Board plan additional investment in Tigers

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Tigerbeat
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Board plan additional investment in Tigers

Post by Tigerbeat »

https://www.leicestertigers.com/news/cl ... t-230215-2

Leicester Tigers directors Tom Scott and Peter Tom have made an investment commitment which could raise up to £13m for the club.
The proposal would see Scott, a non-executive director, and executive chairman Tom increase their shareholdings in the club.
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bendy
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Re: Board plan additional investment in Tigers

Post by bendy »

I know supporters blow hot and cold on the Board, but I can't see this as being anything other than great news for the club.

Whatever your opinions on the individuals concerned, them putting their money where their mouths are is brilliant to see.

Thumbs up from me.
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Re: Board plan additional investment in Tigers

Post by TigerFeetSteve »

I'm not the most financially savy guy.

If I'm reading the articles correctly.

This is them buying new shares TS £10million worth & PT £3million worth.

This then increases their shareholding to a point where they "could" be forced to buy out remaining shareholders (so take over the company completely). However they are asking shareholders to sign a waiver to allow them to increase their shareholding to those levels without purchasing the full club.

Is that correct?!?
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Re: Board plan additional investment in Tigers

Post by TigerFeetSteve »

bendy wrote: Wed Feb 15, 2023 12:38 pm I know supporters blow hot and cold on the Board, but I can't see this as being anything other than great news for the club.

Whatever your opinions on the individuals concerned, them putting their money where their mouths are is brilliant to see.

Thumbs up from me.
Indeed £13million into the club is a good thing at these times. Clearing debts or a new infrastructure project incoming possibly?
Used to run around with an 11, 14 or 15 on my back.
bendy
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Re: Board plan additional investment in Tigers

Post by bendy »

TigerFeetSteve wrote: Wed Feb 15, 2023 12:45 pm

Indeed £13million into the club is a good thing at these times. Clearing debts or a new infrastructure project incoming possibly?
From the detailed circular, sounds much more like the former:

"It has become clear to the Board that the events of the last few months outlined above represent a very significant challenge
to the Company’s financial position particularly having regard to, inter alia, the requirement to meet the terms of ongoing
credit and loan facilities with HSBC, DCMS and certain Shareholders. The Board has therefore concluded that it is now
essential to take steps to secure additional funding in order to be able to meet the Company’s near term working capital, debt service and growth requirements and to put the Company in a sound financial position for the medium term. After due
consideration, the Board approached certain of the Company’s Shareholders to elicit support for an equity fund raising"
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Re: Board plan additional investment in Tigers

Post by TigerFeetSteve »

bendy wrote: Wed Feb 15, 2023 12:50 pm
TigerFeetSteve wrote: Wed Feb 15, 2023 12:45 pm

Indeed £13million into the club is a good thing at these times. Clearing debts or a new infrastructure project incoming possibly?
From the detailed circular, sounds much more like the former:

"It has become clear to the Board that the events of the last few months outlined above represent a very significant challenge
to the Company’s financial position particularly having regard to, inter alia, the requirement to meet the terms of ongoing
credit and loan facilities with HSBC, DCMS and certain Shareholders. The Board has therefore concluded that it is now
essential to take steps to secure additional funding in order to be able to meet the Company’s near term working capital, debt service and growth requirements and to put the Company in a sound financial position for the medium term. After due
consideration, the Board approached certain of the Company’s Shareholders to elicit support for an equity fund raising"
Definitely primarily the former having just read the circular.

It seems if it's voted down we plan to appoint administrators.
Used to run around with an 11, 14 or 15 on my back.
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Re: Board plan additional investment in Tigers

Post by Hot_Charlie »

TigerFeetSteve wrote: Wed Feb 15, 2023 12:57 pm

It seems if it's voted down we plan to appoint administrators.
If the Resolutions are not passed then the proceeds of the Initial Subscription and the Further Subscription will not be received by the Company and the Board would have to find urgent alternative funding.
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Re: Board plan additional investment in Tigers

Post by CrumblingTerrace »

My layperson's understanding of this is that it's very bad news for the club (we urgently need money), and very good news that Tom Scott and Peter Tom are willing/able to invest £13m.

Our most recent set of accounts didn't paint this picture, so this feels very out of the blue.
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Re: Board plan additional investment in Tigers

Post by Darc Tiger »

Some pretty alarming implications, though fortunate that we can buy ourselves time to overcome some hurdles.
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Re: Board plan additional investment in Tigers

Post by daktari »

CrumblingTerrace wrote: Wed Feb 15, 2023 1:20 pm My layperson's understanding of this is that it's very bad news for the club (we urgently need money), and very good news that Tom Scott and Peter Tom are willing/able to invest £13m.

