Wasps 22 Discussion Threads

[ozzie_dog] 12/11/2020 19:19

@fastcat99 I can see what you are saying, but if you wait for positive news, you'll miss the price, it's all about being comfortable with the risk at the price. To be honest I was very surprised that I could invest more at the same price of 40 pence after the vaccine news broke, that was a gamechanger for me, fair enough it might go South, but it is positive right now, and I was able to invest at the same price after that news broke.

[ozzie_dog] 12/11/2020 17:34

Thanks, I did think about going in again today, but I resisted, because I am reluctantly trying not to get carried away (I am already quite involved), sometimes it isn't easy trying to be sensible, especially when you suspect good value is there for the taking. I'm not saying that it's anywhere safe, but I think the price is better than the risk represents (that is only my non expert opinion though).

[fastcat99] 12/11/2020 15:54

@dandigirl
Less than a month ago, you said you 'didn't wish to buy into any such plans' - which is what you seem now to have done; in September you expressed doubts as to how deep Mr Richardson's pockets were; in August you were not a buyer at a price very similar to what obtains today (except that today's trades are without reference to tomorrow's coupon); you are buying, just after the Resolution which you said you were voting against has been quite narrowly ADOPTED
All in all, I am confused - especially since we don't yet have the November coupon in our pockets, still less an accountant's comment on 'how the trick was done'.

@Everyone who is getting really enthusiastic about this 'uptick'
- Might be better to wait until there are some substantial trades on record. So far I see only about 50,000 shares changing hands on ORB, which is utterly insignificant; so the price movement must just be market makers adjusting their positions. The sooner we get accounts published, the better: hopefully with an accompanying statement from the Board, if not an acutal trading update.

[dandigirl] 12/11/2020 15:12

Well done Ozzie_dog. Wanted to wait and see how the vote went. Bought today. Current buy is 50.75! A good bit more than you O_d. Again, well done!

[fastcat99] 12/11/2020 12:28

Many more votes were cast this time
- 11,779,600
- because the Chairman declared to have received instructions (both FOR and AGAINST the Resolution) in respect of 7,731,600 shares CDIs or in Crest
- the motion was carried by a 79.95% majority, again qualifying and by a rather more convincing margin than at the first meeting.

1. Accounts will imminently be published revealing the full extent to which the previously Covenanted EBITDA ratios had been breached up to 30 June.
2. We have been assured that the November Coupon will be paid, come what may.
3. Note the Board "remains ready with a comprehensive REOPENING strategy in place for WHEN guidance permits"
and 4. hope there is also a convincing narrative for interim financing.

As Warren Buffet observed, naked bathers are only revealed when the tide goes out.

[ozzie_dog] 12/11/2020 11:58

I invested another £20k on Monday in 2 transactions averaging at 40p

[a0002577] 12/11/2020 11:04

see :

which inter alia, says

"Further to the Issuer's announcement of 30 October 2020, NOTICE IS HEREBY GIVEN to the Bondholders that the Consent Instructions received from those Bondholders who voted in favour of the Proposals exceeded the requisite amount and, therefore, at the Adjourned Meeting, the Extraordinary Resolution set out in the Notice of the Meeting was duly passed and the Amended and Restated Trust Deed will shortly be executed."

and the bid offer spread is now 42.5 to 47.5 p quite a jump

[dandigirl] 30/10/2020 10:02

No, it's a done deal. They have sufficient to approve the proposals at the next meeting. On the bright side, we can look forward to another interest payment and maybe a kick-up in the price. Time has been bought.

[watching2017] 30/10/2020 09:25

The vote has gone in to extra time

www.thebusinessdesk.com/westmidlands/news/2045689-wasps-fails-in-bid-to-waive-bond-covenants

Gives time for the objectors to get organised or give more voice?

[dandigirl] 27/10/2020 10:13

fastcat99: Repay current bondholders and then they can do as they wish. Simples. They have failed in their current business plan, why should we trust them again? [They were failing before the virus so no excuse there please].

