Wasps 22 Discussion Threads

[chabar1] 30/7/2022 09:25

It is a matter of timing. If you fire-sell the stadium and buyers know bondholders are desperate, the bids could be very low with proceeds insufficient to redeem the bonds for anything near par. The debt/equity deal would have the advantage of enabling an orderly sales process over a year or two so that you have a better chance of getting a fair price for the stadium.
This is all a bit theoretical anyway, the current owners will probably give us the choice between a pure bond refi or liquidation, in which case I will choose liquidation as well and take the loss.

[jgh03] 30/7/2022 09:16

If there isn't sufficient cash being generated then doesn't that make them insolvent ? I wouldn't want equity in such a business.

I agree with bigfish: the stadium needs to be sold so that the bonds can be redeemed.

[chabar1] 30/7/2022 08:41

I agree with you. Or at the least, reject the first offer and see if they come back with something very compelling. They could offer a part cash / part equity deal. Banks may not be willing to lend the full £35m as there isn't enough equity in the business nor enough cash generation to cover bank debt interest, but they may be willing to finance say £15-20m. That could provide for a part repayment of the bond and the remainder would get converted into equity. At least we would have the satisfaction of having wiped out current owners who have behaved dishonestly.

[bigfish1] 30/7/2022 06:33

We'd be fools to accept any new terms when they defaulted on the last agreement and have been so dishonest. We have to force them to sell the stadium. We would basically be accepting terms that HSBC wouldn't touch.

[goonerbob] 29/7/2022 22:16

They will offer a higher interest rate, a new redemption date and compensation. The EROS Bond went through a similar process recently.

[pusb] 29/7/2022 21:54

Something that annoys me is that Wasps recently spent £4million on a new training ground knowing that the maturity date was rapidly approaching with insufficient funds to meet their obligations.

[bondholder] 29/7/2022 21:40

Don't forget that we have a first charge on the property as security. Basically the property can be repossessed to sell and this security trumps all other creditors. Also the P shares in the Rugby league (worth £13m based on a market transaction in 2018) are charged as further security for the debt.

[dandigirl] 29/7/2022 21:20

There will be only one deal on the table - it is either taken or not. If the latter more than likely liquidation will follow. We are most unlikely to be offered a cash alternative, more likely asked to take a hair-cut. While in our terms Richardson is a wealthy man, relative to the amount here he is not. He is not a Manchester Building Society nor an Enquest.

And it is both wrong-headed and delusional to speak of potential redemption at par as if it is a realistic prospect and something available to us. If there is a re-listing, there is only one price and that is the day-to-day market price. Let us not forget these were priced below 50% not so long ago and we wondered if the next interest payment would be made.

Moreover, I suspect relisting would follow only if a refinancing is successful. I doubt if the listing authority would agree absent full financials, etc. Besides, who would buy as matters stand? Only a gambler or an opportunist.

[thincat1] 29/7/2022 21:04

This website wouldn't accept the URL of the Enquest announcement, hence the [...] above. You can find it by Googling "Enquest exchange offer".

[thincat1] 29/7/2022 20:48

It wouldn't be good if bondholders who want out quickly are outvoted by those who accept the extension terms and then can only recover their money by selling at a discounted price. I wonder whether the Trustee could insist that bondholders are instead offered a choice: exit now at par plus interest accrued since May, or extend on the Issuer's new terms at higher interest. Enquest did this recently ([...] Any views?

[dandigirl] 29/7/2022 20:21

.. and how long is the lease please fastcat? Thanks.

[fastcat99] 29/7/2022 20:13

In recent posts, people seem to be talking at cross purposes on a very elementary point:-

Once relisted, the bonds will have two 'values' IN THE NORMAL RUN OF AFFAIRS
- the actual price at which they can be sold at any given moment,
- versus potential redemption at par, at a future maturity date, specified in the proposed Consent Solicitation

At this very moment, because they have been delisted and they have passed their maturity date, these Bonds have NO NORMAL value
- only the indefinite promise of continuing interest payments
- and/or potential value arising from the pretty horrendous option of full default (forced sale of the Arena lease, leading eventually to a distribution of the proceeds to Bondholders)

The Consent Solicitation (which I suspect has actually been demanded by the Trustee, as the current irregular situation cannot be allowed to continue indefinitely, and Wasps Finance has manifestly lost full control of the refinancing timetable) will surely only address the essential points - a new maturity date, possibly compensation for breach of covenants (as in January 2018), and any other necessary adjustments to the terms of the Launch Prospectus.
It surely will NOT offer a new higher rate of interest - that would be to fundamentally change the terms of the instrument.
But this can only come into force if accepted by a majority of Bondholders (my previous point), so it will be incumbent on the Issuer to sweeten the deal - financially, and/or with concrete evidence of viable refinancing plan(s).

And this is where I feel we have real leverage over Wasps Finance - because of the delisting process (which still remains quite murky in its precise detail) we will have been deprived for AT LEAST 3 months of a fundamental aspect of this financial instrument; we should not just accept that as fait accompli, actually aggravated by incoherent apologies and obfuscation over who said/did what/when.

Once Consent is given, this will THEN lead to relisting, where market forces will indeed intervene (for those who chose to sell - or buy), and the Yield to Maturity will probably be quite volatile, and surely always higher than the nominal 6.5%.