Our most recent set of accounts didn't paint this picture, so this feels very out of the blue.
affect of the current financial situation, Liz Truss' non-budget which trashed the economy, Worcester and Wasps going under, and the inexplicable cost of fuel. If we are in trouble its got to be expected that most of the other clubs are as well - though they have sugar daddies , we don't really
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marillion 19, coming ....er not sure..
Tigersunited
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Re: Board plan additional investment in Tigers

Post by Tigersunited »

Wow and blimey, that’s a massive vote of confidence from our major shareholders, at the same time a clear insight into the parlours state of professional rugby. Makes me question just what the RFU & PRL are doing?? “Asleep at the wheel” I think the select committee said.
I just hope we have more than a couple of teams to play against.
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Re: Board plan additional investment in Tigers

Post by AViewFromLe2 »

For context, I work in Commercial Finance, specifically Working Capital and have done so for the last 10 years. In my opinion, this is a cash flow squeeze that has affected the club, and has meant that we will breach our HSBC overdraft limits. I suspect we know that no extra funding will be coming from the bank which is why this action has had to be taken & taken quickly.

The cash flow squeeze has been caused by multiple factors, all combining at the same time:

- The cancellation of fixtures - Worcester & Wasps - contributing to a severe fewer home games at this point of the season than normal, so much less cash in the bank
- Interest rates rising fast. Quite a lot of our large lending is a percentage above LIBOR. 3 month LIBOR is currently 4.85% I believe today. It was 0.10% throughout most of 2020 and 2021, so our total borrowing costs are circa 7-8% on large sums of money. That is going to be hurting.
- Energy rates rising. This again will be hitting us as it is variable and has gone up (we can all identify with that).

As a result, our day to day cash position is severely under pressure. In simple terms, we are running out of money at present. This investment reads to me as a cash injection to cover the overdraft limits being breached. It is a good thing that this option is available to us, because the alternative is grim.

This motion really does need to be passed, because there are frankly limited options. The Alternative Lending market is also not a guaranteed vehicle for funding being provided, as we may be too risky to be offered funding, or if it is offered, it under such crippling rates as to not be worth doing. Hence why it says if this is not passed, the administrators are called in.

The positive that can be taken from this, is that we have 6 home games left. This will hopefully allow us to catch up our cash position alongside this investment and secure our position financially medium term. But this should be another wake up call for rugby across the board.
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Re: Board plan additional investment in Tigers

Post by wigworth »

AViewFromLe2 wrote: Wed Feb 15, 2023 1:48 pm For context, I work in Commercial Finance, specifically Working Capital and have done so for the last 10 years. In my opinion, this is a cash flow squeeze that has affected the club, and has meant that we will breach our HSBC overdraft limits. I suspect we know that no extra funding will be coming from the bank which is why this action has had to be taken & taken quickly.

The cash flow squeeze has been caused by multiple factors, all combining at the same time:

- The cancellation of fixtures - Worcester & Wasps - contributing to a severe fewer home games at this point of the season than normal, so much less cash in the bank
- Interest rates rising fast. Quite a lot of our large lending is a percentage above LIBOR. 3 month LIBOR is currently 4.85% I believe today. It was 0.10% throughout most of 2020 and 2021, so our total borrowing costs are circa 7-8% on large sums of money. That is going to be hurting.
- Energy rates rising. This again will be hitting us as it is variable and has gone up (we can all identify with that).

As a result, our day to day cash position is severely under pressure. In simple terms, we are running out of money at present. This investment reads to me as a cash injection to cover the overdraft limits being breached. It is a good thing that this option is available to us, because the alternative is grim.

This motion really does need to be passed, because there are frankly limited options. The Alternative Lending market is also not a guaranteed vehicle for funding being provided, as we may be too risky to be offered funding, or if it is offered, it under such crippling rates as to not be worth doing. Hence why it says if this is not passed, the administrators are called in.

The positive that can be taken from this, is that we have 6 home games left. This will hopefully allow us to catch up our cash position alongside this investment and secure our position financially medium term. But this should be another wake up call for rugby across the board.
Perhaps you might know working in commercial finance but surely a company the size of Tiger's taking on largish type loans with variable rates would hedge out some of this interest rate risk? Especially if the loans are linked to Libor, there are plenty of ways to protect yourself.
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Re: Board plan additional investment in Tigers

Post by AViewFromLe2 »

wigworth wrote: Wed Feb 15, 2023 2:09 pm
AViewFromLe2 wrote: Wed Feb 15, 2023 1:48 pm For context, I work in Commercial Finance, specifically Working Capital and have done so for the last 10 years. In my opinion, this is a cash flow squeeze that has affected the club, and has meant that we will breach our HSBC overdraft limits. I suspect we know that no extra funding will be coming from the bank which is why this action has had to be taken & taken quickly.

