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London Capital and Finance
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There is a discrepancy between the rate paid on this loan and the 12-20% suggested on the LCF website though.
Yes, agreed. However unlike the website/Information Memorandum these numbers have been released and signed off by external accountants/auditors so I suspect they may be more reliable. The Independent Oil & gas interest rate "shouldn't" be less than the borrowing cost from LCF.
Assuming the £122million lent to LOG was from bond money subject to the 25% charge (and as the admins quoted £60 million it appears to apply across the board) then it would have required bond money of £162 million to have come from investors to make this loan.
That only leaves £73 million to loan to other companies but if the 25% is applied then it's down to £55 million remaining. Assuming the £236 million was all 3 year bonds then after 3 years LCF would have needed £292 million to repay bondholders capital and interest at 8% pa. £122m loan to LOG would generate c £12.2m per year at 10% interest so £36.6m of interest. Total from the LOG loan would therefore be £158.6m after 3 years.
That means there is a shortfall of £134 million which needs to be raised from the remaining £55m left to loan out. To get that sort of amount you need a return of 245% over the 3 years.
All this assumes that LCF have no costs for themselves so no sponsorship of horse races etc. Although the directors of LCF took no salary from the company (why?) it seems somewhat unlikely that there were no other costs.
Do these numbers add up? Any issues with the calcs?Remember the saying: if it looks too good to be true it almost certainly is.0 -
Yes, I don't doubt those figures for one minute. But the interest rate is does not include all of the borrowing costs. The figures do not mention other fees, such as an initial 25%, if that was charged. As per the worked example above, when a 25% fee is factored in, the total amount repayable matches that calculated for a loan of the same term by the administrators to satisfy bondholders claims, plus 1.4%. That's very close to the actual interest rate stated.Yes, agreed. However unlike the website/Information Memorandum these numbers have been released and signed off by external accountants/auditors so I suspect they may be more reliable. The Independent Oil & gas interest rate "shouldn't" be less than the borrowing cost from LCF.
That isn't necessarily true. As per the worked example above, the face value of the debt may have been 133% higher than the amount LOG received due to the 25% charge being applied to the loan to LOG, rather than deducted from the bondholder money before the loan was made. In other words LOG borrowed £122m and received £91.5m after fees, but would eventually have to pay back £122m when the loan was finally called in. There could have been a gentleman's agreement whereby the can could be continually kicked down the road, such that LOG didn't believe it would actually have to make that final bullet repayment of principal for a very long time - which is the only valid reason why a company would borrow on these terms.Assuming the £122million lent to LOG was from bond money subject to the 25% charge (and as the admins quoted £60 million it appears to apply across the board) then it would have required bond money of £162 million to have come from investors to make this loan.
The alternative is, as you suggest, LOG received £122m and only needs to repay £122m, but bondholders invested £162m. In that situation, LOG can raise its middle finger to the LCF administrators because they have no obligation to repay a penny more of capital, and we also know they aren't paying anywhere near enough interest to meet LCF's obligations to bondholders, who have no recourse against LOG.
But if the latter situation is the correct one, why are the administrators assessing whether the borrowing companies have sufficient returns to meet obligations they do not have - it's irrelevant whether they do or not, they have no need to pay and will not, even if they can.
If the 3 year loan example above is typical (i.e. margins of only 1.5%), then Surge is creaming off all the profits and LCF is left in relative poverty. Perhaps that's how the system is designed to work - because bondholders have a claim over the assets of LCF but not of Surge. The LCF directors can claim they were building a market share using a loss leader business model, so they didn't make any money. That's the cost of doing business, sorry investors lost out but they tried their best. etc etcThat only leaves £73 million to loan to other companies but if the 25% is applied then it's down to £55 million remaining. Assuming the £236 million was all 3 year bonds then after 3 years LCF would have needed £292 million to repay bondholders capital and interest at 8% pa. £122m loan to LOG would generate c £12.2m per year at 10% interest so £36.6m of interest. Total from the LOG loan would therefore be £158.6m after 3 years.
