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Correction: It was 10th January last year....2007:)
http://www.hotelinteractive.com/mdx.asp?page_id=3000&article_id=340
You need to google:
Hotel Financial Strategies Announces Financings in the Amount of $400,000,000
Should be first on list.
GLTA
This may have been posted before, but what the heck:)
http://heritagecapitalcreditcorp.com/PR_20508.pdf
"Wilmington, DE – February 5, 2008 - Heritage Capital Credit Corporation (OTC PK: HCPC) today announced that it is arranging short-term financing of $170 million for a commercial revenue producing project. An independent third party lender has issued the letter of interest for financing and anticipates scheduling the closing upon completion of its due diligence. This financing is expected to ultimately roll into the BCLOC program."
and:
http://relmholdingsinc.com/id2.html
RELM’s has signed a purchase contract to acquire a 68,000 square foot office building, and signed a letter of intent to acquire a 27-story 1995 room hotel which is conditioned upon financing. Both projects have closed on the first phase of financing totally $682,400,000 using convertible preferred stock of the Lender, which is a commonly controlled company. The second phase is expected to come from an independent third part lender providing up to $175,500,000 in short term financing.
GLTA
Worth a repost....early vintage Cash DD....:)
http://investorshub.advfn.com/boards/read_msg.asp?message_id=27259228&txt2find=grand+sierra+
So GSR deal was done back end of last year...according to the news of 1st October 2007
GLTA
Backtracking on some earlier DD...this was found by lenderboy and followed up on by Cash...
http://www.fusedworld.com/Real_Estate/North_America/USA/Nevada/Reno/Hotel_for_sale_in_Reno_USA_24991.html
"1995 rooms. Current management is a mess......Worth 1B - 1.2B. Selling for 300M. It belongs to the bank"
So figures stack up....someone obviously stepped in and picked it up in a firesale....now looks like RELM are taking it on....
GLTA
Backtracking on some earlier DD...this was found by lenderboy and followed up on by Cash...
http://www.fusedworld.com/Real_Estate/North_America/USA/Nevada/Reno/Hotel_for_sale_in_Reno_USA_24991.html
"1995 rooms. Current management is a mess......Worth 1B - 1.2B. Selling for 300M. It belongs to the bank"
So figures stack up....someone obviously stepped in and picked it up in a firesale....now looks like RELM are taking it on....
GLTA
Grand Sierra Resorts plans,....'to go public late this year or early 2008'.......:)
Friday, May 25, 2007
Reno casino buyer scoops up Zebulon land for development
http://triangle.bizjournals.com/triangle/stories/2007/05/28/story12.html
Extract:
In the meantime, Whichard is focusing most of his attention on the redevelopment of the Reno property, formerly the Reno Hilton, which the group bought from Harrah's Entertainment in June 2006 for about $150 million.
Grand Sierra and its investment partners have spent more than $200 million on the hotel and its renovation, which includes converting nearly half of its 2,000 hotel rooms into hotel-condominiums and an overhaul of its restaurants, convention center and other facilities.
Grand Sierra Resort Corp. is a private company, but Whichard says the company is working to go public late this year or early in 2008.
GLTA
Grand Sierra Resorts plans...'to go public late this year or early 2008'.......:)
Friday, May 25, 2007
Reno casino buyer scoops up Zebulon land for development
http://triangle.bizjournals.com/triangle/stories/2007/05/28/story12.html
Extract:
In the meantime, Whichard is focusing most of his attention on the redevelopment of the Reno property, formerly the Reno Hilton, which the group bought from Harrah's Entertainment in June 2006 for about $150 million.
Grand Sierra and its investment partners have spent more than $200 million on the hotel and its renovation, which includes converting nearly half of its 2,000 hotel rooms into hotel-condominiums and an overhaul of its restaurants, convention center and other facilities.
Grand Sierra Resort Corp. is a private company, but Whichard says the company is working to go public late this year or early in 2008.
GLTA
Conduit Lenders: The following is a post from last year, explaining a bit more about conduit lenders and how they work
http://investorshub.advfn.com/boards/read_msg.asp?message_id=23621607
Extract:
Conduit Lenders: Following website provides a bit more info
http://www.commercialbanc.com/conduit-loans-102.html
Extract:
"Within the capital marketplace there are a number of conduit lenders, including, life insurance companies, pension companies, financial services firms and some of the nation's largest banks and investment banks. Conduit lenders generally hold the conduit loan only until it can be securitized, typically 2 years."