The cash flow squeeze has been caused by multiple factors, all combining at the same time:

- The cancellation of fixtures - Worcester & Wasps - contributing to a severe fewer home games at this point of the season than normal, so much less cash in the bank
- Interest rates rising fast. Quite a lot of our large lending is a percentage above LIBOR. 3 month LIBOR is currently 4.85% I believe today. It was 0.10% throughout most of 2020 and 2021, so our total borrowing costs are circa 7-8% on large sums of money. That is going to be hurting.
- Energy rates rising. This again will be hitting us as it is variable and has gone up (we can all identify with that).

As a result, our day to day cash position is severely under pressure. In simple terms, we are running out of money at present. This investment reads to me as a cash injection to cover the overdraft limits being breached. It is a good thing that this option is available to us, because the alternative is grim.

This motion really does need to be passed, because there are frankly limited options. The Alternative Lending market is also not a guaranteed vehicle for funding being provided, as we may be too risky to be offered funding, or if it is offered, it under such crippling rates as to not be worth doing. Hence why it says if this is not passed, the administrators are called in.

The positive that can be taken from this, is that we have 6 home games left. This will hopefully allow us to catch up our cash position alongside this investment and secure our position financially medium term. But this should be another wake up call for rugby across the board.
Perhaps you might know working in commercial finance but surely a company the size of Tiger's taking on largish type loans with variable rates would hedge out some of this interest rate risk? Especially if the loans are linked to Libor, there are plenty of ways to protect yourself.
To a certain extent you can protect yourself, mainly cutting costs and growing revenues. That would hopefully throw off enough cash to meet your repayments. However if the rate increases go over your tolerance, and you have an income gap, which we have had with our lopsided fixture list, then that is where your problems are caused. This is what has happened here IMO. It is a perfect storm coming together.

It's no different to a personal scenario with your mortgage. If your rate goes up to a level that you're on the edge with, you may find it hard to pay but you still make the repayment. However if you then do not get paid that month then you have an issue.
wigworth
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Re: Board plan additional investment in Tigers

Post by wigworth »

AViewFromLe2 wrote: Wed Feb 15, 2023 2:33 pm
wigworth wrote: Wed Feb 15, 2023 2:09 pm
AViewFromLe2 wrote: Wed Feb 15, 2023 1:48 pm For context, I work in Commercial Finance, specifically Working Capital and have done so for the last 10 years. In my opinion, this is a cash flow squeeze that has affected the club, and has meant that we will breach our HSBC overdraft limits. I suspect we know that no extra funding will be coming from the bank which is why this action has had to be taken & taken quickly.

The cash flow squeeze has been caused by multiple factors, all combining at the same time:

- The cancellation of fixtures - Worcester & Wasps - contributing to a severe fewer home games at this point of the season than normal, so much less cash in the bank
- Interest rates rising fast. Quite a lot of our large lending is a percentage above LIBOR. 3 month LIBOR is currently 4.85% I believe today. It was 0.10% throughout most of 2020 and 2021, so our total borrowing costs are circa 7-8% on large sums of money. That is going to be hurting.
- Energy rates rising. This again will be hitting us as it is variable and has gone up (we can all identify with that).

As a result, our day to day cash position is severely under pressure. In simple terms, we are running out of money at present. This investment reads to me as a cash injection to cover the overdraft limits being breached. It is a good thing that this option is available to us, because the alternative is grim.

This motion really does need to be passed, because there are frankly limited options. The Alternative Lending market is also not a guaranteed vehicle for funding being provided, as we may be too risky to be offered funding, or if it is offered, it under such crippling rates as to not be worth doing. Hence why it says if this is not passed, the administrators are called in.

The positive that can be taken from this, is that we have 6 home games left. This will hopefully allow us to catch up our cash position alongside this investment and secure our position financially medium term. But this should be another wake up call for rugby across the board.
Perhaps you might know working in commercial finance but surely a company the size of Tiger's taking on largish type loans with variable rates would hedge out some of this interest rate risk? Especially if the loans are linked to Libor, there are plenty of ways to protect yourself.
To a certain extent you can protect yourself, mainly cutting costs and growing revenues. That would hopefully throw off enough cash to meet your repayments. However if the rate increases go over your tolerance, and you have an income gap, which we have had with our lopsided fixture list, then that is where your problems are caused. This is what has happened here IMO. It is a perfect storm coming together.

It's no different to a personal scenario with your mortgage. If your rate goes up to a level that you're on the edge with, you may find it hard to pay but you still make the repayment. However if you then do not get paid that month then you have an issue.
I mean you can just go into the Eurodollar market and hedge off your risk from Libor extremely cheaply, I am quite shocked that this is not done to be honest.
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