Wasps 22 Discussion Threads

[grahamg8] 21/3/2022 17:24

jimpy do you have a new home lined up for when your money gets returned?

A home for the money not for the two of you I meant.

[jimpy6365] 21/3/2022 11:31

At our age (mid 70's) my wife and I are more interested in income than capital retention and have been buying WAS1 at varying prices for over 5 years (High 110 Low 49). with nearly 27k we are currently sitting on 10% profit plus good imcome for last 5 years. If bonds pay back in May I estimate 25% profit on purchase costs plus 5 years+ income. not bad for a novice.

[grahamg8] 18/3/2022 17:25

I love it. Risk v Reward, Greed v Fear. Different views on what may or may not happen - in the general market and with Wasps in particular. We also have to add individual objectives and portfolio balance into the mix.

I think there is a buying opportunity for the bonds but my exposure is already at my limit, set last year. So I sit and wait for news, less than two months left now. By the way the yield (income + capital) on a purchase price of 92.4 and excluding dealing costs is now 60.64%pa.

Edit: If you include the cost of accrued interest this drops to 59.20%pa

On the market in general I am more worried. The optimist in me says a peace deal will happen which will boost prices for a while. Inflation pressures remain and I suspect any rally will be short lived. So I'm tending to cash with opportunistic purchases when spotted.

[aringadingding] 17/3/2022 13:53

A0002577, Yes I agree with what you say. I was just saying that if I sell these bonds, or receive par at maturity, and buy shares with the proceeds, then if sale/maturity is after the ex div date of the shares to be purchased (which it is in 1 case, not in the other in fact for the 2 shares I bought) then I don't get the div that I want and I miss out on any share price growth between now and then also. For bonds I think you might refer to it generally as coupon or interest, rather than dividend.

[a0002577] 17/3/2022 12:40

aringadingding ; as far as I know - there is no ex-div date for this bond.

If you sell you get the interest accumulated up to the sale date and if you buy you will have to pay (the seller) for the interest accumulated since the last payment date - (last 13th November)

[bondholder] 16/3/2022 13:40

TCS is a great example of the value out there!

[aringadingding] 16/3/2022 13:20

Yes I agree and see your point I need 4% growth in the shares to add to the 7% dividend yield if ex dividend date is prior to maturity, to breakeven...

Looking at that picture though there is some possibility the bond return is less than 11%, and on balance I suspect the wider market might go up more than 4% prior to bond maturity (when I say wider market I don't really mean oil or mining stocks, or tech stocks, I mean typical FTSE 250 stocks which have been unfairly bashed in my opinion in the last few mths/weeks).

I just felt like I would be annoyed if I missed that and exchanging bond risk for equity risk is fairly valid.

[135791113] 16/3/2022 11:05

Yes, the dividend yield will be lower than if you bought now, but that is irrelevant if you make more from the bonds redeeming at par than you lose by buying the shares at a slightly higher value. Shares would have to bounce 11% before May for it to be worthwhile which, IMO, seems unlikely.

Anyway, each to their own. Nothing wrong with taking profits at any time.

[fastcat99] 16/3/2022 11:03

(I have been greedily fearful throughout! :) )
ie I have NEVER found anything persuasive except actual payments and official statements (HMG, European Commission, CCFC, CBS, Wasps, etc, etc); speculation about DR's intentions, the size and overall outlook of the total Bondholdership, the relative value of pies and pints is just that; the daily value of the Bonds seems a rather capricious vector, but longterm anomalies do need some rational explanation. The MASSIVE Yield to Maturity is highly perplexing.

[aringadingding] 16/3/2022 10:57

Well we could discuss ex-dividend dates etc but the forward dividend yields really only relate to the prices at which shares can be purchased today, so if the market bounces on Ukraine peace talks the opportunity for those yields will have gone.

The market crashed in the last few weeks for no real reason and many shares were already well priced before that. There are plenty of fossil and renewable energy sources in the world and I don't buy the idea that inflation is a big problem.