Conduit lender: DD
Been doing some more research into the conduit lender/ potential merger partner for HCPC.........the party who is/ are buying $1 billion of preferred shares from them, to finance their loans....
Some have suggested, including me, that it could be Hotel Financial Services (HFS) or Howarth HTL. However, the more I look into these companies, the more I think they may be the 'go-between,' especially HFS, between HCPC and the source of the finance/ conduit lender....
Here's some background on HFS:
http://www.hotelfinancial.com/company/company.html
Extract:
"Our approach to funding is much different than other companies. We don't do mass shopping of your proposal. We identify up front who is most likely to fund your project and why. We then take your project to those capital sources for an immediate response. Once the lender is secured we stay involved with the project until the closing.
So although they show on their website, under recent transactions, The Grand Sierra Resort (GSR) in Nevada, which we have linked to RELM and the ICCC websites (and other DD), it may be that they were just an intermediary in closing the deal i.e. another organisation put up the cash, to either finance the project for the buyer (short term finance possibly) or to purchase the property themselves (as I understand it's actual valuation is much higher?) until such a time that they refinance the deal. Interesting that last year in the HCPC PR, they mentioned an institutional investor putting up $300 million to fund commercial projects. The closing did not happen as stated.
See below:
http://heritagecapitalcreditcorp.com/sitebuildercontent/sitebuilderfiles/pressrelease22707_allocation.pdf
"Heritage Capital Credit Corporation
(OTC:HCPC) today announced that one of its affiliates has secured an institutional
investor to purchase up to $300 million in BCLOC Trust Notes, which will fund
commercial projects. The closing on this funding is scheduled to begin on March 15,
2007."
Coincidentally, or not, the GSR transaction was for $300 million. See following link:
http://www.hotelfinancial.com/recent/sierra.html
HFS, seem to organise and structure the funds for the deals, with finance raised through through both debt and equity offerings.
Firstly Debt:
http://www.hotelfinancial.com/services/debt.html
"We provide you with access to the primary capital sources for your deal:
-Investment banks.......
-REITS,
-national and international banks,
-insurance companies,
-pension funds, and
-hedge funds."
Secondly Equity:
http://www.hotelfinancial.com/services/equity.html
"We have an impressive history in raising joint venture equity for the hospitality industry, which can be the most challenging aspect of any real estate transaction. The team has organized, structured and negotiated exceptionally intricate equity transactions for numerous properties and is skilled in ascertaining the most compatible and cohesive options for any hospitality acquisition or recapitalization."
We have long-standing relationships and access to institutional equity sources all over the world, and are experts at matching appropriate joint venture partners with you and your project. Our creative equity structures have ranged in capital commitments from $10 million to in excess of $1 billion.
Equity and Preferred Equity such as:
-Investment Banks
-Hedge Funds
-REITS
-International Banks
-Credit Companies
-Opportunity Funds
-Financial Advisors To High Net Worth Individuals
The last section is especially interesting. Creative equity arrangements......and these have been to 'in excess of $1 billion.'
Coincidentally, or not, HCPC's current preferred share equity offering is for $1 billion.
Still no closer to gaining the identity of the conduit lender but I think it may not be either HFS or Howarth HTL now, but an organisation/ individual (s) from the list below:
-Investment Banks
-Hedge Funds
-REITS
-International Banks
-Credit Companies
-Opportunity Funds
-Financial Advisors To High Net Worth Individuals
and possibly
-Pension funds
-Insurance Companies
GLTA
Thought for the day:)
We think the conduit lender, with whom, HCPC plan to merge, is buying up to $1 billion in preferred shares from the company to help fund the loans in the short term.....until they can be securitised and sold on to institutional investors......they will be converted into common shares within 12 months of issue, giving the conduit lender a major or majority shareholding in HCPC imo. HCPC will be capitalised to the tune of $1 billion after the merger.....at the very least................can it not be assumed, that the total value of this conduit lender must be greater than $1 billion? They are presumably not putting all their capital into the preferred shares purchase.....right?
