WHo's going to the pre AGM damage control meeting on Monday?

[taipan]

I guess there is no choice ,better to have lived than to die the death of a thousand cuts.
if the 3A application gets through the Govt dept.the clubs debt will be reduced dramatically,(via sale of landassets)and the club retains the two top floors of the club house plus the football stadium.
Plus the 10% profits on sale of apartments 315 to whatever 500-700,plus proofits on sale of retail land plus interest.
It is either that or Perth Sharks or CC Bears(made up of Shark's players)and the land with factories or storage buildings on site.
ATM we are up sh*t street without a St George Bank paddle,under this arrangement the Bank is putting the screws to cover their a*ses and the developers likewise.
The biggest millstone around the clubs neck is the debt,and the servicing of that debt.This arrangement would reduce the debt ,subjcet to the club selling off part of the farm
It's IMO a necessary evil and I will have to vote for it. Else my kids and future generations will not have a local team.
More pain for some gain,the gain being long term survival.

 

[Russell Crowe's Band]

pretty much

 

[Russell Crowe's Band]

so once we get 10 mill off he debt
whatst the business plan to make sure that we dont just keep losing million after million and be in the same spot we were?

 

[Ausguy]

1.Steal underpants
2. ?
3. Profit

 

[taipan]

so once we get 10 mill off he debt
whatst the business plan to make sure that we dont just keep losing million after million and be in the same spot we were?

The profits on the sale of 315 unit to whatever plus the sale of land for retail,should clear the outstanding debt,at least that is my reading of the deal..
Surely a club with b..all debt could make a profit and a football club that receives a decent grant(via the new TV deal) and buys decent players can become self sufficient.
Isn't the servicing of the interest component of the debt one of the problems apart from the debt itself.
The comment in the info brochure referring to the remaining $3.5m debt"This will be further reduced by the Club as the project continues and revenues flow through to the Club from completed portions of the development".

My gut feeling is the project if it gets the go ahead,will be reduced from 700 units down to 5 or 600 on the residential side.On the basis of 500,and the first 314 going to the developer,the remaining 186 where 10% of gross realisations go to the club,could yield $9.3m,and that does not include profits on sale of retail land.
Any business that has little debt in these days ,is laughing.Trouble is we are looking at 5-7 years ahead.

 

[taipan]

so once we get 10 mill off he debt
whatst the business plan to make sure that we dont just keep losing million after million and be in the same spot we were?

We then get George Capsis to lay the foundation stone of the 300 storey towers,to show him we really care.

 

[Quigs]

how about we just lay poor old George under the foundation stone and we could all be happy.

Me, I'd rather we lay him in the urinal on beerhill.

Better value.

 

[Ausguy]

Capsis the trough Lolly.

 

[kurtz]

seems there wasnt as much 'info' at the information nights as first thought.

im not impressed to be honest....

what happens if only 400 units gets approved? we get 10% of 86 units?

86 units at 400k/10 = 3.4M... what happened to the 25M???

So in a nutshell, apart from $10 million upfront when the Part 3A is approved (which goes straight to the bank, leaving about $4million in debt remaining), the Sharks get absolutely nothing until apartment number 315 is sold (at which time they get, say $40-50,000 per unit sold).

The key to getting decent returns from apartment developments is to spread out sales. Try to sell 500 apartments at once and supply will exceed demand, and the average sales price will be lower than if sales are staggered.

So I'd be interested in knowing when the Sharks realistically expect to get any cash at all from the development.

The 3A approval is only the first step (although the one obviously with the biggest external approval risk). There's a fairly long timeframe of preparation of detailed consultants documentation before construction can commence, then a long period of time for construction before apartment number 1 is finished for post completion sale (unless there are good off the plan sales, which in this market is difficult - always easier and the sales price will always be higher if people can see what they are buying).

So how long then until apartment number 315 is sold and the Sharks recieve anything? 5 years? 7 years? What's the plan up until then?

Incidentally, I've been wondering about the financials of the project partners as well. According to the information on Wikipedia, Bluestone seem like the archetypal business model to suffer through the GFC - non-bank mortgage lender using wholesale borrowing, and who are implementing European expansion plans. Their 2009 profit was announced as $5million, so presumably they are relying on external funding for the development, which has dried up in the last 3 years.

What's the contingency plan if GFC part 2 eventuates? Tough to sell 300+ apartments in that environment, and even tougher finding the funding to actually build the things in the first place.

 

[taipan]

So in a nutshell, apart from $10 million upfront when the Part 3A is approved (which goes straight to the bank, leaving about $4million in debt remaining), the Sharks get absolutely nothing until apartment number 315 is sold (at which time they get, say $40-50,000 per unit sold).

The key to getting decent returns from apartment developments is to spread out sales. Try to sell 500 apartments at once and supply will exceed demand, and the average sales price will be lower than if sales are staggered.

So I'd be interested in knowing when the Sharks realistically expect to get any cash at all from the development.

