is not invested in ECDC it is no longer a related party...
perhaps avoiding the need for a shareholder vote on a sale to a related part...

..if C represented a buyer...then they would take 3% commission perhaps...
...these finance companies....often good at making money, for themselves !

but
if we get a big payout...then its good for us...

[smithie6] 09/2/2014 15:17

btw
Shedlin is either a part of Aero or related to Sheldlin

it is mentioned on their website

and Aero is related to ECDC.....Aero dirs. have worked for C in the past

(yes, a spiders web, but sometimes it can be useful.....maybe a part of the web of contacts might be interested to buy Cascade)

[smithie6] 09/2/2014 15:13

NEF 3

"On a side note, it seems like C. is getting a ridiculously high compensation for their services. They're getting paid hundreds of thousands a year for managing a company that has only one activity (a loan)."

Not sure I agree with that.
Your numbers give the income and profit for "NEF 3"....a ltd company....not for C for managing NEF3....the costs for C will be deducted as a cost from the income....

that gives the costs as quite small imo

----

As I recall ECDC owns 55% or something of NEF 3...
so, if NEF 3 makes money then ECDC makes 55% of 'money'

---

I agree with your that the ECDC accounts are poor and do not give a 'true and fair' report of the company situation ...otherwise there would not be discussion about what is the reality , because the accounts dont give enough info.

[smithie6] 09/2/2014 15:02

someone just bt. 300-350k worth of shares...

so I assume they had a trained accountant pore through the accounts and subsidiary accounts...and they were happy....

and we havent looked at the subsidiary accounts....whereas they will have
..and they then bought...

so, imo I see their purchase at 5.3p as underpinning the share price
----

and I agree with you that the cash in Silven is not in ECDC accounts, since accounted for via equity accounting.....
so cash 'owned' by ECDC is similar to the share price imo

while it is possible that one of the investments will end up being worth much more...so, imo the risk/reward is quite good.
(a lot of the mall investments are not worth much or anything...but hopefully cascade is...and Sliven has 1M of land)

One could have invested in Rumania/Bulgaria in 2006/7 in the stampede and paid high prices....or now and pay very low prices. Much better risk/reward to do so now imo.

[smithie6] 09/2/2014 14:57

Would the easiest thing be if you sent an e-mail to the company and asked, or telephoned them ?

[smithie6] 09/2/2014 14:55

Hi
Thanks for your hard work on that...
...I'll try to grind through it and see if I can make any sensible comment/addition.
---

(one prev. comment now deleted.....you can also delete if you wish)

[greedfear] 08/2/2014 11:32

Firstly, I know long essays can be a put off but please hang on because I think the following is of the utmost importance !

Smithie- I apologize, reading back my posts I became somewhat upitty.

Let's forget about all other than the NEF 3 (2 IOM) Limited (hereafter NEF) loan to Cascade of 2 million.

I think I'm right on the NEF 3 loan and iit needs urgent attention.
If I'm wrong and we take action on it then I'll only look like a fool but we can be happy bunnies because the asset value remains.
If I'm right we'll be happy bunnies too because we can limit the desastrous effect of the NEF loan.
If you're right and despite that we took action then I still look like a fool, but hey I don't mind as long as we realise the current net asset value.
If you're wrong however and because of it we did nothing, we'll regret that very dearly.

All in all, no matter who is right here it's still best to act as if the NEF loan is a threat.

Okay then, now the facts:

1. NEF 3 (IOM 2) was incorporated on 24-8-2008 by Charlemagne Investment (hereafter C) with 1 share of 1 euro. It's managed by C (that will become of importance later on);

2. The ECDC annual report 2010 mentions a 300,000 investment in NEF for the first time:

"page 31
NEF 3 (IOM)
Towards the end of 2010 the Company co-invested with another fund managed by the Manager into three new investment vehicles. Two of the vehicles invested in two projects, in Iasi & Oradea, with the JV partner Argo Capital Partners Fund Limited.
The projects are up and running and are expected to return a significant IRR to the Company. The other investment vehicle
(NEF3 (IOM) 2 Limited) raised funds for further investment into Cascade Park Plaza Srl. "

3. On 2-3-2011 an RNS was published: "(...)announces that it has invested a further €317,647 in its Romanian joint venture associate company, Cascade Park Plaza S.R.L. ("CPP"). The investment is in the form of a new shareholder loan which will rank in priority to all pre-existing shareholder equity and shareholder loans.