If so what is the actual worth of this merger partner....$2 billion, $3 billion, $5 billion?.........makes you go mmmmmmm:)
GLTA
Thanks cmbs, just read through your past posts, interesting to see your perspective from someone who's worked in the industry....good to have you here:)
GLTA
Good article from last year on the B-Piece buyer in conduit financing.....some good background if a bit dated.....any comments cmbs?...learning more each day:)
http://findarticles.com/p/articles/mi_m3601/is_31_53/ai_n18770059
GLTA
Well they say no publicity is bad publicity, so any exposure is good..... in 6 months none of this will matter...events will run their course imo.
GLTA
Hey thanks, but now I am just jealous....:)
oh.....and looking forward to the next trading session and seeing if we bounce of that 50 day MA..*wink*
GLTA
Hey Crooner....I've been giddy most of my life actually.....so why stop now:)
Eeekk....is that OT....ok quick before the thought police arrive, nice close yesterday, seems to be forming a nice flag:)
Later:)
GLTA
Agreed and thanks:)......
Really, you have to ask and answer the question, 'why would such a big fish be interested in a trip zero, Pink Sheet, start-up company with historically no revs until about a month ago?:)
HCPC must have something they want...right?:).....for them to go after them and want to merge?....afterall, there must be plenty of other options open to a company, or companies, with $1 billion at their disposal:) And the only thing that HCPC has that separates them from the crowd, is their unique products (BCLOC et al), developed over the last 4 years or so.
This will play out over weeks/ months and probably years.....imo of course:)
GLTA
Great post and membermark:)
I think you answer the key question for me, that everyone is asking at present:
The question:
Why would a major player/ institutional investor/ conduit lender want to purchase up to $1 billion of preferred shares in HCPC, to help them fund their loans, and also more importantly, plan to merge with them in the future with the view to helping them in their plans to form a bank?
The answer:
"The conduit lender is after HCPC and their loan products and not RELM"
You sum it up further in the following:
"HCPC's products has built in security via insurance and credit enhancement account. there is more safety for them to let HCPC handle their $1 billion dollars and collect dividends AND common shares of HCPC."
If HCPC has a product with those great benefits to both borrower and lender, as we longs think it has, then given the problems of the credit crises in the States and Worldwide over the last year, what they have is priceless in the current market. When the credit markets stabilise and new players and products have a chance to emerge, HCPC could then be placed to be one of the first movers in the industry as it gets back on it's feet.
GLTA
hi no19one88,
Thanks for your comments..and understand your side of the argument.....still playing with various ideas here.....what I am thinking is that for a major player (s) to put up potentially as much as $1 billion in finance, to buy 1 billion preferred HCPC shares, is going to want some solid security. The only real security they would have is the real estate purchased by RELM, using the money raised by selling HCPC preferred shares. That is the only real asset for now. Preferred shares get precedent over company assets, ahead of common share holders, in the event of bankruptcy etc. So in the event of RELM or HCPC defaulting, my thinking is they would need to have a clear agreement giving them property rights? That also raises the issue of hat relation RELM may have with HCPC in the future....will they merge?
If you had $1 billion, would you not want more than just HCPC preferred shares to show for your money? Even if you received a dividend. Would they not be looking to purchase the real estate too? Once owned, and when the credit market improves, could they not then, through HCPC business model, prepare BCLOC securities for selling to institutional investors and so freeing up their capital again? Still playing with ideas here, but could the Preferred share issue, just be a short term arrangement until the merger with HCPC is finalised?
What I am getting at is that it may not be in the institutional investors best interest to convert all the preferred shares into common shares, if they want to keep the share structure reasonable for uplisting etc. Maybe they have already gained majority control of HCPC through another means......? Still working on this one....:)
GLTA
Exactly, at present the common share price would have to be >$0.33 pps for the conversion to work.....
However, I don't think they will need to convert those preferred shares, because I think the owner of the preferred shares is the Conduit Lender(s) who will merge with HCPC...read the whole of my last post ......
