London Capital and Finance

Aretnap

jimjames wrote: »

A big selling point from LCF (and also many other secured bond providers) is that the bonds are "asset backed" with security. I wonder how many people looked at what this asset backing or security consists of.

LCF made a £50 million loan to London Oil & Gas. The main security for this loan is the onward loans London Oil & Gas made to Independent Oil & Gas in 2015/16. So there is no security over any physical assets under the fixed charge.

There is no security relating to the loan to Atlantic Petroleum and no security over loans made after 2016 when LCF massively increased their bond issuance.

https://damn-lies-and-statistics.blogspot.com/2019/02/what-secured-assets-lcf-loans.html

The charge is listed here
https://beta.companieshouse.gov.uk/company/09734575/charges/WK3WWpt0fZFhkaQ-IrkgGxs0Bq4

Good catch!

I do remember noticing that LOG's loan to either Independent or Atlantic (orpossibly both) were convertible to equity, so I did wonder whether the assets backing LCF's loan to LOG might consist of shares, or the opportunity to acquire shares, in the ultimate borrowers. Of course if the borrower cannot repay it's shares will have no value, so the security offered by such assets would be purely illusory. But if the assets were effectively the loans themselves, that's even more blatent.

As another thought, Independent and Atlantic are both penny stocks, so if they do somehow recover their equity could potentially be very valuable. So it appears that the directors of LCF and LOG have effectively taken a high stakes gamble where all the risk is borne by the punters who bought LCF bonds, and almost all the reward would go to the directors and shareholders of LOG. Not a bad deal, if you're on the right end of it.

jimjames

Aretnap wrote: »

So it appears that the directors of LCF and LOG have effectively taken a high stakes gamble where all the risk is borne by the punters who bought LCF bonds, and almost all the reward would go to the directors and shareholders of LOG. Not a bad deal, if you're on the right end of it.

I think it's an incredible business model. Take money off unsuspecting investors who think they are putting it into a low risk bond.

Borrow money with interest rolled up so you don't need to repay anything before loan term. Invest in speculative shares with absolutely none of your own money. If it goes well you make a fortune. If it goes badly you lose nothing and investor loses everything.

The charges also appear to be circular. So company A takes loan from LCF and LCF applies charge on it for the loan. Company A also has a charge on its assets by company B. Company B takes a loan from LCF and uses the charge on Company A as the security.

Essentially there are 2 loans now to different companies on the same assets.

bowlhead99

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If there's something you think needs to be said that hasn't already been covered in one of the last (almost) 1100 posts, why not go ahead?

jimjames

Some more info on charges

https://damn-lies-and-statistics.blogspot.com/2019/02/what-secured-assets-lcf-loans.html

I wonder how many bondholders thought this comprised the "asset backed security" that they were promised. How can you value this as being worth 25% more than a loan value? So far it appears that none of the assets consist of anything physical and in at least one case it appears the charge for LCF was applied after another company so their charge doesn't take precedence.

billyolly

Has anyone thoughts about the lady from a Claims Management company on Facebook.She seems to indicate that she putting a team together to try and recover some money for the bond holders.

Botheredin

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Either you know something, you're a gobby person or a flamer. Spit it out then...

dunstonh

billyolly wrote: »

Has anyone thoughts about the lady from a Claims Management company on Facebook.She seems to indicate that she putting a team together to try and recover some money for the bond holders.

Where is she going to recover it from?

Does she have some powers that the administrators and regulator do not have?

Jelli

dunstonh wrote: »

Where is she going to recover it from?

Does she have some powers that the administrators and regulator do not have?

Any affective strategies should not be made public yet as will work against the bondholders if the suspect admin or LCF find these out too early resulting in a better defence.

masonic

Jelli wrote: »

Any affective strategies should not be made public yet as will work against the bondholders if the suspect admin or LCF find these out too early resulting in a better defence.

LCF is in administration, so it has legal protection from any action. The directors are protected by the veil of limited liability unless and until it is proven in court that they acted contrary to the interests of bondholders - a process which will probably take many months and over which they will have full visibility.

Victims in cases like this should be very cautious of falling victim to other predators who will see them as 'suckers' and try to get more money out of them. For example, firms that claim they are able to recover some of the money they lost. This behaviour is very common.

sully1311

Jelli wrote: »

Any affective strategies should not be made public yet as will work against the bondholders if the suspect admin or LCF find these out too early resulting in a better defence.

Please do not go chucking good money after bad Jelli. This statement lets me think you're going to do something silly again.