Some Thoughts on E&Y (KSFUK) Progress Report of 7.4.2012

  • Gordon 45
  • 22/10/08 n/a (free)
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Posted: Sun, 06/05/2012 - 19:55

Hi All,

Now posting my thoughts on the E&Y (KSFUK) 7.4.2012 Progress Report as an attachment in order to keep the format, hopefully.

I felt this Report gave meaningful information on the progress of the Administration, was upfront on where future returns have to come from and was heartening with regard to the claim (now claims) submitted to Kaupthing hf Winding up Committee.

E&Y (KSFUK) raised the estimated final dividends slightly for unsecured creditors from between 79 – 86p/£ to 81 – 86p/£. So based on 2% of £246.1m = £4.922m or 0.543p/£ to us over our Liquidation

I still think there is a possibility that E&Y (KSFUK)’s lower estimate can move up further towards the 89.08% of our JLs lower estimate on our the loan book. But this report does seem better news for KSFUK and therefore perhaps KSFIOM regarding returns from Kaupthing hf.

Other not so good news from E&Y concerns ‘write offs’. It has always appeared that E&Y and our own JLs have taken different approaches with regard to how they have handled defaulters within the Administration of KSFUK and the Liquidation of KSFIOM. Up until now both ways have appeared to work equally well. But there was another high increase of £193m in ‘write offs’ within KSFUK over the past 6 months, bringing their ‘write off’ total up to £530m or 7.57%of their total assets of c£7,000m. Whereas our ‘write offs’ within KSFIOM have risen slightly to £3.4m or 0.375%. A substantial difference. The only good point in this, is, as I have stated on many occasions now, E&Y are working with a 23% excess in loan book values over requirements whereas our JLs only have a cushion of 8% in book values over cash required. And as Icecrusher and myself have stated on many occasions now there has to be some sort of increase in our ‘write offs’ over the coming months – lets hope any are fairly low in value. But E&Y (KSFUK) with ‘write offs’ of 7.57% at present, could see another 10% added to that if nothing came back from the Kaupthing hf claims. Although it appears more likely now that there will be some form of return.

E&Y continued to downsize their company portfolio within the KSFUK group through Voluntary liquidations, Compulsory Liquidations, and are planning for another four companies to be put into Voluntary Liquidation, leaving one company currently being reviewed regarding ongoing strategy. So E&Y continue to push hard, but incurring ‘write offs’ along the way. They are also continuing to sell on finished developments or trying to get planning modified to change existing part built or unbuilt developments with a view to making them more appealing to would be clients. But again not finding it easy.

According to the report, although yachts/aircraft still comprise 42% of Private Banking it only refers to the remaining three yachts/aircraft. Added to that is the split in their Property Loan book, 35% in the UK and 65% Overseas – not good. It appears that our KSFIOM Property Portfolio is now mainly Overseas also. In E&Y (KSFUK) Private Banking, the Property aspect is worth 47% mainly in UK residential mortgages, but LTV (loan to value ratios are rising).

But some good news re the claim against Kaupthing hf, and hopefully some actual agreed claim figures within the next few months from E&Y.

E&Y will apply to the Courts to extend the Administration by another three years, up until 7.10.2015. They had previously mentioned a two- year increase. This is not good news for us, as it could extend our Liquidation into 2015, when it might have been hoped for an end for us by 2014.

E&Y (KSFUK) also raised their lower estimate of returns to unsecured creditors from 79p/£ to 81p/£. That would mean another £4.922m, to us (or 0.54p/£), it all helps. I will update my Table 12 spreadsheet to allow for this, prior to adding in the data contained in the April figures from the JLs.

E&Y (KSFUK) have not given any dates re any more future dividends, but are hopeful of a 9th dividend by late 2012. That would be great news and a big help towards our next hoped for dividend from the JLS, after the one we will receive around 15.6.2012.

So I still hope we are heading towards an overall return from E&Y (KSFUK) of around the same as our KSFIOM Loan Book, 89.08 – 91.82% and according to my calcs between 95-100% to us from our JLs. But that is obviously looking at the best scenarios.

Let’s assume that the current cash total of £522.290m covers the 10p/£ dividend, the cash held back for unresolved and the balance of the cost of the Administration.

We can then look at what is likely to come back over the balance of the Administration from the three loan books – Private Banking, Corporate loan book and the Property Loan book.

I have looked at the split in percentage terms and value for all three books. I.e. Bi-lateral, Syndicated, Club, Property – UK & Overseas, Yachts/Aircraft, and have once again taken wild guesses as to the % return from all of these areas. In doing that, once I allow for the 8p/£ still to come to cover the 81p/£ lower estimate from E&Y, I feel conservatively that returns will still be in excess of 4p/£, and that returns to E&Y from Kaupthing hf Winding up Committee will yield another 2p/£, bringing their returns up to 87p/£. So, really, no change to my thoughts on returns ex E&Y (KSFUK) to our JLs over the term of their Administration.

You may not agree with all or part of the above and that is understandable, because it is as usual made up of fact, hoped for returns, guestimates into the future, no big losses on our 10 large loans and my own interpretation of how things may pan out. Hope you get the gist of what I am trying to put forward.

But stay positive – 90.8% (GBP) by around the 15.6.2012 from our JLs, and perhaps, just perhaps, another 5p/£ from our JLs between Dec 2012 & Feb 2013 – wouldn’t that be utterly brilliant. Let’s see what I get when I add in the factual April figures from the JLs

And as usual,

God Bless,

Gordon 45

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Thanks

  • everhopeful
  • 11/10/08 n/a (free)
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  • Sat, 16/06/2012 - 05:45

Excellent! Thanks Gordon

James


Thanks

  • insameboat
  • 12/10/08 31/05/09
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  • Fri, 15/06/2012 - 19:55

Thanks again Gordon


The Gordon Reports 06/12

  • Wombat761
  • 30/01/09 20/03/15
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  • Fri, 15/06/2012 - 01:32

Thanks again Gordon


gordon

  • roddy
  • 10/10/08 31/05/09
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  • Mon, 11/06/2012 - 10:24

Weve never commented before so thank you from Roddy and missus in Cornwall,it helps if you have more than half a brain !


Thank you

  • saoversoix
  • 10/10/08 02/07/13
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  • Tue, 15/05/2012 - 15:28

I can't thank you enough for all the work you do to help all of us to understand the issues.


Thank Yo

  • Dolobran
  • 14/01/09 14/07/10
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  • Tue, 15/05/2012 - 14:50

Excellent work and thank you once again for all the hard work you have put in to make sense of all this


Thank you

  • shellshocked
  • 23/10/08 31/05/09
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  • Tue, 15/05/2012 - 13:07

again Gordan for your terrific work.


thank you

  • rippedoff
  • 12/10/08 31/05/09
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  • Tue, 08/05/2012 - 07:06

...for making sense of it all.


Excellent work Gordon. Thank

  • sambururob
  • 10/10/08 n/a (free)
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  • Mon, 07/05/2012 - 16:13

Excellent work Gordon. Thank you as always
Rob and Wendy