GLTA
Ok I am still working this through......but:)
HCPC
Offers $1 billion Preferred Shares at $1.00 a share to raise $1 billion cash
Assuming no HCPC shares OS already, then as Milo sates, conversion price for common shares would have to be 10 c or greater
i.e. 1 billion x 0.10 = 10 billion shares OS. However, there are 7 billion OS already, so if the AS of 10 billion is not to be exceeded, the common share price must be > c. $0.33, assuming HCPC don't increase the AS.
i.e 3 billion x $0.33= $1 billion
Preferred Shares are issued, but the conversion clause makes it hard for them to be traded in easily for common shares.......one of the reasons for this, I think, is below:
Conduit Lender (s)
_ Already lined up to purchase $1 billion Preferred Shares at $1.00 a share at a total cost of $1 billion
- They earn interest on their Preferred Shares. From who? Relm properties pay interest on their loans to HCPC. HCPC takes their cut and pays the dues on the Preferred shares to the owners of the Preferred Shares i.e. The Conduit Lender (s).
However when:
HCPC + Conduit Lender Merge........:)
- Preferred shares are not converted to Common shares because CL merges with HCPC within that 12 month period.
The preferred shares are owned/ returned again to the company (i.e. HCPC) through the merger. The precise terms of the merger/ share allocations to the various parties will need to be apportioned fairly.
HCPC then earns the interest due to the Preferred Shares as well as it's original % from payments from RELM. The company is capitalised/ owns loans to the tune of $1 billion.
When the credit climate improves, HCPC (along with it's newly merged Conduit Lender), prepare BCLOC securities/ bonds to the value of it's c.$1 billion in loans, which they can then sell to the investment community. Something which the market is not ready for just yet. Capital is released again to HCPC and they can then fund the next real estate deals
- HCPC wins....they get their funding and eventually merge with the CL, providing greater access to capital
- Conduit Lender wins.....they initially get interest on their capital and merge with HCPC, presumably seeing much greater returns on investment of their original $1 billion
- RELM wins....they get funding for their properties and start paying back loan (capital + interest) to HCPC
There is another twist I think i this tale...but I promised not to tell:)
Thoughts?
GLTA
Milo....checked back on the Florida DoS site for HCPC preferred share listing:
http://www.sunbiz.org/pdf/00058704.pdf
Under:
"Designation and amount:
The number of shares constituting the series of Preferred Shares shall be 1,000,000,000 which number may be increased (but not above the total number of authorised Shares of Preferred shares) or decreased (but not below the number of Preferred Shares then outstanding) by resolution of the Board of Directors."
So it refers to not exceeding AS of Preferred Shares , not common shares which we know is 10 billion. Do you/ does anyone know where we can find the AS of Preferreds or is it the same?
Previous amendment stated AS of Preferred Shares was only 10, 000, 000 (10 million:)
http://www.sunbiz.org/pdf/00036948.pdf
In the latest amendment, they did not state an amended AS for Preferreds....can we assume it is 1 billion + 10 million overall?
TIA
GLTA
Hey Milo,
Thanks for the response....I am still trying to work this one through and learning that Preferred shares can actually be traded...in a similar way as common shares.....that's a new one for me:)
Just read this:
http://www.businessweek.com/investor/content/may2006/pi20060512_593971.htm
Do you think this is this what HCPC will do? I read the financials regarding the preferred shares and a clause mentioned the conversion to HCPC common shares after 12 months, but that the conversion cannot exceed the AS of preferred shares. If the AS Preferred remains unchanged (c. 1 billion), the conversion would have to be at $1.00. Just trying to get my head around this one.....
Also, would it make sense if they were listed and traded for that short period?
TIA.
GLTA
Last thought for now:
Whoever is buying $1 billion in preferred shares in HCPC, is doing so in the knowledge that this is a short term arrangement and that within c.12 months they will end up with common shares in HCPC. So the funding source is not funding the loans through buying longer term BCLOC securities with a set interest return, they are really buying into the company....HCPC.
If then, the funding source mentioned last year, putting up $300 million to purchase BCLOC notes, to fund the loans, was an institutional investor....
http://heritagecapitalcreditcorp.com/sitebuildercontent/sitebuilderfiles/pressrelease22707_allocation.pdf
.....is it not possible, that the funding source putting up $1 billion to buy HCPC preferred shares is also an institutional investor?
Still with me?
And if so.... this institutional investor is going to end up with $1 billion worth of HCPC common shares at the end of it all................they would almost certainly then be a majority shareholder of HCPC.....?:)
So is not our potential merger partner.....the conduit lender.......crazy though it may sound....possibly an institutional investor?:)
If so, then you have to really ask yourself what HCPC has that is so special......thoughts anyone?