The 3A approval is only the first step (although the one obviously with the biggest external approval risk). There's a fairly long timeframe of preparation of detailed consultants documentation before construction can commence, then a long period of time for construction before apartment number 1 is finished for post completion sale (unless there are good off the plan sales, which in this market is difficult - always easier and the sales price will always be higher if people can see what they are buying).

So how long then until apartment number 315 is sold and the Sharks recieve anything? 5 years? 7 years? What's the plan up until then?

Incidentally, I've been wondering about the financials of the project partners as well. According to the information on Wikipedia, Bluestone seem like the archetypal business model to suffer through the GFC - non-bank mortgage lender using wholesale borrowing, and who are implementing European expansion plans. Their 2009 profit was announced as $5million, so presumably they are relying on external funding for the development, which has dried up in the last 3 years.

What's the contingency plan if GFC part 2 eventuates? Tough to sell 300+ apartments in that environment, and even tougher finding the funding to actually build the things in the first place.

I believe that is the time line.
Debt reduced next year to $3.5m ,which supposedly is serviceable on current figures.
They surely would have arranged funding beforehand,before making this committment.
If the 2nd GFC happens in 2012.then the Tv deal is stuffed and so is the rest of the economy.However interest rates will drop substantially to stimulate the economy and make purchasing a little easier on the consumer.
In fact if the economy is struggling,building developments such as this help stimulate the labour market.
If the3A is approved,the developer within 90 days has paid the money to reduce the debt,all expenses and selling responsibilities rest with them not the club.
If approval for 3A is granted the UCV of the land is worth $20m,so theBank is covered,the club has reduced the debt and the developer has an asset worth the $10.5m outlay.
5m towrds debt,the developer gets the 100% of sales of the units>Itis in their corner to flog the 314 units.

 

[spider]

Debt reduced next year to $3.5m ,which supposedly is serviceable on current figures.

have you read the financials released this week?

surely not if you suggest they can service any debt when both entities trade at a loss

 

[Russell Crowe's Band]

yep

back in the same position rather quickly i would say.

bar a miracle.

or privatisation

 

[roboshark]

so once we get 10 mill off he debt
whatst the business plan to make sure that we dont just keep losing million after million and be in the same spot we were?

A good football team would be a start

 

[Russell Crowe's Band]

well yeah

we need a

1. professional GM of football to sign real talent and keep our own
2. a legit first grade coach

thatd be a good start off the field.

 

[taipan]

have you read the financials released this week?

surely not if you suggest they can service any debt when both entities trade at a loss

If PPB advisory and the St George Bank maintain that the debt at that level is serviceable and sustainable by the board,I can only go on their expertise.
Anycase I am going to the info night to satisfy myself .

 

[spider]

If a business operates at s loss and can't pay all debts, then how does it service it's debt

And why do you think a new covenant is that the bank is to receive constant financial updates?

This is just the surface

Before they can move into a profitable mode they will need to spend millions brining the core business assets into this century - where is that coin coming from?

 

[sydneysharkbrisbane68]

Private ownership is now only option, the current situation has failed, lets roll the dice again

 

[Feej]

It's over - Just die already and stop the pain.

 

[sydneysharkbrisbane68]

If a business operates at s loss and can't pay all debts, then how does it service it's debt

And why do you think a new covenant is that the bank is to receive constant financial updates?

This is just the surface

Before they can move into a profitable mode they will need to spend millions brining the core business assets into this century - where is that coin coming from?

They need to be very careful here to ensure they pay each creditor, it will only take one that could cause not even voluntary administration, but a letter of demand sent to club and not paid, the creditor hands this over to say Dun & Bradstreet, this will flag on the clubs D&B account, which the bank if doing the business correctly will immediatley receive a automatic email, as they will have the club account flagged on the system should anything change in trading conditions

 

[taipan]

If a business operates at s loss and can't pay all debts, then how does it service it's debt

And why do you think a new covenant is that the bank is to receive constant financial updates?

This is just the surface

Before they can move into a profitable mode they will need to spend millions brining the core business assets into this century - where is that coin coming from?

If interest charges on loans are a decent component of costs,and the loans and therefore interest charges are reduced substantially,that makes makes a hell of a difference to the bottom line.
Of course any business continually operating at a loss with a huge loan,can't go on .Get rid of the loan and you are in with a far better chance.

The bank is doing what is required with a debt of such magnitude, constant updates equates to constant surveillance.That is a given for any financial institution worth its salt.
The bank knows the situation is not going to improve overnight but is working on over years.
The very first thing the club needs to do is remove the debt.The only way they can do that is what is proposed .Sell off part of the farm,and earn profits from part of the farm sale in a few years,in addition to profits on sale of the retail land.
If the Bank knew there was no chance or required early settlement of debt,the Club would be history.
Of course the club will have to spend money to update the premises.On current figures and current circumstances they can't ,full stop.All the club has is time and the money provided to reduce the debt,once 3A is approved.
They have no other option,unless some white knight like a Tinkler comes on board,and the chances of that happening are as much as the Sharks getting into the 2011 G/F .
Another thing a winning football club, brings money into the club.That being said ,this year people are saving money rather than spending it.Hardly good conditions for a club to operate,especially one with a huge debt.