ERUDIO student loans help

anna2007

erudioed wrote: »

Erudio has invested £11m in acquiring the student loans.

Is this gone too erudioed? The whole "aggregate consideration" thing stinks and is ripe for an FOI request - I'm willing to do it, but wouldn't mind help in wording it, if anyone knows how these things work? It has to be worded in such a way that BIS can't just say the sale price was £160m (or whatever it was)... or was this covered already in another FOI request?

Brooker_Dave

anna2007 wrote: »

Is this gone too erudioed? The whole "aggregate consideration" thing stinks and is ripe for an FOI request - I'm willing to do it, but wouldn't mind help in wording it, if anyone knows how these things work? It has to be worded in such a way that BIS can't just say the sale price was £160m (or whatever it was)... or was this covered already in another FOI request?

I think Arrow paid £11m and Carval coughed the rest.

erudioed

Always good to here a mention of Erudio outside the forums, so a quick heads up, Simon Read just tweeted about that job advert.

@Brooker Dave: do you know where you heard that? As its Erudio listed as paying that 11m, from what i understand (and i am happy to be set straight), all money from every party (the whole consortium that is) flows through Erudio. Thats one of the things a shell company is for. If thats right, it raises an intriguing possibility...

anna2007

Brooker_Dave wrote: »

I think Arrow paid £11m and Carval coughed the rest.

Do we know for sure how much, if any, of the purchase price was coughed up? Arrow Global's press release states:

"The sale was completed today, delivering £160 million of aggregate consideration to the Government".

http://arrowglobal.net/news/default.aspx?newsitem=115


From a Google search, aggregate consideration seems to relate to shares, and Arrow Global had its stock market launch (Initial Public Offering) the month before the sale.

Does this mean the Government received £160m of Arrow Global shares in exchange for our loans? Would such a set up reduce Public Sector Net Debt, which was the main justification for the sell off?

I don't know for sure what the implications are, but it looks decidedly dodgy to me.

Sarebear78

anna2007 wrote: »

Is this gone too erudioed? The whole "aggregate consideration" thing stinks and is ripe for an FOI request - I'm willing to do it, but wouldn't mind help in wording it, if anyone knows how these things work? It has to be worded in such a way that BIS can't just say the sale price was £160m (or whatever it was)... or was this covered already in another FOI request?

Can you ask if this sale price was made up of instalments and also for the dates of payments received and amounts to make up the £160m? Also whether these were cash payments/transfers or whether these were share options/other?

The wording definitely needs to be carefully considered......

erudioed

The 'loan notes' mentioned in Arrow Global's own annual report also need to be deciphered. Thats 'aggregate consideration', 'loan notes' and "Erudio has invested £11m in acquiring the student loans", just some of the confusion that needs to be unravelled if anyone is knowledgeable about such things. Not forgetting Carval, Arrow Guernsey and The Wilmington Trust all having their financial operations based in The Channel Islands...but maybe that isnt such an issue right here.
There certainly seems a little more to the story than just BIS selling the remaining mortgage style student loans for £160 million. Maybe BIS just need to be asked to explain the deal. It cant be a trade secret or a disadvantage for other student loan sales of the future to reveal standard government deals surely, especially, if as Arrow Global stated in that article linked to by Anna yesterday in The Telegraph shows, that Arrow expect to acquire some post-2000 loans after the general election has concluded and BIS opens its doors again. If they get the same kind of deal again, there is no harm revealing what the deal is. If that isnt in the public interest, i dont know what is. After all, the sale was made with the public in mind supposedly, so explaining the specifics about why it was such a good deal cant be a trade secret. If they explain the specifics of the deal, then those with financial knoweldge would be able to say why it was such a good deal. However, if through some kind of financial trickery, on paper it is £160million, but the detail shows it to be far less, then that is also in the public interest. I am not sure at all if £160 million of aggregate consideration (as Arrow Global call it) is actually £160 million in reality. Maybe someone here knows?

Mr_McGuffin

From the 25 November 2013 Press release from BIS and 'ShEx' announcing the sale:

'Erudio Student Loans has agreed to pay £160 million for the portfolio of loans. The terms of the sale transfers the financial risks associated with loan repayments to the purchaser. Any impacts on the public finances will be decided by the Office for National Statistics, however we would expect there to be a reduction of Public Sector Net Debt (PSND).'

It says Erudio 'has agreed to pay' £160m, not will pay or has paid. The press release says 'we would expect there to be a reduction of PSND'. So it is uncertain what 'any impacts on public finances will be.'

It was not publicly stated how much was paid for each of the three different types of loans, those in repayment, those in deferment, those defaulted. Was the price agreed conditional on what Erudio could achieve? The loans in deferment counted for close to half the loans sold, but with more than half the face value.

As I understand it, Arrow was floated in October 2013 by the RBS Special Opportunities Fund (SOF). In 2012 RBS SOF had tried and failed to find a buyer for Arrow.

At that time last year RBS SOF was part owned by RBS, of course substantially owned by the Government. RBS sold its final minority stake in SOF in May 2014.

In March 2014 RBS SOF sold the 24% stake in Arrow it had retained at the launch and its two directors left the board of Arrow. In September this year what was RBS SOF became Pollen Street Capital, led by Lindsey McMurray, formerly on the board of Arrow.

Board members get around don’t they? This is true, I kid you not:

Mr Iain Cornish is a non-executive director of Arrow Global. He is also until February 2016 a member of the Bank of England’s Prudential Regulation Authority Board.

eroneo

Has there been any FOI for the "Deed of Assignment"? (DOA)
This is the contract made between the SLC and Erudio and will detail the price paid and whether it was just a flat rate or if there were different rates depending on repaying, deferred or disappeared.

The DOA may also have provisions for outstanding liabilities and probably a provision for SLC to repurchase the loans if Erudio fail to treat borrowers fairly or fail to abide by the terms.

This is very important because borrowers supposedly have rights and the GOVT may have the capability to put things right.

The govt took back railtrack after negligence causing an unnaceptable number of rail accidents.

anna2007

Mr_McGuffin wrote: »

Board members get around don’t they? This is true, I kid you not:

Mr Iain Cornish is a non-executive director of Arrow Global. He is also until February 2016 a member of the Bank of England’s Prudential Regulation Authority Board.

The President of the Credit Services Association (the DCA industry's trade association) has also recently been appointed to Arrow Global's Senior Management Team... not much point in taking our complaints to the CSA then!

anna2007

eroneo wrote: »

Has there been any FOI for the "Deed of Assignment"?

As far as I know, there hasn't been a request for this. I made an FOI for the due diligence report, which was refused, has gone through an internal review and still has to be appealed at ICO. I assumed they'd be even more likely to refuse to release the DOA, on the same grounds as the due diligence info, details here:

https://www.whatdotheyknow.com/request/details_of_the_due_diligence_pro#incoming-561825

BIS did provide an extract (only a paragraph) from the sale agreement in response to another FOI request on Whatdotheyknow, but I can't find it just now, will look for it tomorrow.

I can't see BIS willingly releasing info which is damning for them/useful to us, so it will probably mean internal review/ICO/tribunal, but if you (or anyone else!) have the time to make this or other requests, it can only help.