GLTA
Some more DD 'coincidences'........
Going back to WallSt.net interview last year (September 20th 2007):
http://heritagecapitalcreditcorp.com/Wall_St_net_Interview_GCJ.pdf
"For the long term, we plan to merge with a conduit lender to give the company direct access to more capital and different structures. This merger is expected to help us carry out our plan to organize a bank."
and:
"Well, I think for the new investors I hope their listening and potential ones. Why should you invest in the company? That’s the question. We believe when we reach the milestone, revenues will begin and the result will be positive earnings, continued growth and ultimately dividends to the investors. We believe we can accomplish it. People ask, who have been looking at us for a while, how much longer will it take? Well, we have a new funding source and funding for loans appears to be imminent. "
Now check this out:
http://www.hotelfinancial.com/recent/sierra.html
See this: $300 million financing for the purchase and rehab of this 2000-room hotel, casino, and condo-hotel.
Now check this out (Shareholders letter of 27th August 2007):
http://heritagecapitalcreditcorp.com/Share_Letter_PR_82707.pdf
Q: Is the institutional investor, stated in the press release on February 27, 2007, still providing the $300 million in funding for the purchase of the BCLOC Notes?
A: A potential funding source has advised us that the special purpose entity (SPE) that issues the BCLOC Securities has made changes in the structure to reflect the current credit market conditions and expects to offer direct pay "AAA" rated notes versus collateralized debt obligations or CDOs. Further, they have advised that the restructuring is expected to allow the funding source to offer BCLOC Securities at a substantial amount over the $300 million previously mentioned in the press release.
Are there not just a few to many coincidences here.....the $300 million for one? Ok, so there seems to be an institutional investor who was going to put up $300 million early last year.....this I see as being the funding source (it could be the conduit lender with whom HCPC mentioned the proposed merger with...or it could be another institution...thoughts?)
See original press release:
http://heritagecapitalcreditcorp.com/sitebuildercontent/sitebuilderfiles/pressrelease22707_allocation.pdf
That figure subsequently changed to significantly more. GSR was financed at $300 million in a recent transaction by HFS....that figure now seems to being increased, maybe to help fund the improvements/ water parks/ condo developments at GSR?......RELM are suggesting on their website that they are purchasing it? How? With finance coming from preferred shares being sold by HCPC (to the tune of $1 billion).......??
HCPC are funding it through selling preferred shares....to whom?....the institutional investor mentioned in the PR's last year....? Either it is HFS and/ or Horwarth or HFS and/ or Horwarth financed the deal for an unknown third party.....the mystery institutional investor....??
...if we can find out who put up that $300 million to finance the GSR deal on the HFS website, we may then know who the institutional investor is.....cashflo where are you?:)
This is turning into something closer to the Da Vinci code than the stockmarket:)
We know that somehow HCPC are confident that they can sell $1 billion in preferred shares...to fund these deals.....who is putting up that cash to buy them in the first place, to give HCPC the capital, to lend to RELM, to purchase the real estate, including GSR?
Well this could be a case of, 'trying to find the pieces that fit your argument, but also something changed in the 4th Quarter last year for Carol to come out on the offensive like that, with such a positive interview on WallSt,net.
There are pieces that do fit imo
GLTA
Hey Crooner,
Just dropped by to say hi and add a boardmark....going to be interesting to see what develops with RELM and the relationship to HCPC:)......
GLTA
Interested to know more about the following comment heels....grateful for any insight/ info on how this could be carried out. Can they approach MM's directly and negotiate a deal rather than just buying on the open market?. Thanks in advance:)
"And... for those of you saying you don't see a buy back yet, there is more than one way to buy back shares!"
GLTA
Balamidas post reminded me of this:
http://investorshub.advfn.com/boards/read_msg.asp?Message_id=27260223&txt2find=hotel
Always thought the $1 billion dollar amount mentioned by HFS, RELM and the $1 billion preferred shares of HCPC could be significant and linked. We do know that some major money is coming into this.......so rather than an either/ or scenario, could it not be both HFS and Horwarth Hospitality? Afterall, they have a strategic alliance already, could that not also be the same in a merger scenario with HCPC?
Just a thought.
GLTA
Just been catching up on some of the posts here from last couple of days....
