[urlhttp://www.bradfordbulls.co.uk/news/5791/BULLS%20CHAIRMAN%20CLARIFIES%20CLUBS%20BANKING%20RELATIONSHIP[/url

Thank you Mr Hood

Can someone reconcile the assertion made by Hood in sentence 3 with the other two sentences from Hood's statement please?

Hood says that

1) "the Club provided NatWest with a ‘debenture' - a type of ‘mortgage' over all of the Club's assets in whatever form."

2) "the debenture was left in place against the possibility of a new facility perhaps being needed in future."

and yet he asserts

3) "At no time has NatWest (overdraft) ever been specifically secured on the stadium"


This seems contradictory to me and accords with the Bank's version (much as I despise RBS). i.e. The Bank believed their credit line (overdraft) was secured against the 'Club's assets in whatever form' (Hood's own words) and once we sold the leasehold to Odsal (presumably without informing the Bank) they withdrew the overdraft because of the reduction in security such a sale represents.

Took long enough for him to tell us that, instead he kept quiet.

It would have taken him an hour to compose and post that on the bulls website right after the announcement was made, so we all knew where the club stood

Think he has been rather busy, give the guy some credit for doing this.

Onward and forward, lets save the Bulls COYB

A debenture is a floating charge. Which, by definition, is over assets that are NOT fixed, like property, but change from time to time.

You secure a loan on specific property by means of a fixed charge (mortgage).

At the time the debenture was put in place, there WAS no property asset to give a fixed charge over.

And one was never granted even once there was. (Source: Companies House).

If you're busy fighting a fire, it might take someone slightly removed from the situation to help you direct the water better? Maybe he got a bit of outside advice today that he didn't have yesterday?

Any clarification is welcome, even more would be good.

This seems contradictory to me and accords with the Bank's version (much as I despise RBS). i.e. The Bank believed their credit line (overdraft) was secured against the 'Club's assets in whatever form' (Hood's own words) and once we sold the leasehold to Odsal (presumably without informing the Bank) they withdrew the overdraft because of the reduction in security such a sale represents.'"

Perhaps he wasn't aware of the incorrect information that was being put around until someone informed him. Anyway it's good he has clarified the situation. It was strange to think the club would do that without thinking it through.

Interesting then that Hood states that the debenture was against 'all of the Club's assets in [iwhatever[/i form'.

Your argument seems to hinge on whether the lease is a fixed asset or not? I would suggest the Bank's view is that it is not and therefore would come under the terms of the original debenture as suggested also by Hood's statement?

If your argument is right Adey and the Bank had no reason to believe the lease formed part of their security against the credit line they were offering, your position also seems to contradict another part of Hood's statement where he states:

"the bank now had substantial extra security in the form of land and buildings worth multiple millions of pounds"

I could give them the benefit of the doubt, but this statement doesn't help clarify things, so perhaps you should start drafting their statements on these issues.

Ultimately I'm afraid this still looks to me like poor financial management - not discussing the RFL purchase of the lease with the Bank and the Bank withdrawing credit as they're entitled to do (unfortunately).

Why all the talk about RBS then? It's NatWest? Or am I being dim?
My account is in NatWest in Bradford. I think I might be going to close it tomorrow.

Company's net assets INCREASE significantly in January, due to profit on sale of lease (book value zero).

Bank has personal guarantees anyway to cover more than what is owed, quite apart from security over all the assets anyway, ranking only behind preferntial creditors (effectively employees to a certain limit).

Lease (as was) of doubtful value, if any at all, for purposes of security.

Bank pulls facility.

I'm struggling to see how this equates with "bad financial management", tbh.

[urlhttp://www.natwest.com/global/about-us.ashx[/url

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Right, s. That's my account closed then.

I've been meaning to shut it anyway, ever since they f*****d me over when I was a student.

23 years ago.

Why do you think the bank pulled the facility if there was no change, was it just getting debt off the RBS book?

Two simple questions Adey,

Did they speak with the Bank about any impacts the sale of the lease might have on their overdraft facility?

Do you consider Hood's statement to be clear and to show a good understanding of the way their overdraft facility was structured?

Quite possibly.

RBS has got to shrink its balance sheet significantly. And has to pay fees to HMG on its assets (i.e. loans etc it makes).

I was told categorically a few years ago that RBS had no appetite whatsoever for RL clubs. From RBS.

Lending to the likes of Bulls will never be seen as high-quality lending.

And banks are looking at the likes of Rangers FC and Plymouth FC and all the other sporting club disasters waiting to happen with considerable concern.

So yes, it seems quite feasible to me, in the absence of more detailed information.

Needed the money to give RBS directors their bonuses!

I believe the assumption was that the bank would actually be happier, since they turned an "asset" with no book value and probably no real value as a security into cash, which has.

I believe the staement is worded to try and make it relatively easy to understand. I am very satisfied that the club had a good understanding of the way their overdraft was structured, since it was explained directly to me and I was able to (and took) the opportunity to ask direct questions. And to hear the tone of the responses, and the feeling behind them.

Personally? It looks to me like RBS used this as an excuse. But only those party to the discussions will know for sure.

But stop keep asking me. Ring Duckett or Hood and [uask them.[/u And form your own view, like I did.

Furthermore, the directors provided NatWest with personal guarantees. Today those personal guarantees are collectively amount to approximately twice what the Club owes the bank.

So if there are guarantees in place then were is the issue, why the need for £1million. Time to pay the overdraft or call in the guarantees. Surely thats the purpose of a Guarantee.

Eh?

The guarantees were from the directors to the bank. To be called in by the bank if the club did not repay the overdraft.

What the hell has that got to do with why the need for funds? The club need the funds in part to plug the gap left now they have no overdraft facility, and in part to pay the RFL earlier than they expected. As they have stated.

No idea what your point is?

I must admit that its the RFL deal that is confusing me far more than the role of RBS. RBS seem to be acting like a bank, perhaps unreasonably, but thats not entirely surprising.

But I just dont understand the RFL deal. I was under the impression that, rather than turning the "asset" into cash , they were using it to cancel a loan from the RFL? Would RBS have known about this debt? And its how that loan came about in the first place, and its terms, that I find mystifying. From what I can gleam it seems there are three elements to the crisis:

1) RBS withdrawing the facility (presumably we still owe them the money?)

2) Some vague suggestion of a large but unquantified HMRC debt.

3) The RFL seemingly arbitrarily re-scheduling repayment dates on what was a debt but is now a lease

All very confusing

See PM.

So your point is they have paid the overdraft releasing the directors of their guarantees. But left no funds to plug the gap.

In the end it was the BOD who took the loans, who took the overdraft, who offered the guarantees and then have paid off in the fashion you describe.

So my point is the Chairman is saying they had guarantees in place to cover this overdraft. However because the overdraft has been called in they are now short of cash. To the tune of £1million.

We can all moan if our loans are called in, but in the end if we take those loans then it's our job to pay them and have the assets in place to pay them.

No.

The bank called in the overdraft. It was not the directors's choice. They were happy to leave the guarantees - assets - in place.

And the overdraft is only a part of the cash requirement. Far less than the £1m.

I suspect you don't really understand the process of commercial lending?

Adey, think you're being slightly harsh on people who aren't as savvy at all this as you are.

Think people are just trying to get their heads round it - I'm blooming struggling myself!



So, the bank called the overdraft in - contrary to what they said t'other day. The bit im lost on is this guarantees business - what exactly does that entail?