| Crapdiff will be debt free by 2021. on 20:33 - Feb 11 with 2250 views | monmouth |
Aye the debt is meaningless but wouldn't half deter any purchaser. Far better to have the debt under control and a club that is living within its means if you want to ditch it. If he's got the debt to 40m he has created a potential platform for discussion...if he can find interested parties.
To be fair to Bluey, I think his has been his endgame hypothesis for a while. I was hoping for something more dastardly from the Tan. |  |
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| Crapdiff will be debt free by 2021. on 20:51 - Feb 11 with 2193 views | blueytheblue |
| Crapdiff will be debt free by 2021. on 20:22 - Feb 11 by Jack1 |
Is Russell Slades the man for that? Do you play many Academy players?
I thought you'd struggle this season to he honest and I'm surprised you're as high as you are. I had you finishing around 14th - shows how much I know! |
We've not had many coming through recently; a lot tread water in the dev squad at the moment.
Oshilaja looks a decent centre back, Ajayi could do well. Some bubbling under like O'Sullivan, just nobody really hammering on the door to play. |  |
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| Crapdiff will be debt free by 2021. on 23:00 - Feb 11 with 2058 views | Clinton |
Cardiff are very lucky boys and girls to receive such benevolence. Effectively amounts to a writing off of well over 100 million quid in all. wow. [Post edited 11 Feb 2016 23:01]
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| If you can fill the unforgiving minute.
With sixty seconds' worth of distance run,
Yours is the Earth and everything that's in it,
And - which is more - you'll be a Man, my son! |
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| Crapdiff will be debt free by 2021. on 23:02 - Feb 11 with 2054 views | monmouth |
| Crapdiff will be debt free by 2021. on 23:00 - Feb 11 by Clinton |
Cardiff are very lucky boys and girls to receive such benevolence. Effectively amounts to a writing off of well over 100 million quid in all. wow. [Post edited 11 Feb 2016 23:01]
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Does that mean he's given them 100m quid to get them from 9th in the championship to 9th in the championship? Excellent. Only in La La Land. | |
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| Crapdiff will be debt free by 2021. on 23:03 - Feb 11 with 2053 views | headcleaner |
So apart from the rebrand what has vinny ever done for the bluebirds/dragons (delete as appropriate) besides he didn't upset the supporters because they don't have any. they only have customers ;) |  | | |
| Crapdiff will be debt free by 2021. on 23:25 - Feb 11 with 2032 views | Pegojack |
The man is a frickin' football genius. |  | | |
| Crapdiff will be debt free by 2021. on 00:20 - Feb 12 with 1995 views | Nookiejack |
Any idea how much Tan paid for the original £100m debt? For example did he buy loan note instruments at the time of his takeover at 100p in £ or 40p in £ ? What was the quantum of these at the time?
Or has debt grown by £100m since his takeover and he has written that amount off?
One possible benefit of Debt to Equity restructurings is Substantial Shareholding Exemption. If you can qualify for the exemption - then any later gain on the Equity you have received from the debt restructuring - will then not be subject to Corporation Tax. (Assuming Tan has invested in Cardiff City via another company).
http://www.gannons.co.uk/tax-law/substantial-shareholding-exemption/
What this then means is the company through which Tan has invested - claims a tax deductible write down of the loan notes restructured - but if then Cardiff City recovers in value - will not pay any Corporation tax on recovery in Equity value.
However it sounds like £40m of debt is still left in Cardiff City company and with end of parachute payments - can't see how Cardiff City can be valued more than the debt - even if you take into account value of stadium? Now or anytime in future. | | | |
| Crapdiff will be debt free by 2021. on 07:16 - Feb 12 with 1947 views | Watchman |
| Crapdiff will be debt free by 2021. on 18:58 - Feb 11 by Flashberryjack |
Maybe it's me......but something doesn't smell right. |
it's called the start of the exit strategy!
Thats when the effects of the parachute payments will come to an end and he will have taken those out of the club and limited his losses!