Just to clarify a few things, myself and braden have been in HCPC for over a year now, through thick and thin. Through that period I have been fortunate to develop an email correspondence with him in which he trusted me with some sensitive info from the company, for which I am extremely thankful, including as he said the email about the proposed purchase of the Market Street property at the end of last year. It is probably because of braden that I hung on in during the hard times..and believe me when you look at the chart for the last year you will see what I mean. Without some insight into the company it would have been very easy to cut my losses and move on. Many did. Apart from the contact made through i-hub we have no other business involvement. I'm based in Hong Kong, Schwab have an office here, and I thought I'd try my luck at finding the next big thing:) That's what a lot of people are searching for right?
The credit crises of the last year really caused major problems all around, including a major impact on the timeframe for closing of the loans by HCPC. Time is money, and with the delays came the need for additional finance. As they were yet to generate revenues, they had no option open to them, but to raise that capital through issuing more shares, just to keep going. I don't think anyone liked the fact and certainly not those (including myself) who bought in originally at higher prices. Hindsight is a marvelous thing, it just occurs at the wrong end of the process imo:)
However, when you look at their investment of time and money over the 3-4 years prior to that ($3-4 million of their own cash), it was hard to see that they were anything other than a legit startup company which would either sink or swim. Others may disagree, but we all form assessments on the info available imo, and that was my conclusion then and it has not changed, despite events.
In closing the first loans they have shown they can survive. It also looks like they have gained the support of a major player in providing finance for closing of these first loans. This was the missing link for a long time, they may have had the makings of an innovative and timely business model, but would they be able to persuade anyone in the industry of it's merits? The finance it seems is coming from the conduit lender with whom they mentioned that they intend merging with in the shareholders letter issued in October last year. Selling preferred shares to this source raises the capital for the loan closing and also, upon conversion to common shares, gives the lender a majority share holding in HCPC imo. With that major finance available and subsequent merger, will come a new directors in due course. I don't think we should be viewing HCPC as just Carol, Lawrence, Rick etc. now, there are many more vested interests involved imo. In effect, we could be seeing the reverse merger of a major private company into HCPC, changing the market cap and future potential forever imo. We see that a lot in the pinks. Private companies using a dormant shell to go public. Here, however, HCPC is not dormant, nor the existing business model defunct as is often the case with RM's.
I don't think it ends there either. The conduit lender with whom they plan to merge is just the first part of the equation. They put up the short-term finance to close the deals. The loans are then 'rolled into the BCLOC programme'. In effect the loans are securitised and sold on to institutional investors (as bonds). The conduit lender had to not only see sufficient potential in the HCPC business model, that it could work in principle, but they had to know that they could sell the bonds onto the investment community, or at least one major player in the investment community. This is high level stuff. Only if the conduit lender was confident that this could be achieved, would they be willing to put up $1 billion in cash to support HCPC in their quest of getting their business model up and running and committing to a merger with them.
I think during this time, their has also been a shift in emphasis within the company. Initially they marketed the BCLOC publicly. A new product presented challenges for applicants in preparing all the necessary paperwork to support the applications. Pr's alluded to that fact. Due to the complexities of the loans structure, I think they also saw the opportunity to purchase properties for themselves, or rather through RELM. In that way they could be in control of the paperwork process, have the conduit lender on board to provide finance and presumably have the institutional investor standing by to buy the BCLOC investment bonds. A win-win situation. They close loans and build a real estate portfollio at the same time. This is some endorsement of their own product imo.
The point of all this is that HCPC has a new and innovative business model. I think they have found at least two major players in the industry who see the potential here. The conduit lender with whom they plan to merge and at least one institutional investor to purchase the bonds. I think that is why their has been a sudden jump in scale up to buying Grand Sierra Resorts (GSR). No way could HCPC could do that themselves. But with the right connections, with the right companies, anything is possible. If the business model works, then loans closed could be $10 million, $100 million, or $1 billion +. It makes no difference imo. If the business model works, the only limiting factors is available finance and complete aplications for real estate. It looks as though they have finance for up to $1 billion already. What if they gain finance for up to $10 billion in due course to fund even more loans? This is just conjecture at this stage, but if they have a product that offers more security to both borrowers and lenders alike, would there not be a lot of other capital that would not be attracted to this? Maybe the RELM approach is the way forward. Maybe they just locate suitable property to purchase for RELM, close the loan and sell the bonds onto the institutional investor. One option. Of course, if the loan was opened up and marketed throughout the States, the potential market could be huge imo.