I don't wish to buy in to these new plans. I don't wish to do homework of any kind. I don't wish to accept this weakening of bondholders' position. I wish to have my interest and principal paid as per the prospectus. We are debt holders, not shareholders. I see no reason to do this as IMV it is failure now or failure later. I prefer the former.

[watching2017] 26/10/2020 18:37

I have not seen the "Ricoh Arena Development Plan" but wonder what it comprises

The planning application to build the new hotel is in the the name of WPS Trading Limited a personal company of DR ( not WASPS ) so not a group asset

Another item that was supposed to be included at the Stadium was a training facility. However they have failed on that score after 2 attempts to build one inside the City they have ( by doubtful means - google Henley Sports Alliance ) acquired a site in Henley in Warwickshire but that is in the name or WASPS RFC - ( not Limited )

Not much appears to be happening to boost WASPS Holdings or Group Limited assets

[fastcat99] 26/10/2020 12:33

I am a bondholder, and have done my homework: first, to obtain from the Tabulation Agent the full solicitation Memorandum, which puts a lot more emphasis on the Ricoh Arena Development Plan than appears in the Stock Exchange notice; second, to study the meeting Notice, which shows how a technical adjournment can remove the need for an absolute majority of bonds, but that 75% votes cast will always be required to adopt the Resolution; third, to complete the paperwork to allow me actually to attend this Meeting.
I will be 'there' with a genuinely open mind whether to vote for or against the Resolution; I hope the chairman will ensure a transparent and orderly process throughout, as the Chief Executive's 7-page letter seems to raise as many questions as it answers.
How many others have gone to such lengths ? What are the key assurances Bondholders should be seeking in return for any amendment of the Financial Covenants ? I fully accept that the Interest Service Reserve procedure has to go once/if the November coupon is paid, that the Group badly needs to raise extra finance, and should be allowed to leverage any support it receives from government or PRL, but where are the really scary bits ??

[dandigirl] 17/10/2020 18:02

Hi: Words like "straw" and "grasping" spring to mind.

Let us watch and see what transpires.

No more from me on this until we see more from WASPS.

[aringadingding] 17/10/2020 14:38

Dandigirl, "these onerous terms" - such as? "the new Johnies-come-lately do so" - how if their debt is non-recourse?

The only lender I can see accepting the terms would be the government, unless there was security provided to the lender from elsewhere. In the case of the former, the waiving of covenents would be a 'nice to have' for the government (I guess) but in the case of the latter you can see why a new lender would want them waived in advance to avoid us calling default when not strictly necessary from a 'kept whole' perspective. You can argue they have made provisions to raise cash from either source. From DR's perspective to not do the former would be mad, and to do the latter using other security he has is basically his choice but if it's better than using equity I can see why that may be the case.

We don't know how much debt will be raised under the proposals and what it will be used for, if raised. Hypothetically £20m could be raised secured on some other asset, used to refinance 57% of the bonds pro-rata to holdings, while the rest have extended maturity but are now effectively lower geared. Don't know how likely that is but it is possible! The equity raise plus extend life option is another one, yes, though 10% seems perhaps optimistic.

Indeed it's a double whammy of the covid issue and the non-ground share issue... The FT report today that Pfizer may seek emergency authorization for their vaccine in the 3rd week of Nov. Vaccines are already deployed in Russia and China. History tells us recoveries from such events are slow but they do happen. The groundshare thing... yeah to me it is ridiculous and it seems likely that egos have got involved but such is life.

[cc2014] 17/10/2020 13:44

But IPF is throwing off cash and making an underlying profit... So, whilst the market does not like the rate they are currently paying, the refinancing pays down debt.

With Wasps this is more a COVID issue. Once a vaccine is found we go back to normal in due course and Wasps regains it's revenue streams. It seems to me the best solution is something like extend the bond for 10 years at 10% and maybe a share of the media rights or some other convertible instrument. I'm not really an expert.

Question is if they can't afford the 6.5% now how do they afford 10% but it feels fairer to me.

[dandigirl] 17/10/2020 13:07

Hi. Thanks. Your points are well made and for the most part are two-edged.

