Finalised thoughts on JLs 9th July Progress Report
Hi Folks,
Finished my thoughts on the data contained in the Progres Report, and have attached it as an attachment in order to retain the format.
Will now update my Table 11 based on this report, taking account of data contained in the July figures, which partly update the report data. Will then issue another post on estimates.
Sorry for this separate post but you cannot attach an attachment to a reply,
Gordon 45
| Attachment | Size |
|---|---|
| 2011.8.14 - finalised thoughts on the JLS 6 monthly report of 9.7.2011.doc | 36.5 KB |
(9 votes)
@G45 Top 10 Loans
Hi Gordon, forgive me for saying, but regarding the 'Rolling Top 10' largest loans, whatever numbers are chosen to allocate to each tier to determine the top 10 value (£104m for 9/7/11) must also be used in calculating the total debt outstanding (£154m at 9/7/11). The numbers given in your attachment sum to £104m, but using them to determine the total debt brings a result of £239m which is £85m too much - and this is without allocating any value to the lowest tier of the Value Table. This is a tricky issue, and the numbers must also fit the total debt and top 10 for the end of July. As I see it, the only way this works is that the last two top tier loans were very high value and the last remaining loan in that tier is the highest. I would prefer you calculate the value yourself to cross-check, but the 2nd tier loans average (I believe) almost £8.5m whilst the third tier comes in a little over £1.5m on average. The 26 loans now remaining in the lowest tier average a little under £300k in my estimation. My figures give results that satisfy the top 10 and the total sum for both 9/7/11and 31/7/11 but it may be possible to get a similar result with lower high-end values - I've just not been able to do that - but I'm not happy with the high value debt that I'm getting from a single loan either.
Ice
To Icecrusher
Icecrusher,
Thank you for your reply.
Would just like to say a couple of things to you without us getting into to technical a situation over the 10 large loans.
The reason I took the 7 loans at £69m was to show a worst situation with regard to them.
I do think my £17m is a reasonable guess based on info the JLs gave re their first set of 10 loans and then the make up of their second set of loans (by deduction).
At the time of the info re the second set the average overall was around £11.2m but that included by deduction the 4 new loans in the 10 valued at around £6.4m each (I think). It left the other 6 at far higher values.
So when the £12.353m was repaid in July from 2012 I think it left the one at over £10m around the £17m mark.
The second tier which I showed high on purpose to give a worst scenario I think is around £5m each on average.
The third tier I think around the 2.5 - £3.0m average.
and the fourth and lowest tier is around £0.5m each.
Which means 17+35+75+13.5 = £140.5m
So we still differ on the average on each tier, but I do not think that matters very much at present. What we need is the one really large remaining high loan repaid, so that whether we are then at an average of £8.5m or £5m per loan for the remaining 7 loans between £ 5-10m, the danger to defaulting has a far less effect on our returns. The same with these 7 loans, we need them repaid in order to greatly minimise the dangers of defaults to ourselves. But we know that the loan of £8m due in 2014 is one of them. And I think I do show, sadly higher end values giving a similar result to yourself. The JLs have mentioned the Spanish Property and I think based on the current situation in Spain there will be a substantial loss on that, the same with the aircraft that has not been sold off yet (although it's value is not massive). The yachts may be a bigger problem. So as I said in my thoughts we can expect some increase in 'write offs' shortly. The good point in the Progress Report for me was the values in property in the London area going up since 2009 (where over half the value in property in the portfolio is based there) and 66% of the remaining £140.8m is in residential property. So we have a substantial way to go before the JLs 'write off' £40m. And as I said and you appear to agree even with a £60m lost from £140.8m we can still expect around 90/91% return in our cash.
Just one other point, I do think sadly that we could see a figure of above £30m being put back from 2011 loans into 2012. But that again will depend on any higher value loans being repaid or not repaid this year. I personally do not feel despondent if that happens as returns this year so far, are way above that achieved from loans in 2009 & 2010 (from actual loans due in those years). and returns from later years are by far the best this this year in % terms.
And remember we will reach 80% this year. Once we get the £12.305m back from E&Y (KSFUK) we almost have the 6.4% required.
So we should stay positive at our possible 90%+ return at this stage.
Perhaps we are not so far apart now in our estimations and thoughts.
Gordon 45
@G45 (and others) Top 10 Loans
Gordon 45,
Thanks for coming back quickly on this; I understood why you presented it the way you did and I couldn't agree with you more that the important thing is to see that highest debt repaid (soon!). When you say that you selected a high of £5m in the 2nd tier as worst case I think you meant 'low' as £5m is the lowest limit of the tier and lower values make the worst case of raising the value of debt on the highest loan. The figures you now show above sum to a total debt of £140.5m which is close enough to the £140.9m owed on the 31/7/11, but these numbers then only make the top ten loans on that date worth £53.7m instead of around £93m (I said its tricky!)