The investment forms part of a total of €2 million investment in CPP, made in conjunction with another company managed by the Manager which is investing the balance on the same terms as the Company."

What's interesting here is that this loan ranks in priority, the partner is not mentioned (but it's managed by C !) nor are the specifics of the loan.

4. Further investigation makes clear that the other company providing the 1.7 million was Shedlin Capital AG:

"Prospektnachtrag
SHEDLIN
New European Frontiers 3
Prospektnachtrag Nr. 3 gemäß § 11 Verkaufsprospektgesetz
der SHEDLIN Capital AG vom
04.08.2010 zum veröffentlichten Verkaufsprospekt
vom 06.06.2008 betreffend das öffentliche
Angebot über den Erwerb von Kommanditanteilen
an der SHEDLIN New European Frontiers
3 GmbH & Co. KG. Die SHEDLIN Capital AG in
ihrer Eigenschaft als Anbieterin des Beteiligungsangebotes
gibt folgende Veränderungen/
Nachträge gegenüber dem bereits veröffentlichten
Verkaufsprospekt vom 06.06.2008 in der
Fassung der Nachträge Nr. 1 vom 16.12.2008 und
Nr. 2 vom 19.03.2010 bekannt:
1.
Aktuell verfolgte Investitionsprojekte
Die 1. außerordentliche Gesellschafterversammlung vom
22. Juni 2010 hat – vorbehaltlich unerwarteter entgegenstehender
Erkenntnisse aus dem weiteren Due-Diligence-
Prozess – die Verfolgung folgender Projekte in Rumänien
beschlossen:
1.1
Büroimmobilie Cascade Euro Tower, Bukarest
Die Investitionsmöglichkeit des Fonds besteht in einer
Investition in Höhe von EUR 1,7 Mio. in einen nahezu fertiggestellten
Bürokomplex „Cascade Euro Tower" in Bukarest.
Die Beteiligung des Fonds ist als Mezzanine-Finanzierung in
Höhe von EUR 1,7 Mio. vorgesehen. Weitere EUR 0,3 Mio.
werden durch einen anderen von dem Management-Partner
des Fonds, Charlemagne Capital, gemanagten internationalen
Fonds bereitgestellt, der bereits in dem Projekt
investiert ist. Die Mezzanine-Finanzierung würde vorrangig
vor den bereits bestehenden EUR 15,2 Mio. Eigenkapital
bzw. Gesellschafterdarlehen zurückgezahlt und verzinst.
Die Rendite auf Projektebene (IRR*-Rendite) ist mit 22,5%
p.a. für die ersten 12 Monate und mit 27,5% p.a. für die
Laufzeit über 12 Monate hinaus kalkuliert. Die Investitionsdauer
des Fonds ist im benannten Projekt auf ca. 18 Monate"

Here we can read that initially this investment was intended to be for a period of 18 months and that the interest rate was 22.5% for the first year and 27.5% thereafter.


So what do we know thus far?
ECDC (managed by C) provided together with Shedlin (managed by C?) trough NEF 3 IOM 2 (managed by C) a loan to Cascade.
A loan that ranks in priority and is currently doing a 27.5% interest rate.
Also it seems all parties are (partially) managed by C who offcourse gets paid for their service (I'll get to that later with regards to NEF 3)

5. Is Cascade paying back on the loan or paying the interest to NEF 3?

The interim and annual reports of ECDC are very helpful here as they show the value of the investment in NEF 3 and assets, liabilities, profits and loss of NEF 3.

NEF 3 (IOM 2) Limited as in ECDC reports
Valued at Assets Liabilities Revenues Profit
31-Dec 30-Jun 01-Jan
annuals 2010 300 - 2.100 - - -
interims 2011 317 300 2.117 - - -
annuals 2011 357 2.448 107 407 265
interims 2012 382 2.695 189 251 165
annuals 2012 409 357 2.982 292 539 349
interims 2013 454 3.464 405 389 297





The assets are accruing with circa the interest rate of 27.5% so it looks like the interest nor the loan itself has been paid.