Could it not be that we have the makings of a major company that, as a result of the credit crises, had the right product at the right time? And yes, maybe it was a sub-Pinkie, once. Wouldn't that make for a great story:) Time will tell.
GLTA
Great...liked these bits the best:
Bellwether Report is not affiliated or compensated by any of the above mentioned companies.
and
-- An Unbiased View of the Company
-- Short-term Target Prices
-- Long-term Resistance and Support Levels
-- Analyst Opinions
-- Sector Review
-- Competition Overview
-- Direct Market Integration and Influence
Can't wait to see the report.
GLTA
Bsandy, nice turn of phrase, more likely to be Billy Connolly imo....but maybe you have to be a Brit to get that one:)
Good week here, lots of good DD, interesting developments on Bellwether Report.
Interesting, no pr on big loan yet. That they want to protect their buyback plans makes sense to me, but maybe the pr which we think will come out next week will clarify things.
GLTA
Checked back through your posts on this....will look more later on today.
One thought, do we know how old Ed is? Any chance that this could be a son? It mentions Jnr? Just a quick thought.....be back online later.
GLTA
Good find.....I checked on Access Channel last year and found the official public register for the license/ patent for the software listed under Ed Johnson's name. I've tried to backtrack and find it but not successful yet. If anyone has time to DD, it's more 'fuel for the fire'.
GLTA
Interesting find...thanks:)
GLTA
Hey crooner, thanks again. I remember boardmarks breaking into the 30's and thinking 50 would be nice. Now we are in the 300's and 500 would be nice. I think we will hit that soon and don't be surprised if we exceed 1000 this year.
Good luck to you too and all longs here:)
GLTA
Well here are some thoughts on the BCLOC Promissory notes issue. Elliscoming summed it up well in the following message.
http://investorshub.advfn.com/boards/read_msg.asp?message_id=27741502
Here are two of my posts from last year on Conduit Lenders and the nature of their role in the whole process.
http://investorshub.advfn.com/boards/read_msg.asp?message_id=23821096
http://investorshub.advfn.com/boards/read_msg.asp?message_id=23821579
I really think the key is understanding the role of the conduit lender in the whole process. My understanding is that they organise the 'bridging finance' for purchase of the property in the first place i.e. They find or have the capital required to close the deal. That is only step one. Step two is as follows: "A conduit lender makes their profits based on the difference from what they can sell the bond for on Wall Street and the value of the sum of all of the loans in the pool."
The following describes the role of the conduit lender in more detail.
"In general, there are basically two types of commercial lenders in the market: those that hold the loan on their balance (portfolio lenders) and those that sell the loan into the secondary market (conduit lenders).The secondary market represents Wall Street funds, also known as Commercial Mortgage Backed Securities (CMBS). [Or in the case of HCPC, BCLOC loans funded through the sale of Promissory notes to institutional investors].
A portfolio lender makes their profits from the spread or margin above the interest rate index. A conduit lender makes their profits based on the difference from what they can sell the bond for on Wall Street and the value of the sum of all of the loans in the pool. That is the main reason why conduit lenders are able to price a commercial mortgage loan more aggressively than a portfolio lender."
Worth then looking back at some PR's from last year that mentioned the introduction of the BCLOC Promissory notes and the conduit lender:
Wilmington, DE – June 20, 07- Heritage Capital Credit Corporation (Pink Sheets OTC: HCPC) provides updates on corporate activities.
• Revised BCLOC Program
The BCLOC Program has been enhanced to include a “BCLOC Promissory Note,” which is securitized and guaranteed with a Default Contract to cover 100% of the principal and interest payments for the life of the BCLOC Promissory Note. There are plans to have several avenues to sell the BCLOC Promissory Notes for funding.
and:
Heritage Capital Credit Corporation Engages NASD Firm to Raise Debt and Equity
Wilmington, DE – June 27, 2007- Heritage Capital Credit Corporation (Pink Sheets OTC: HCPC) announced the engagement of a NASD member firm, to raise equity and debt for the purpose of providing working capital for the company and to fund the BCLOC Promissory Notes. The initial capital raise will be an amount mutually agreed upon to assist the company with its capital needs through a debt and/or equity offering.
and:
Heritage Capital Credit Corporation Announces Plans at Shareholders’ Meeting
Wilmington, DE – October 18, 2007- Heritage Capital Credit Corporation (OTC: HCPC)
Heritage will develop an action plan to merge with its conduit lender that will provide the capital infrastructure for launching new business and funding remaining BCLOCs in the pipeline.