PR sold him a pup
it'a about the money! |  |
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| Crapdiff will be debt free by 2021. on 08:44 - Feb 12 with 1889 views | Elward |
| Crapdiff will be debt free by 2021. on 23:25 - Feb 11 by Pegojack |
The man is a frickin' football genius. |
All jokes aside there is an element of truth in what he's saying regarding shooting. The amount of times i've watched us make 10 or so amazing passes (usually between the back 4) to then make 1 mistake and the other team quickly pounces and goes up the filed to take 1 shot and score on us. Also we do have a habit of trying to walk it into the net and look for that extra pass when a simple shot would on some occasions be much better. Lost count the amount of times we gone on a break and have someone like Routledge, Montero etc. sprint up the pitch with the ball only to just come to a halt and wait for the rest of the team to catch up to make a pass. | | | |
| Crapdiff will be debt free by 2021. on 08:47 - Feb 12 with 1886 views | ItchySphincter |
I don't know much about this subject but is this a debt/equity swap or a equity/debt swap?
If he owns the majority of the shares what does he gain by doing this? It's not as if the club is worth tens of millions so what does raising a share issue in something relatively low in value gain?
Lisa, Nookie, anyone? Please.
If you could keep it short and relatively straight forward that would good. TIA. |  |
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| Crapdiff will be debt free by 2021. on 08:54 - Feb 12 with 1877 views | ScoobyDoo |
| Crapdiff will be debt free by 2021. on 23:03 - Feb 11 by headcleaner |
So apart from the rebrand what has vinny ever done for the bluebirds/dragons (delete as appropriate) besides he didn't upset the supporters because they don't have any. they only have customers ;) |
In his mind yes we are only customers and that's what upset a lot of us (plus the rebrand) , although he did say supporters yesterday in saying we all should back the manager, must have been a slip of the tongue? 😊 | | | |
| Crapdiff will be debt free by 2021. on 11:03 - Feb 12 with 1809 views | Nookiejack |
| Crapdiff will be debt free by 2021. on 08:47 - Feb 12 by ItchySphincter |
I don't know much about this subject but is this a debt/equity swap or a equity/debt swap?
If he owns the majority of the shares what does he gain by doing this? It's not as if the club is worth tens of millions so what does raising a share issue in something relatively low in value gain?
Lisa, Nookie, anyone? Please.
If you could keep it short and relatively straight forward that would good. TIA. |
This is a debt to equity swap - as Tan his converting his debt for additional equity. An equity to debt swap - would be other way around - converting equity position for debt.
I think as Monmouth, Londonlisa2001 and others have said above:-
1. normally would restructure debt to level which equates to current value of company (this seems to be £40m in Cardiff City's case).
The benefits of this are:-
(a) Asset:Liability Balance Sheet Ratios improve.
.........so should then improve credit insurance scores with rating agencies. Hence then easier to do business with suppliers.
(b) Improves the profit and loss position - as you then do not have large interest payments being charged to the p&l - given large chunks of debt has been converted to equity. Hence previously might be making a loss but now a profit. (This is a benefit if you are just focussing on P&L and not EBITDA/EBITA measurements which shows how much cash company is generating before interest payments).
2. Dilute other shareholders to very low % shareholdings
This is why the Trust was always wary of the Yanks investment - as if they ever provided a loan to club as part of 'Investment' - if club ever ran into financial difficulties (and from latest accounts we don't seem to be as financially stable as we thought)- could convert that loan to equity and dilute away Trust's 21% shareholding.
......you then don't have any significant minority shareholders who could potentially be troublesome.
3. Potential tax implications/benefits
- Avoids tax issues of debt forgiveness
If debt is forgiven - then company could be seen to be receiving income which may then deemed to be taxable. (For the Accountants on here - the Debt is credited through the Profit and Loss Account - hence increases profit - when the Debt if forgiven). Debt to Equity restructuring avoids this (if you follow certain provisions in respective tax act).
Quite interesting why though he proposes to write off £40m of remaining debt over 5 years - at £8m per year?
4. Other Benefits
(a) To incentivise Management they are offered some of the new equity created - hence if business starts achieving equity value they can earn substantial rewards as this can be unlimited (whereas when you recover value of debt it is only limited to 'par' value of debt). Hence can really motivate new management. (Don't know whether Tan would give his management team any equity).