First up: Totally agree that WASPS [and all the PL clubs] are in a weak position. IMV because of this any finance will not be low cost, as you suggest. Who would provide it? On what terms? Certainly not any regular financiers - hedge funds? maybe, but whoever does will be an opportunist and drive a very hard bargain. Any finance will not come cheap and in any event there isn't the cash flow to service it. WASPS is not bankable.

In a simple world, and I think we agree it isn't, DR could arrange for a new bond on terms such as these he is proposing and repay current bondholders. He knows it will not fly.

That is why he is trying to foist these onerous terms on current holders. It doesn't matter if the current bondholders force his hand now or the new Johnies-come-lately do so sometime next year. WASPS is still bankrupt whoever does it.

WASPS problems are not going away with these proposals. They make matters worse.

Please ignore the valuation. What you have is historic. It no longer applies. Value is what someone will pay today.

If DR has sources of finance which require these changes, let him come clean now and tell us what is intended.

Why should CCFC or anybody enter into any sort of arrangement with a weak organisation which may not be around in a few months time. Better to wait a bit longer and see what transpires. Might come cheaper if the WASPS hive has collapsed.

In my terms DR is a wealthy man. When it comes to baling out WASPS, he isn't. The last figure I saw for his net worth was in the high £30 millions. That was pre-Covid so who knows, now he may be worth less, maybe more. But as before, why should he risk his wealth on this. I am sure Mrs DR would have something to say!

Yes, I am resigned to losing part of what we have invested.

Finally, if DR or someone has a few million to spare, he could arrange to repay bondholders 20% on the condition that the other 80% is extended on different terms to be agreed. This is what IPF is proposing with their Eurobond due next year. DR would do well to look at this sort of idea.

Finally, as part of this process DR ought to lay out the current state of the Group's finances - and what is intended, in details.

Enough, I think.

[aringadingding] 17/10/2020 11:44

Dandigirl, thank you for saying clearly what you think so we can discuss it. There are always two sides to these debates so it's all good!

I agree the new debt will have to be cash serviced but if it doesn't impact security and related parties keep cash in the short term, and if its low cost, which it may be, then that doesn't matter hugely. Who other than government would lend in this way anyway?

You seem resigned to a loss and would therefore rather have that sooner than later. I can understand that but the route to profit for wasps is a ground share agreement with ccfc. At the moment wasps are in a bind because their debts and low bond prices make them look in a weak position to ccfc and thus they have not been able to agree terms. But if that problem went away ie via refinancing of the bond and recapitalisation of the company then a deal becomes much more likely, thus management are probably just focused on getting through this phase. The stadium has that valuation on it for a reason but the value does need to be acheived by managers of companies in the end. I'm not saying i am 100% certain the refinancing will be at par, when it happens, but to try and do it, or force it, in the middle of a pandemic does not seem like great timing, and it makes sense to let the management put together their own package and proposals first before deciding whether to accept or reject them. We have not seen such proposals yet and i don't see anything in the current proposals that makes them likely to be worse.

As for reshaping the landscape of rugby business, well it's an interesting point and makes one think of the unique nature of sports business. Note however that dr is diversified in modes of engagement with arena location.

Actually anecdotally distressed debt investing can be a highly profitable area but hey that is for others to spend more time on.

[dandigirl] 17/10/2020 09:59

aringadingding: You clearly aren't a financier! :) Please consider the servicing and repayment of any additional debt, not just the security. If WASPS and others can't service what obligations they have, how on earth will they be able to service additions? Please see my post above. All the PL clubs apart from Exeter were loss making way before the Virus. The business model needs rethinking. Like businesses in a similar position, someone has to take the hit, write down the debt to something manageable in relation to income - not add more - and start again, maybe. Rugby, WASPS, existed before professionalism It will continue but with a different model which could include lower payments to players some of whom may even have to revert to part-time as before. Bondholders, including me, have to accept the potential for loss. It is just a question of when and I would rather sooner rather than later. Only a die-hard WASPS fan who doesn't understand finance would vote for this. Sorry to be very direct!