My concern (and yours too I imagine) is that we get the best answers possible from the JLs and figure the rest out to check that we're not being led a merry dance. As you will know, I've been carping on about deferred debt and the obscuration of defaults by virtue of the many substantial loans being repaid early; I think you have elevated your own concern about this more recently and indeed have made several comments upping the ante along the way.
The JLs made what I consider a strange comment in the July CR, viz: "As at 9 July 2011, the ten largest loan relationships accounted for £104m outof the outstanding loans total of £154m, being 68% by value. The percentage represented by the ten largest loan relationships will rise as the loan book falls both in outstanding amounts and the number of loans to be repaid."
Is this really true? If I have £104m in top ten debt and £154m of total debt and then a 2nd tier loan of (say) £10m is repaid, then 94/144% = 65% which is 3% less not more! Not only that, but as each top 10 debt gets repaid, then lower tier debts move up and further dilute the total value of the top 10 debt. Their statement could come true if the JLs anticipate fewer large debts will now be repaid compared to lower value debts. Why did the JLs start reporting the top ten debts? They generally act to conceal what they don't really want us to know and I venture that the top 10 debt saga has been a useful way of averaging total debt without revealing the size of the maximum loan in each tier. The highest loan of all could effectively remain in the top tier until the very end with its real value obscured ever more by lesser-value loans moving up (you know how cynical I am). And another thing that's bugged me about the top tier in their Value Table is that it has no upper limit, no >=£10m < £20m, not at all; the JLs left the top tier open-ended - why did they do that?
Gordon, I've been working on a tool to try and fathom the real value sitting in the top tier and I will upload it to this website for you and others to play around with. You said in an earlier comment something like "just for fun lets try..." Well, this tool could be a bit of fun for our colleagues to try too; the name of the game is to enter your own combination of numbers and try and get the highest loan to its least value, but still satisfy all other criteria: keep within the tier limits; match the top ten value; match the total value and keep to the number of loans in each band for the chosen date. Repeat the exercise with the same derived averages and match everything to the end of July figures. My tool is automatically set to do this on my numbers, so the idea would be to make another copy of the attachment and write your own numbers on top of mine thus rendering the auto function inoperative. This bit of fun has a serious side; I think there's a lot of money 'up there' and deperately wish to find out how much...
Ice
To Icecrusher again - top 10 loans
Hello again Icecrusher,
A lot of good stuff in your above comments and I did find it a bit queer like you, when JLs said as you quote below
''The percentage represented by the ten largest loan relationships will rise as the loan book falls both in outstanding amounts and the number of loans to be repaid."
for the reason you give.
Look forward to you uploading the means that might determine the size of the largest loan.
But got to say I'm not unduly worried at this stage as I think the returns will keep coming this year and next at least. The worry for me as I have hinted at is:
If we get around another 8% this year, dependent upon returns in the first half of next year we could see a situation of no return around June 2012 but a larger return later in 2012 that still gets us to 90% by the end of 2012. So you perhaps take your pick;
Either 6.4% this year = 80% +5% next June + 5% = 90% by Dec 2012 or perhaps 8% this year = 81.5% + 8.5% by dec 2012 = 90%.
Our next return will be helpful as regards the above scenario.
Gordon 45
@Gordon - top ten tool
Thanks Gordon; you should be able to download the tool from the 'Rolling Top Ten' forum now. Regarding the returns, I would personally see the minimum sum of 5p/£ back right now than wait weeks/months for a penny or two more. I know that people will say it costs more to administrate, but really, these sums are very small compared with the way forex could (and frequently does) make or lose a fortune every day! I want my money in my pocket now so I can do with it what I want, not have it in the KSFIoM bank for any longer than it need be there! Others will have their own reasons which is perfectly OK with me too.
Ice
HEAR HEAR
Dear Ice,
Couldn't agree with you more!
As I recall, the Liquidator and COI stated that their policy is that they would not make payments unless/until the 5p/£ threshold was reached - for cost/administration reasons. In that case, I would suggest that as soon as that threshold is reached, the dividend/payment should be made, regardless of the time of year. As you say, I would rather have 5p/£ in my hand now, than wait until the end of the year for a couple of more pennies!
i get the feeling that our Liquidator likes to save up our payments/returns until the end the of year so that he can present us all with a nice Christmas 'gift'.......... or perhaps I'm being a little uncharitable/cynical?
Kind regards,
Mike
Here, here. I agree with Ice.
Here, here.
I agree with Ice. Those of us who convert our returns to another currency have been watching our savings decline as Sterling does. I for one would prefer to see 5p/£ sooner rather than a few pence more in 4 months time.
Regards, TonyC
prefer pay little and often
We agree with the above.
Rather our money in our hand than in the KSFIOM bush even if it means slightly less owing to admin costs.
Rob and Wendy
prefer pay little and often
Has my vote too.