(You also normally give new management at least 5% each to qualify for Entrepreneurs relief - so then only pay CGT rate of 10% on any capital agains then made).
(b) Cosmetically tidy up Balance Sheet for New Investors - so they don't have to do the above when they take over the company. Hence makes the company more marketable. Akin to tidying up your house before you market it for sale. | | | |
| Crapdiff will be debt free by 2021. on 11:12 - Feb 12 with 1803 views | Pegojack |
| Crapdiff will be debt free by 2021. on 08:44 - Feb 12 by Elward |
All jokes aside there is an element of truth in what he's saying regarding shooting. The amount of times i've watched us make 10 or so amazing passes (usually between the back 4) to then make 1 mistake and the other team quickly pounces and goes up the filed to take 1 shot and score on us. Also we do have a habit of trying to walk it into the net and look for that extra pass when a simple shot would on some occasions be much better. Lost count the amount of times we gone on a break and have someone like Routledge, Montero etc. sprint up the pitch with the ball only to just come to a halt and wait for the rest of the team to catch up to make a pass. |
How long before he says:
Forget all this running, passing, throw in, corners, free kick stuff. I noticed teams who score more goals than the other team win games 100% of the time. So I want you to go out and score more goals than the other team. Simples. | | | |
| Crapdiff will be debt free by 2021. on 12:08 - Feb 12 with 1745 views | father_jack |
ffp anything to do with this? |  |
| DRINK, FECK, GIRRRRLLSSS! |
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| Crapdiff will be debt free by 2021. on 13:20 - Feb 12 with 1695 views | Nookiejack |
| Crapdiff will be debt free by 2021. on 12:08 - Feb 12 by father_jack |
ffp anything to do with this? |
Great point - Football League seems to be now tougher on FFP compared to Premier League.
http://www.football-league.co.uk/news/article/2015/football-league-ffp-guidance-
You would assume that Football League would be ok - if historic losses are effectively written off through debt for equity swap.
Owners can then only get their money out through dividends - if a club has distributable profits or share sale.
.........as opposed to in debt case - where if loan principal and interest repayments are not made - owners can then sell assets (players, stadium etc) of the club - so club then effectively folds.
So maybe now Football League Transfer embargo on Cardiff City - will be lifted as well?
http://www.walesonline.co.uk/sport/football/football-news/cardiff-city-transfer- | | | |
| Crapdiff will be debt free by 2021. on 14:14 - Feb 12 with 1648 views | ItchySphincter |
| Crapdiff will be debt free by 2021. on 11:03 - Feb 12 by Nookiejack |
This is a debt to equity swap - as Tan his converting his debt for additional equity. An equity to debt swap - would be other way around - converting equity position for debt.
I think as Monmouth, Londonlisa2001 and others have said above:-
1. normally would restructure debt to level which equates to current value of company (this seems to be £40m in Cardiff City's case).
The benefits of this are:-
(a) Asset:Liability Balance Sheet Ratios improve.
.........so should then improve credit insurance scores with rating agencies. Hence then easier to do business with suppliers.
(b) Improves the profit and loss position - as you then do not have large interest payments being charged to the p&l - given large chunks of debt has been converted to equity. Hence previously might be making a loss but now a profit. (This is a benefit if you are just focussing on P&L and not EBITDA/EBITA measurements which shows how much cash company is generating before interest payments).
2. Dilute other shareholders to very low % shareholdings
This is why the Trust was always wary of the Yanks investment - as if they ever provided a loan to club as part of 'Investment' - if club ever ran into financial difficulties (and from latest accounts we don't seem to be as financially stable as we thought)- could convert that loan to equity and dilute away Trust's 21% shareholding.
......you then don't have any significant minority shareholders who could potentially be troublesome.
3. Potential tax implications/benefits
- Avoids tax issues of debt forgiveness
If debt is forgiven - then company could be seen to be receiving income which may then deemed to be taxable. (For the Accountants on here - the Debt is credited through the Profit and Loss Account - hence increases profit - when the Debt if forgiven). Debt to Equity restructuring avoids this (if you follow certain provisions in respective tax act).