(If on the other hand Consent is NOT given, the Trustee would have to act, probably definitively, to take control from Wasps Finance, and exercise the full default option)

Finally, there will eventually be a concrete refinancing proposal - which Wasps Finance will have to make more attractive than the outcome immediately above, or Bondholders will reject it.

Speculation about who might be tempted to 'buy bonds on the cheap in order to get the stadium on the cheap' is both a redherring and probably wrongheaded - these Bonds are only GUARANTEED by the Stadium Lease, they do not actually own it.

[grownupinvestor] 29/7/2022 20:10

They can only buy back bonds on the market from holders willing to sell them.

That however might be a good idea because some will be willing to sell, and it would reduce the value of the remaining debt and make it more likely that the rest of us who won't sell, will carry on getting our interest.

I have some West Bromwich Building Society PIBS, and the society did exactly this a few years ago at half face value. I sold mine to them because they offering a small premium on the market price. But I bought them back again in the market at a slightly lower price the same day.

Since then they've shot up to near par because the PIB Debt is now negligible, and the Society is making good profits for other reasons. I near doubled my money and I can rely on getting the interests as long as I hold them.

[goonerbob] 29/7/2022 19:31

Is there anything preventing Wasp finance from buying the bonds at a huge discount and cancelling them, if and when they are listed? They would effectively be cutting the redemption cost.

[rowley142] 29/7/2022 19:19

The value of the bonds is not par because of the uncertainty of whether they will be repaid in full. It is this risk which will reduce the price of the bonds if they are again quoted on the Stock Exchange. If the price is £500 for £1000 of bonds you may get 13% interest but is that a good deal if you lose your £500?

[jimpy6365] 29/7/2022 18:58

The price people are willing to pay may plummet, but the value will not. They will remain payable at par.

If you can buy £1000 for £500 you will get 13% on your money.

[dandigirl] 29/7/2022 18:32

It seems to have passed by the posters here that if/when these bonds are re listed their value will plummet. I would guess to below 50%. They would be considered as “junk”. The higher the interest rate, the junkier they become, the greater the fall in price.

There will be many wanting to sell with not many buyers, at least initially.

With time someone wanting to buy the stadium on the cheap might take an interest.

Easy peasy if the bonds can be bought at a considerable discount.

L2S: You are the voice of sanity.

[bigfish1] 29/7/2022 18:16

The only way we are going to see our money again is if they sell the arena. That is pretty clear. It certainly seems clear to HSBC.

[goonerbob] 29/7/2022 18:08

Anything less than 9.00% will not get my vote, together with suitable compensation for passing the consent solicitation, and the relisting of the Bonds.

[thincat1] 29/7/2022 17:49

A couple of thoughts: 1. This announcement is better than further prevarication and procrastination by the Issuer. A pathway is opening for us to get our money back; I guess the risk is that too few bondholders will want this and so the bonds will get extended, albeit on better terms. I wonder how many bonds are in the hands of fans of the club who will consider its future more important than the prompt return of their cash - does anyone know? 2. It's welcome that the Issuer is talking about relisting, and surely nobody will consent to extension of the bonds without this. I will contact Laurence Griffiths at the Trustee to see if he has anything to add on this.

[bigfish1] 29/7/2022 16:57

Hi All, Bondholder here with £20000 (don't I feel a fool!). I would not dream of consenting to continue lending my money to Wasps Finance. It is obvious that no-one else is prepared to do it, HSBC, Coventry Council or anyone else so why should we? I bought this bond on the understanding that it was backed by the value of the arena as collateral. It is not 'putting the boot in' to demand that they follow through with this legally binding agreement. I was fool enough to buy this bond in the first place, I certainly wouldn't be fool enough to agree to continue to lend them money when apparently no-one else in their right mind is prepared to do it! Sell the arena and pay us back.

[l2s] 29/7/2022 16:27

Trying to look at this without being over emotional, it would obviously have been possible at the outset to extend the term of the bonds albeit with the added cost of consent solicitation and an increased interest rate. Rather than doing that it would make sense to try and find adequate alternative finance to meet the cost of repaying the bonds when they were due to mature. The latter course of action has proved more difficult than expected/hoped for. I do not necessarily read anything in this, as some people clearly do, that suggests that anyone is deliberately trying to avoid repaying my investment. Whilst we may disagree on what constitues a fair level of consent payment or appropriate interest rate I certainly don't see any advantage in trying to make the situation worse by as someone suggested, 'putting the boot in'.

[cesareborgia] 29/7/2022 16:21

If the bondholders do put the boot in - which I hope they do - will that nevertheless still mean that Moonstone and all who sail in her and safely located in Malta, will remain fireproof?

[fastcat99] 29/7/2022 16:09

Consent Solicitation is a technical term for the (only legal) way to change the terms of the Bonds, as defined in the Prospectus.

It is therefore not an option/formality for Wasps Finance
- it is the only way for them to evade the two current extremes: a) complete default & dissolution of the company (PLEASE note this is not the same thing as the Rugby Club, but would require 'sale' of the stadium lease) OR b) prompt full redemption including outstanding interest.
- I assume Consent will again require the previous high majorities (basically, 75% of Bonds), so this time the "boot" really IS on our foot (IF we dare to "put it in")

[cesareborgia] 29/7/2022 16:06

Has it yet occurred on anybody that the bondholders may have been given a First Class PPE Degree tutorial in Perfidy, Procrastination and Evasion and that they are the now being invited to be the audience for a piece of misdirection that would leave the Magic Circle gasping as they witness the disappearance of Thirty Five Million pounds?
Without recourse