This gets confirmation from the liabilities that keep increasing with the costs over a period. So NEF 3 doesn't seem to pay their manager for services. I'm sure C. would demand payment if there was cash available.

So I think we can conclude Cascade is not paying off on this loan.

(Further confirmation can be found looking at the liabilities from Cascade over the last couple of years)
On a side note, it seems like C. is getting a ridiculously high compensation for their services. They're getting paid hundreds of thousands a year for managing a company that has only one activity (a loan).
I don't know how the management fee is calculated, but it seems something like 35% of the revenues.
(Mind you indirectly we're paying for those services too).


In conclusion:
Cascade has an obligation to NEF 3 to pay 27.5% interest on a loan that keeps accruing (it's not being payed off)
In the end eating up all value of Cascade for us.
The NEF 3 loan will benefit Shedlin (managed by C) and it will benefit C directly as they seem to take a large part of the 27.5% interest NEF 3 charges.


The NEF 3 loan deserves our immediate attention!

[smithie6] 07/2/2014 21:14

"The Sliven cash is not included in ECDC's cash."

if that is true then ECDC has even more cash than given in the accounts...
since owns X % of Sliven....(I cant recall now, around 55% perhaps)

around 1.5ME of extra cash for ECDC which was around 3ME at interim stage...
would make around 4.5ME +/- X, imo.

vs cap. value of 5M pnds, 6M euros.

---

happy to be corrected

[smithie6] 07/2/2014 21:08

cut
---

and I'm very grateful for you sharing your knowledge of the co....greater than mine...even though we might disagree on some pts.

discussion is good

===

Facts.


from interim accounts in 2013, to 30 June 2013 . Page 12.
"In accordance with the most recent loan agreement the company has made use of its option and paid down some additional debt on the first anniversary."

And ECDC holds cash and is also the manager of NEF 3 which you say has a loan.

What "facts" do you have that makes you say there is now, in 2014 , a loan of 1.7ME at 27% on Cascade ?

And also ECDC owns 55% of NEF , no ?

...noting that you are I think referring to a loan from 2011....long time ago...

[greedfear] 07/2/2014 21:03

The Sliven cash is not included in ECDC's cash.
Once again you mix up persons/parties.
ECDC did not lend to Sliven, they lend money to their partner in Sliven.
Different persons.

Now really logging out: nice evening!

[smithie6] 07/2/2014 21:02

go to it !

Sacisa Limited

SACISA LIMITED
264 STONEY STANTON ROAD
COVENTRY
ENGLAND
CV1 4FP
Company No. 06329390

director
BHAVESH CHANDRAKANT PATEL
APPOINTMENT TERMINATED SECRETARY ANITA PATEL

so, perhaps a private/family/personal investment co.

only 200 pnds share capital....either increased since or received a loan in order to buy more ECDC shares
one guess is that paid a much higher price for their original stake in ECDC, perhaps in initial IPO.


192.com might give you their phone number.

Or first class post arrives the next day.


"at 10 January 2014, Sacisa Limited via HALB Nominees Limited purchased 7,441,320 of the Ordinary Shares in the Company at the price of EUR0.0535 per share and as a result now holds 8,941,320 Ordinary Shares in the Company (10%) and is therefore considered to be a significant shareholder in the Company for the purposes of the AIM Rules."

I've contacted major shareholders before....worked in that case....the major shareholders voted the way I wanted in an EGM....whether they would have anyway is another question !

[greedfear] 07/2/2014 21:00

Cascade has been paying down on the bank loans NOT on the NEF 3 loan.
Why do you assume?
Based on WHAT?
If you just would take the time to do some proper investigation you would come to the conclusion the NEF 3 loan has not been paid off.

Seriously, I'm not going to discuss any further about this.
Thank you for your input.
Have a nice weekend!

[smithie6] 07/2/2014 20:55

you know if the % of cash of Sliven that 'belongs' to ECDC is "included" or not in the ECDC cash number ...or if Sliven is accounted for all as a capital asset ?