Quite interesting why though he proposes to write off £40m of remaining debt over 5 years - at £8m per year?
4. Other Benefits
(a) To incentivise Management they are offered some of the new equity created - hence if business starts achieving equity value they can earn substantial rewards as this can be unlimited (whereas when you recover value of debt it is only limited to 'par' value of debt). Hence can really motivate new management. (Don't know whether Tan would give his management team any equity).
(You also normally give new management at least 5% each to qualify for Entrepreneurs relief - so then only pay CGT rate of 10% on any capital agains then made).
(b) Cosmetically tidy up Balance Sheet for New Investors - so they don't have to do the above when they take over the company. Hence makes the company more marketable. Akin to tidying up your house before you market it for sale. |
So where does the extra equity come from? As in, if he's gaining it who's giving it up? How much more equity is there that he doesn't already have? | |
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| Crapdiff will be debt free by 2021. on 15:42 - Feb 12 with 1599 views | HugeEnkins |
| Crapdiff will be debt free by 2021. on 11:12 - Feb 12 by Pegojack |
How long before he says:
Forget all this running, passing, throw in, corners, free kick stuff. I noticed teams who score more goals than the other team win games 100% of the time. So I want you to go out and score more goals than the other team. Simples. |
One of the boys I used to play football with (right back) would often shout 'Score' when we were attacking regardless of the situation in which we were attacking, making it sound like the easiest thing in the world!  |  | | |
| Crapdiff will be debt free by 2021. on 15:57 - Feb 12 with 1583 views | Nookiejack |
| Crapdiff will be debt free by 2021. on 14:14 - Feb 12 by ItchySphincter |
So where does the extra equity come from? As in, if he's gaining it who's giving it up? How much more equity is there that he doesn't already have? |
The Company (Cardiff City) issues additional equity and Tan subscribes for that equity with regards to a certain agreed proportion of his debt outstanding.
Existing shareholders wouldn't normally give up or sell their Equity (sometimes they do) in a Debt for Equity restructuring.
As an example say initially there were 100 shares in issue - of which Tan had 75 shares (75% ownership) and Other shareholders 25 shares (25% ownership)
.......then after Debt for Equity swap - where say 900 new shares are issued to Tan for certain proportion of his debt then new position would be........
Total Shares = 1,000 (100 + 900) which would then comprise Tan - 975 shares (97.5% ownership) and Other Shareholders 25 shares (2.5% ownership).
Hence why others on this thread have commented that Tan will have diluted Other Shareholders away.
In my example (not the real case) Other Shareholders would have been diluted down from 25% to 2.5%. | | | |
| Crapdiff will be debt free by 2021. on 18:55 - Feb 12 with 1495 views | blueytheblue |
| Crapdiff will be debt free by 2021. on 15:57 - Feb 12 by Nookiejack |
The Company (Cardiff City) issues additional equity and Tan subscribes for that equity with regards to a certain agreed proportion of his debt outstanding.
Existing shareholders wouldn't normally give up or sell their Equity (sometimes they do) in a Debt for Equity restructuring.
As an example say initially there were 100 shares in issue - of which Tan had 75 shares (75% ownership) and Other shareholders 25 shares (25% ownership)
.......then after Debt for Equity swap - where say 900 new shares are issued to Tan for certain proportion of his debt then new position would be........
Total Shares = 1,000 (100 + 900) which would then comprise Tan - 975 shares (97.5% ownership) and Other Shareholders 25 shares (2.5% ownership).
Hence why others on this thread have commented that Tan will have diluted Other Shareholders away.
In my example (not the real case) Other Shareholders would have been diluted down from 25% to 2.5%. |
Tan already has over 90% of shares from memory.
From what I've read, 40m of debt remains which will be also converted to equity over the next 5 years at 8m per year - believe the limit is due to FFP? | |
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| Crapdiff will be debt free by 2021. on 19:13 - Feb 12 with 1475 views | Nookiejack |
| Crapdiff will be debt free by 2021. on 18:55 - Feb 12 by blueytheblue |
Tan already has over 90% of shares from memory.