Which takes me onto the next point:
http://www.firstindependentfinancialgroup.com/id6.html
Extract:
Are the Bonds Listed?
"The Company has applied for and is ready to list the Series 2005-1 Bonds on the Luxembourg Stock Exchange, with the right to be registered in the U.S."
Not sure how up to-date the above paragraph is, but the point is that I think the bonds will be sold into a recognised market. In that way the initial capital used to purchase the properties will be released back to HCPC to enable further deals to be closed....and so on. Remember the earlier point:
"A conduit lender makes their profits based on the difference from what they can sell the bond for on Wall Street and the value of the sum of all of the loans in the pool."
So in the case of HCPC, the selling of preferred shares ( in this case I think it is to the conduit lender with whom they plan to merge in due course)raises sufficent capital for them to close the initial loans/ deals and secure the property. Once closed the loans can be rolled into the BCLOC programme and the 'bonds' sold into an appropriate marketplace to institutional investors. This frees up the original capital by selling the bonds (with good returns to institutional investors). HCPC and it's related companies continue to service these loans earning revenue throughout the life of the loans.
So in this process where preferred shares have been issued by HCPC, capital has been raised from a major source imo, the loans are funded, and the conduit lender is assured a major shareholding in HCPC as part of that deal when they convert them to common shares. In effect, the merger has taken place between HCPC and the souce of the finance (conduit lender (s) and other parties). To gain the finance in the first place, HCPC has decided, I think, that a merger with a major player is the way to get their business model up and running. For a major player to commit that kind of finance to HCPC and it's business model ($1 billion initially, they must be pretty sure that the business model is sound and that they stand to make major money on this new approach to commercial mortgage financing.
Once merged, the money earned by the conduit lender selling the bonds into the market, will also accrue to the overall earnings of HCPC. I think then, we have the makings of a major new company in this emerging market.
Final point, when $1 billion preferred shares are converted into the equivalent dollar value in HCPC common shares, the market cap of HCPC will be $1 billion +. Please correct me if I am wrong. Look at the market cap today and I think you will see that the merger with the funding source would change the valuation of HCPC exponentially. HCPC will have $1 billion of cash on their books to close deals, before rolling into the BCLOC program, selling the bonds into the markets and then starting again by closing further deals. Maybe then, they are in the early stages of forming a bank:) Time will tell....
GLTA
Well thanks for those kind words Crooner...you're a real gent.
Actually, the last year has been quite a test. When you look at the chart you'll see why. There were many times when I kicked myself for ever 'playing the pinks'.....I always remember someone writing saying that it's like Mad Max down here.....and it is. But I can honestly say that I have not sold a single HCPC share throughout all this and added along the way.....not as many as some here, but enough if this plays out as I think it may.
I think the reason that we are all here is the hope to find that 'hidden gem'. It's more like being a detective than investing........I'm a Brit but I guess this is very much part of that American dream....that you can be a nobody, but dreams really can come true.....that keeps us going, right?
We are not there yet, but if.....and I do still mean if, this all comes off....I for one hope that it will not just change my life, but maybe, in some small way I can make a difference in someone elses life as well. Now for me, that really would be the definition of success.
GLTA
Hehe.....
well i found a song called:
'Almost Paradise'
by Ann Wilson & Mike Reno
No idea what it's like but it's on my list now:)
GLTA
Now you are talking my language, think we should compile an HCPC album while we are waiting for news...more of a party atmosphere here now.....:)
GLTA
Haha...well we all need a litlle wwwweeeeeee:) every now and then:)
Quick Calculation:
Loans closed (to date)= c.$680 million
Say HCPC earns 3% fee (conservative) = $ 20.4 million
Shares outstanding = 7 billion
EPS = $0.00286
PE of 6 = $0.017
PE of 12 = $0.034
The above takes no account of any share buybacks.
Now multiply by your current shareholding......and smile:)
GLTA
Well done Rizzo.....think it could be a life changer for many here:)....(feet on ground still:)
GLTA