[aringadingding] 16/10/2020 20:59

I agree with zeroking.

I don't get why people are saying the security is diluted. The provisions allow for non recourse debt so that means no security dilution by definition.

The current trading price is irrelevant to the propects of the company, that is pretty much the first rule of investing. Maybe there are lots of panicky sellers.

If you look at the covenants list some of them are clearly not going to be met this year or probably in the future too so to expect more than 6.5% pa (or the massive ytm of the bonds) seems pretty unhelpful. Like i say above the covenants are not relevant, but i would not be surprised if 'wasps asks bondholders to waive covenants' as a headline causes some people to sell.

If a company makes provisions to raise debt, potentially from a favourable source, without impacting security, during a difficult time, then clearly that is a good thing! Think about what something bad would look like: high interest rate debt with first ranking security and probably ramp up in rate if new covenants not met. That would be worth voting against but it's not that. Sure equity would be great but this lets DR or others keep their powder dry so in a way its better than equity (if the debt cash shows up).

The security:

The security is very real and the maximum value of the stadium is clearly through maximum utilisation, and clearly this would involve rugby and football. But that means both so including rugby. So there is not much point trying to enforce security now to then later do a deal with both rugby and football from the position of a third party. It's not that it's not possible it's that it is just a crazy way to go about things. It's much better to just let the incumbent mangement team do all the hard work first hefore you know if you need to take that path.

Derek Richardson:

DR is clearly highly competent and has multiple businesses and long term plans for wasps and the stadium. Personally i back him to manage this situation.

[cc2014] 16/10/2020 12:09

I think you have missed my point slightly JGH03. I'm not suggesting 0.5% is suitable recompense in this situation but suggesting that some recompense is appropriate because they are offering you nothing in exchange for diluting your rights as you point out.

[jgh03] 16/10/2020 11:43

@Watching - I agree that the value now is unlikely to be as high as at the last valuation. That is why I think it is important not to dilute the security for the bondholders.

[watching2017] 16/10/2020 10:27

I do not understand how the past valuation can be said to be holding up. It is based on revenues, something the Borrower says they do not have and was sometime pre COVID. It also is before the Football Club's departure which does not look like being reversed any time soon.The next valuation is officially not due until next year (?) so I am not sure how reliable this approach is?

[cc2014] 16/10/2020 10:11

From someone sitting on the sidelines with no position, my guess would be something along the lines of the following;

The security behind the bond should allow recovery of far more than 40% of the bond value in due course. Of course there will a load of cost and it will take years so one would need to consider the time cost of money and getting say 5% elsewhere with relative ease.

It's not really a good solution either for bondholders but more importantly for Richardson who has more to lose.

So, although I would expect a no vote (unless Richardson and his family own loads of the bonds which I would have thought he would have to declare but you never know these days with Trusts and other vehicles of similar type) all I think will happen is that Wasps will make a better consent solicitation offer and the horsetrading will begin.


The issue being that Richardson controls Wasps whereas the retail bond holders are almost certainly a disperate band of investors, most of whom won't vote and won't pull together as one entity.

[jgh03] 16/10/2020 10:07

Payment of 0.5% in return for agreeing to the changes is neither here nor there in my view. At stake is significantly more than 0.5% when the bonds are currently trading at 60% below par.

I would prefer that the security for the bonds is not diluted. With that in mind I have voted against the proposals, and would still have voted against even if they had offered me 0.5% as an inducement.

[dandigirl] 16/10/2020 09:37

Reality is that even before COVID all the PL clubs were loss making except Exeter. They would not have survived without outside support - and still will not survive without outside support however it comes. They will not survive 19 months as matters stand without help. Mr Richardson is probably a very nice man but deep as they are, his pockets are not deep enough. He is being invited to pour money into a bottomless pit. Why should he? He is not Abramovich. Loading WASPS with more debt that they will not be able to repay/service is not the answer. It merely puts off the day. Better to address the fundamental problem now. Accept that bondholders are unlikely to get all their money back. Vote no and see how the cookie crumbles.