That means there is a shortfall of £134 million which needs to be raised from the remaining £55m left to loan out. To get that sort of amount you need a return of 245% over the 3 years.
All this assumes that LCF have no costs for themselves so no sponsorship of horse races etc. Although the directors of LCF took no salary from the company (why?) it seems somewhat unlikely that there were no other costs.0 -
I notice this claim on the page:ffacoffipawb wrote: »
But no explanation as to why it is exempt. I don't believe it is.This financial promotion is exempt from the general restriction (in section 21 of The Financial Services And Markets Act 2000 (Financial Promotions) Order 2005) on the communication of invitations or inducements to engage in investment activity0 -
I haven't looked in detail, but it is probably exempt because it would be considered a generic promotion:I notice this claim on the page:
"This financial promotion is exempt from the general restriction (in section 21 of The Financial Services And Markets Act 2000 (Financial Promotions) Order 2005) on the communication of invitations or inducements to engage in investment activity"
But no explanation as to why it is exempt. I don't believe it is.
"17. The financial promotion restriction does not apply to any communication which—
(a)does not identify (directly or indirectly) a person who provides the controlled investment to which the communication relates; and
(b)does not identify (directly or indirectly) any person as a person who carries on a controlled activity in relation to that investment."
It's just harvesting email addresses using generic information about the "investment".0 -
Hmm, so the firm can't market directly to the public (unless a regulated firm signs off the material). Instead they use a 3rd party intermediary who may or may not (but will!) match the prospective investor to the investment.I haven't looked in detail, but it is probably exempt because it would be considered a generic promotion
So by doing that extra step it opens another loophole in the already weak Section 21 rule.0 -
Those whose contact details are harvested will be contacted by the firm actually offering the investment, and those communications would not be exempt. It probably makes it less obvious what's going on though, so less likely to attract attention from the FCA.Hmm, so the firm can't market directly to the public (unless a regulated firm signs off the material). Instead they use a 3rd party intermediary who may or may not (but will!) match the prospective investor to the investment.
So by doing that extra step it opens another loophole in the already weak Section 21 rule.0 -
Supercalafragalistic wrote: »
Two year or so more ago I was looking at number of monthly visitors to the first LC&F website but I cannot remember the stats source. It was 250. That is very low. On one of my websites I was in third page for main search term in all the main search engines out of some 300,000 pages. My sales corresponded to online statistics, That is approx 1 sale for every 1000 visitors as opposed to one sale for every 100 direct mail. I think many sales re LCF resulted from enquiries by phone to the 0800 number.0 -
ffacoffipawb wrote: »Hmm, so the firm can't market directly to the public (unless a regulated firm signs off the material). Instead they use a 3rd party intermediary who may or may not (but will!) match the prospective investor to the investment.
So by doing that extra step it opens another loophole in the already weak Section 21 rule.Those whose contact details are harvested will be contacted by the firm actually offering the investment, and those communications would not be exempt. It probably makes it less obvious what's going on though, so less likely to attract attention from the FCA.
Here we go again:(
marketed by GLOBAL PROPERTY MARKETING LTD incorporated June 2017
https://beta.companieshouse.gov.uk/company/10838013
Tempted to sign up to see what happens, but I don't want to appear on some suckers' list:o. I do have an alter ego and linked email address, but sadly no alternative mobile number. Anyone foresee any problems if I use those details?
Their T&C page:
https://www.improvemyisa.info/0 -
Here we go again:(
marketed by GLOBAL PROPERTY MARKETING LTD incorporated June 2017
Tempted to sign up to see what happens, but I don't want to appear on some suckers' list:o. I do have an alter ego and linked email address, but sadly no alternative mobile number. Anyone foresee any problems if I use those details?
Their T&C page:
I'm guessing they'll ask for your home address.
Could you give them a work address etc, combined with a false name that you could spot when the post arrives? Depends on the nature of your job I guess. Ok if you're a receptionist etc.
Otherwise you could try giving them the address of an empty house near your home.
Even if you can't access the mail - just say it didn't arrive etc.0
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