If you read a lot of investment books or articles they all say you should never try and 'time' the market. I agree with this as a general day to day strategy but there is a massive caveat which is sometimes the market crashes or has a peak of optimism. If for whatever reason you can take advantage of those highs/lows then I think you definitely should.

Going into the covid pandemic I was holding about 50% bonds. The market crashed. I sold the bonds and bought shares and it worked out very well so it's a bit like that.

I think the bonds will redeem at par but there is at least some possibility there is either a haircut of some sort or a rolling over of them. Bonds have downside but no upside. Stocks have both.

It is a fairly marginal decision really but I thought it was a fine time to just move on.

[fastcat99] 16/3/2022 10:50

fear v greed - it always come down to that

[135791113] 16/3/2022 10:24

Interesting decision, assuming the bonds pay back at 100%, which seems likely, then I don't see any other opportunities for better returns over a short period of time? Unless you are anticipating your stocks appreciating by 11% in 3 months, then it would be better to wait and buy the stocks at a higher price later on. Dividend yield might be lower, but you'd still be overall better off.

[aringadingding] 16/3/2022 10:13

Hi All, I wanted to say in the spirit of collaboration and out of respect to the good people on this thread I have messaged with over the last few years, that I sold these bonds yesterday. The reason was pretty simple in the end. These bonds offer circa 11% gain in coming mths but various shares out there offer forward div yields of 7% (some of those divs being special divs, others not...) and are also trading on very low multiples after the crash of recent weeks. It has been an interesting and enjoyable roller coaster. Hope it all goes well from here.

[cc2014] 10/3/2022 12:22

You get the final coupon plus the £100 per bond.

Of course depending on what happens with the bond and time is now running tight.

[bsharman3] 10/3/2022 12:08

Probably a basic question but do we get a final coupon in May of this year or just redemption of £100 per bond on the 13th of May?

[aringadingding] 07/3/2022 19:44

Jonnyhatesrap yes sure. I was just saying if there was no sufficient buyer immediately available the bondholders could raise investment, and if doing that they might want to move assets to a new co just so they have knowledge that there are no contracts or anything in the woodwork not disclosed.

[jonnyhatesrap] 07/3/2022 19:14

The Issuer SPV does not have a limited sheld life - no UK incorporated company has an expiry date.

If the bonds are not repaid on maturity, the bonds default, default interest is payable on top and security becomes enforceable.

Security can be enforced by bondholders directing the security agent to enforce. That can simply be a sale of the Ricoh stadium and other secured assets, which is then used to repay the bonds. The new owners of the assets can then negotiate whatever they want with Wasps or convert the stadium into something else.

No need to move assets to another company or negotiate directly with Wasps

[grahamg8] 28/2/2022 07:44

Saracens purchase looks positive. We just need one more bank/pension fund/insurance company with deep pockets looking for an investment whose performance isn't linked to the rest of the stock exchange.

Non repayment of the bonds makes life quite complex. Wasps Finance plc has a sole purpose of raising money from the bond issue and lending it on to Wasps Holdings Ltd, and also has a limited life. So an EGM would have to be convened to extend the life of plc and decide what to do with the assets claimed for non payment ie the ground, the rugby club, the casino, the hotel, and any other asset pledged. Richardson would have lost his £18.4m and would have to sit on the touch line while the bond holders decided what to do with his baby.

I don't really see that happening. So a new source of finance is needed or a new bond issue. But it would have to be with a new company unless again we get an EGM, life extension and vote on repayment/replacement of our debt.

[aringadingding] 17/2/2022 19:45

Interesting and encouraging (business vote of support for rugby) to read that Saracens have closed what sounds like a combination of a refinancing and primary/secondary equity transaction:

hxxps://www.msn.com/en-gb/sport/news/rugby-saracens-32-million-pound-takeover-by-consortium-completed/ar-AATXMUv?ocid=msedgntp

"The board of Saracens Group Holdings Limited is pleased to announce the completion of the previously announced transaction regarding the refinancing of the group and the acquisition of a controlling stake in the group by Kimono House Limited," Saracens said.

