Sqn Asset Finance Income Share Discussion Threads

[spectoacc] 05/12/2017 09:50

I'd agree that 9% allows for some losses/recovery costs. But IMO too many loans are going bad in boom times. Only time will tell tho.

[scburbs] 05/12/2017 09:44

They are putting the loans out there at c9%.

What is the right price for asset backed finance.

If they are skilled then 9% looks great.

If they aren’t then less great, but that is probably more a function of asset/project selection than rate.

All about the competence of the team here and the repositioning of snoozebox is a key test.

If I remember rightly there is also a problematic shipping loan where the asset is being sold and full recovery expected. Again the proof in actually achieving this is another good test of the model.

The level of problematic loans is of concern, but at 9+% they are always going to be relatively risky and the question is how they perform on the ones that have problems which is key. As yet this is unproven.

[spectoacc] 05/12/2017 07:24

And I can't help making the point I've made many times above - this is a raging bull market, and yet the business model is still looking shaky? What will it look like in the next recession, let alone credit crunch, let alone all-out crash..

(Or put another way - govnts rescue banks, but they don't rescue asset finance investment trusts. Are we being paid enough to take that risk?).

[makinbuks] 04/12/2017 17:31

Why did Snoozebox fail? I have no idea but clearly the model didn't work. What would a new operator of the assets do differently? I'm certainly not convinced they'll get out without a write down.

On Suniva, yes I can imagine there are a lot of hedge funds would take that on for 20p in the £1 but that would represent a significant hit to NAV not to mention the unpaid interest and costs incurred.

You do begin to wonder now that there have been two problem deals how good the rest of the book is. I've noticed quite a few of the challenger banks reducing their exposure to this area

Still watching with interest

[horndean eagle] 01/12/2017 20:04

SQN likely to recover value in both cases. Their debt is secured on assets. What they are worth is a different matter. Chatter online that parties have approached them on Suniva. Mentioned offers too low but if they could get par or even between 50-75% they would probably bite their hands off. Snoozebox should be decent recovery as they own the units and other parties likely to be interested.

[makinbuks] 01/12/2017 16:06

I'm assuming Snoozebox is the company that provides temporary hotel like accommodation at events like Silverstone? Presumably the loans are secured on the portacabin like structures. Do we know the value that is at stake here? On the Solar side I would imagine the protectionists currently occupying the Whitehouse will look favourably on the request for protection but whether they can create enough value with that protection to repay all the loan, interest and recover their costs seems unlikely. Unless I can quantify the Snoozebox value I won't be investing

[belgraviaboy] 10/11/2017 15:09

SQN has two bad loans now - solar and Snoozebox. Got to be about 9p of NAV plus I can't see them being able to maintain the dividend.

[spectoacc] 10/11/2017 14:41

Ranger Direct Losses (or is it Lending). Is on a c.5% NAV discount if you write off its bad loan. SQN has a solar bad loan on the books it hasn't taken a write-down for yet.

[biggcl] 10/11/2017 13:41

What is rdl ?
Tia

[belgraviaboy] 10/11/2017 10:46

Looks to be about another £8m? Not sure what the 'assets' will be worth, if anything?

[riverman77] 09/11/2017 17:32

Thank goodness I sold out of this when still close to par, albeit at minor loss. I can see further bad news on this one, and with the likes of RDL on a 30% discount to nav, these type of funds can fall a long way.

[belgraviaboy] 09/11/2017 15:58

They are going to lose money on Snoozebox as well? You could not make this up!!

Bargepole

[spectoacc] 08/11/2017 16:09

Again the question raises its head - how will SQN (& its ilk) fair in the next recession? Financial crisis? Depression? Because none of them seem to be doing that well in boom times.

[makinbuks] 02/10/2017 15:25

Belgravia, I agree with you I don't hold and Carney's comments on Friday were not helpful for these alternative income stocks

[spectoacc] 02/10/2017 07:01

Ongoing costs in attempting the recovery too.

Surely they should be provisioning for it, at least a % based on likelihood of recovery?

[belgraviaboy] 29/9/2017 19:13

May also be recoverable, i.e. they are hoping - I am not a buyer here. Why take the risk?

[makinbuks] 29/9/2017 18:37

Given the protectionist stance Trump adopts, eg Bombardier it may well be reasonable to assume that the Whitehouse will follow the recommendation and in the fullness of time SQN will get full recovery. The statement implies the $4m fee could also be recoverable. In the meantime as rates rise the premium this , and other similar stocks enjoyed, will fall.

[belgraviaboy] 22/9/2017 17:29

Legal costs $4m not £4m - but point still stands...

[belgraviaboy] 22/9/2017 17:27

£4m spent on legals protecting £24m. This is going to be a very long road - what will the total legal bill be £10m / £15m? Despite this initial victory, there is a very long way to go with no certainty of winning. At the moment, potential loss to shareholders is increasing....

[spectoacc] 07/9/2017 07:17

@Makinbuks - I was surprised to read how far the parent co had fallen - makes me wonder about the guarantee.

And the anti-trust seems to rely on Trump - never a good place to be!

The other worry is what the rest of SQN's loan book looks like..

I'd be a buyer around 92p mind.

[spectoacc] 31/8/2017 08:38

Getting closer to NAV, but can't help feeling this & similar should be trading on discounts - we're in boom times, what will happen in a recession?

And not forgetting the NAV is umimpaired - no write-down taken on solar fiasco (which may yet turn out OK of course).

[spectoacc] 26/8/2017 06:43

Agreed, can't see it as a long above NAV when there's SSIF instead.

Also wondering how any of these will fare in a downturn - none been around long enough to have been tested.

[makinbuks] 25/8/2017 17:30

Don't know why it bounced but it didn't last. I'm still waiting for it to dip below the NAV

[spectoacc] 11/8/2017 16:20

Any reason for today's decent-volume bounce? Tipped, or something on solar?