From what I've read, 40m of debt remains which will be also converted to equity over the next 5 years at 8m per year - believe the limit is due to FFP? |
Yes the Walesonline FFP article above suggested the £8m - interesting why Football League has put a limit on this across the League and why £8m?
So will be debt free then - if I suppose break even on cumulative basis over next 5 years and he therefore doesn't have to put more debt in to Finance net cash outflow over next five years.
Will he really be around for next 5 years though?
Seems all to point to Tan - getting club ready for sale and complying with FFP so that transfer embargo is lifted (which would also help with regards to a sale). | | | |
| Crapdiff will be debt free by 2021. on 19:20 - Feb 12 with 1468 views | blueytheblue |
| Crapdiff will be debt free by 2021. on 19:13 - Feb 12 by Nookiejack |
Yes the Walesonline FFP article above suggested the £8m - interesting why Football League has put a limit on this across the League and why £8m?
So will be debt free then - if I suppose break even on cumulative basis over next 5 years and he therefore doesn't have to put more debt in to Finance net cash outflow over next five years.
Will he really be around for next 5 years though?
Seems all to point to Tan - getting club ready for sale and complying with FFP so that transfer embargo is lifted (which would also help with regards to a sale). |
Apparently the club made a profit last season.
Be amazed if that was true, but if so it shows the club have at least taken finances seriously.
The disparity in Prem money / Champ money is only going to grow and I suspect a few clubs may go under in the future. | |
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| Crapdiff will be debt free by 2021. on 19:49 - Feb 12 with 1448 views | NeathJack |
| Crapdiff will be debt free by 2021. on 15:57 - Feb 12 by Nookiejack |
The Company (Cardiff City) issues additional equity and Tan subscribes for that equity with regards to a certain agreed proportion of his debt outstanding.
Existing shareholders wouldn't normally give up or sell their Equity (sometimes they do) in a Debt for Equity restructuring.
As an example say initially there were 100 shares in issue - of which Tan had 75 shares (75% ownership) and Other shareholders 25 shares (25% ownership)
.......then after Debt for Equity swap - where say 900 new shares are issued to Tan for certain proportion of his debt then new position would be........
Total Shares = 1,000 (100 + 900) which would then comprise Tan - 975 shares (97.5% ownership) and Other Shareholders 25 shares (2.5% ownership).
Hence why others on this thread have commented that Tan will have diluted Other Shareholders away.
In my example (not the real case) Other Shareholders would have been diluted down from 25% to 2.5%. |
Given that he already owned around 95%+ of the club, what this debt to equity is really is just a glorified debt wright off isn't it?
I mean, the club isn't worth the amount he's "paid" for the equity in reality. |  | | |
| Crapdiff will be debt free by 2021. on 20:07 - Feb 12 with 1436 views | Nookiejack |
| Crapdiff will be debt free by 2021. on 19:49 - Feb 12 by NeathJack |
Given that he already owned around 95%+ of the club, what this debt to equity is really is just a glorified debt wright off isn't it?
I mean, the club isn't worth the amount he's "paid" for the equity in reality. |
Yes agreed - tidying up Balance Sheet ready for sale | | | |
| Crapdiff will be debt free by 2021. on 23:14 - Feb 12 with 1342 views | Brynmill_Jack |
| Crapdiff will be debt free by 2021. on 18:21 - Feb 11 by ScoobyDoo |
The rebrand was a big issue and the way he treated long and loyal supporters, some that have never set foot in there since. I must admit I have never been his biggest fan but he has taken the wind out of my sails with this announcement. |
Loyal my arse. They don't ant to go now because you're not high enough in the table. That's dedicated innit |  |
| Each time I go to Bedd - au........................ |
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| Crapdiff will be debt free by 2021. on 23:53 - Feb 12 with 1316 views | ItchySphincter |
| Crapdiff will be debt free by 2021. on 19:49 - Feb 12 by NeathJack |
Given that he already owned around 95%+ of the club, what this debt to equity is really is just a glorified debt wright off isn't it?
I mean, the club isn't worth the amount he's "paid" for the equity in reality. |
That's what I was getting at. Sounds like boIIocks. There'll be a price to pay somewhere down the line. | |
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