The consortium comprises club chairman Neil Golding and Dominic Silvester and Paul O'Shea, both from Enstar Group, a global insurance group.

Former Saracens player Pienaar, Nick Leslau, the chairman and chief executive of Prestbury Investment Holdings, and Marco Masotti, an owner of South Africa's Sharks rugby team, are also in the consortium.

Nigel Wray, who was the club's owner for more than 25 years, retains a "significant minority shareholding".

[aringadingding] 14/2/2022 22:37

Fastcat99, responding to your points in #381:

1. Ok yes my bad. Maybe we will get taken out at the time of announcement then!

2. I'm not an expert but must be lots of ways forward like rolling the pitch, using sand, encouraging grass growth etc.

3. I agree with you actually, that given the very high (actual) YTM the price ought to gravitate, over time, towards the sort of discount that ought to prevail on the day before maturity if there had not been any announcement prior to then. What should that be? Well if maturity date came along and the company had not arranged refinancing, the task the bondholders would face would be set up a new clean company, take possession of the stadium into this, continue the hosting of CCFC, and do a deal with whoever the new buyer of wasps rugby club was (presumably DR would need to sell wasps), to let them use it also. Then the new total debt is effectively £35, which is way lower than today's debt as the DR debt (plus any other) would have gone. Does that involve a massive haircut for bondholders? No.

But I don't think that is going to happen. The reason is I think DR is a highly experienced and quality business person, and the idea that he would mess up a refinancing like this, and lose something like £15m in the process (rough number from memory, apologies), does not seem right to me at all.

Re. the EU ruling news - yes good news good timing.

[fastcat99] 14/2/2022 19:16

Much better report here, which explains clearly the EU law dimension (now finally closed off)

hxxps://www.coventrytelegraph.net/news/coventry-news/coventry-city-stadium-row-appears-23091360?utm_source=coventry_live_newsletter&utm_campaign=daily_newsletter2&utm_medium=email

When Wasps and CCFC announced their groundshare deal in March last year, Stephen Vaughan had to admit that a State Aids ruling by the European Commission was still possible, and beyond all other parties' control. At the time he simply described the issue as 'parked',
hxxps://www.coventrytelegraph.net/sport/coventry-city-ricoh-arena-wasps-20062831

- but it would have appeared as a real loose cannon in the Risk register of any new Bond Prospectus (or other fundraising instrument).

[fastcat99] 14/2/2022 18:36

Plenty more time for rucking, gouging and hoofing to finally drive the beautiful game out of the CBS Arena?!
More seriously, one previously missing element may be the legal announcement buried in today's article
hxxps://www.coventrytelegraph.net/sport/football/football-news/coventry-city-fans-pile-huge-23093319?utm_source=coventry_live_newsletter&;utm_campaign=ccfc_newsletter2&utm_medium=email
- the Bond/Arena/Covid multidimensional chessgame seems to have become one layer simpler....

[dandigirl] 13/2/2022 14:30

slow down, fastcat, there is still 3 months to go. Plenty of time.

[fastcat99] 10/2/2022 22:30

Some counter arguments/observations

1. The early redemption penalty is irrelevant: it was waived as part of the solicitation which 'we' consented in November 2020

2. Yesterday, Coventry Telegraph reported Mark Robins, CCFC manager, complaining that the condition of the pitch after rugby was seriously hampering his team's play, and he started thinking aloud about whether this was appropriate under the terms of 'the contract' (surely not a public document....)
httpx://www.coventrytelegraph.net/sport/football/football-news/coventry-city-wasps-cbs-arena-23032864?utm_source=coventry_live_newsletter&utm_campaign=ccfc_newsletter2&utm_medium=email

3. If everything was plain sailing, the bond price should be gaining momentum towards par (or even higher, given the attractive yield). Instead, it is stuck at almost 12% discount - why ? (by the way I don't quite understand the LSE calculation that gives yield to maturity at just 5.365% ?!))