2) Looks like ECDC lent more money to Sliven...just about 300k
seems strange when SLiven had a few million (3.3ME ?) sitting in its bank account and no active project ?!

[greedfear] 07/2/2014 20:54

It's not gross misconduct because legally it's not their loan, it'a a loan that a subsidiary of a joint venture company took up with an entity other than ECDC.

Anyway, I'm not going into a discussion here as it serves no purpose.

I hope it's clear that things (whatever those may be) must change to get the most out of it for the ECDC shareholders.
Discussions about that can not be started up by one single person not being backed up by an impressive percentage of shares.

[smithie6] 07/2/2014 20:50

Hi
I found the RNS that you referred to, thanks for pointing that out



----
"Further Investment in Cascade Eurotower Office Development

European Convergence Development Company PLC ("ECDC" or the "Company") which is managed by Charlemagne Capital (IOM) Limited (the "Manager") announces that it has invested a further EUR317,647 in its Romanian joint venture associate company, Cascade Park Plaza S.R.L. ("CPP"). The investment is in the form of a new shareholder loan which will rank in priority to all pre-existing shareholder equity and shareholder loans.

The investment forms part of a total of EUR2 million investment in CPP, made in conjunction with another company managed by the Manager which is investing the balance on the same terms as the Company.

The investment was an integral part of the restructuring of the finances of CPP. At the same time as agreeing the capital restructuring, one of the lending banks has agreed the restructuring of its initial lease and signed for 3,250 sqm of office space and 231 sqm of retail space for a period of ten years. This means the Gross Lettable Area of c. 16,300 sqm is now 80% let and will generate sufficient rent to ensure that CPP is both cash flow positive and able to meet its financial covenants. As part of this additional financing, the principal terms of the original investment loan remain in place."



Notes
1) cashflow positive at 80% occupancy...
now at 98%
so, 18% extra occupancy should be providing profit....and you can see it in the accounts...equity accounted investees....increases are significant relative to cap. value of ECDC

2) ECDC is also the manager for the other lenders...
so
ECDC would not shoot itself in the foot by allowing the other lender to charge 27% since it would damage the 40% of Cascade held by ECDC.
..imo it would be gross misconduct..and illegal....and ECDC could have stepped in to take over that loan if it was at 27%

clearly there was high risk seen at the time...since the lenders demanded, and got their 2M loan to be ranked higher than all other loans.
and/or it should have previously been paid off

Cascade has been paying down loans...and those 2 loans have preference over all others....so I assume they have been paid off in 2012 and 2013...

[greedfear] 07/2/2014 20:48

Glad we agree on the accounts. The exact reason I've spent many, many hours examening the ECDC accounts, Cascade accounts, NEF 3, Shedlins, Argo etc.

It's not what's in there that is of interest, it's what's not in it....

[greedfear] 07/2/2014 20:44

Smithie- it's NOT 1.7 million we're talking about, it's 4 million because the loan has accrued with interest.

Why do you insist on speculating about the existence of the loan? Investigate and you'll find out it's there.

What I'm trying to make clear here is that the friendly relationships that exists between ECDC, Cascade, Argo and Shedlin could very well be the exact reason ECDC is just doing what you say "sit back and allow a very high interest rate".

Not saying they are, but when it comes to it they're only working with other peoples money. ECDC can make mistakes, like we, but unlike us they will not be paying for their mistakes (we -the shareholders- will).

[greedfear] 07/2/2014 20:38

ECDC has cash, but not the cash needed to take over the NEF loan as that would require something like 4 million.

Indeed it would be a sensible thing to do, making 27.5% on it is huge compared to what they're receiving on the bank accounts now.
However, ECDC needs money to keep running themselves and Charlemagne would like to be sure they're getting paid for their services.
The only way for them to be sure of that is to let ECDC keep sufficient cash (and thus keep the money in the bank account).

There's cash in Sliven, a project that's going nowhere. Money that parly belongs to ECDC and is making 1% interest a year.
Yes it makes sense to let a JV pay 27.5% on their loan meanwhile stalling cash youself at 1% on a bank account. NOT.

For the moment I'll just wait and see if anyone will contact me, if not I'll probably try to contact the new larger shareholder. Just would like to give people some time.