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Eefrit
Eve Financial Services
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Posted - 2008.03.19 14:59:00 -
[1]
After a lot of feedback from investors and private counsel, these represent what I feel are the best options going forward. The options for both FIN and FIN-U will require a vote, which I will keep open for 10 days.
I will vote the way I see fit with the FIN bonds that I personally own (about 2% of the total), but will not vote with any of the FIN-U bonds that I control as I never personally bought any of them.
FIN
There are essentially two option open here. One which does not need a vote, which I could implement at will. However I am convinced that the second option is the better long term option here, and so will give investors an opportunity to vote for the alternative if they also feel that way. So the two options are:
1) Instruct the trustees to liquidate the assets however they see fit.
This will definately cause a loss to investors but they will get back a portion of their invested Isk at the end of the disposal. I am not sure how much this would be, as I have not been watching the T2 BPO market actively for a while, but my best guess right now is that it would below half based on what I have seen in the last week.
The extra security that I personally added to FIN would be forfeit (about 30-40% of NAV at the time it was put in).
2) Reduce the minimum dividend to 2.5% and use any extra Isk above that to re-invest into FIN.
While many of the BPOs that FIN holds are not massively profitable now, that may change if T3 requires T2 BPCs, which CCP have hinted at, or if CCP tweak invention back a notch or two.
I personally will be voting for option 2, but I urge all investors to decide which option they would be happiest with and vote for that.
FIN-U
Here also there are really two options available, with the case once again being that one option does not require a vote to move ahead but the other does.
1a) Keep payments at 7% until the end of July 2008 by cannibalising assets.
b) After this point drop dividends to zero and re-invest the money into FIN-U until it has reached a point where paying out dividends again does not jeopardise the long term viability of the investment.
c) A list will be opened for bond buy backs which will give any investor 2 weeks to list the bonds that they wish to sell at 95% of IPO value.
d) Those will then be bought back at a rate of no more than 5% of total investment per month until they are all bought back. This will more realistically be just above 0% and may take years to complete.
2a) Drop dividends to actual profits (closer to 3-4% at present)
b) I will use my personal income to try buy back bonds at IPO price as fast as is possible rather than use it to try and bring the dividends up to 7%. I expect that this would be complete in less than a year, at which point all investors would have their full investment paid back.
c) I realise some people paid a premium buying from third parties, but that is a risk they took. Everything has always been structured around IPO prices which included any buyback option in the initial investors agreement.
I would recommend a vote for option 2, but any investor should only vote as they see fit.
If there are any questions from investors I will try and answer them as best I can. I have a list of every single person I ever sold any bonds to and will work predominantly off that, with the odd exception where appropriate.
I sincerely wish CCP had not destroyed so much of the market the way they have, and that these sorts of measures were not necessary. I will continue to do my best to rectify the situation with the limited means at my disposal.
I will allow some time for discussion before the actual votes are created.
Also I will be paying the FIN-U dividends today at the agreed upon 7% for the month of February.
Sincerely,
Eefrit
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Eefrit
Eve Financial Services
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Posted - 2008.03.19 16:17:00 -
[2]
 Originally by: EBANK Ricdic
Why doesn't FIN-U have a close shop option?
Essentially option 2 is a close shop option for FIN-U, but it is one where I will personally take the hit, and investors will get out with the full IPO value of their bonds.
Doing a straight liquidation would mean a significantly higher loss for investors and hence I made a decision not to.
Sincerely,
Eefrit
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Eefrit
Eve Financial Services
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Posted - 2008.03.19 17:07:00 -
[3]
Edited by: Eefrit on 19/03/2008 17:10:24
Edit: random grammar and wording
Originally by: Ray McCormack
Eefrit, the minimum value of the BPOs may well exceed even your high-end estimations of their value. The market has taken an up-turn recently and some are selling for close to four years' profit.
Regarding trustees liquidating the assets. Personally I no longer have any faith in them, if security has indeed dropped by 50% they should have made an announcement or ordered it shored up at least 6 months ago. Nothing his suddenly happened within that time-frame that could account for such a loss.
Would you entertain the idea of a third party liquidating the assets?
Ray, I could very well be incorrect on the value of the BPOs, but I do not think it will be possible to value them accurately in an unstable market. That is part of the problem in that it could be the low point in the market right now, which would make selling now a poor choice if it turns out to be (of course I can't show this to definately be the case).
I have no problem with a third party liquidating assets if it is agreed to by a shareholder vote. I would however only propose that vote if I thought the third party trustworthy in the first place. There are quite a few people that fit that bill that shareholders could choose between if option 1 passes.
Regarding the trustees, I think you being unfair on them. Their mandate was to make sure that there was enough security before any expansion took place and to prevent me from having access to the BPOs. That they definately did do, to a greater extent than their mandate at time (which annoyed the heck out of me) - the last time there was an expansion, to be safe they had me have the security at 140% rather than the required 120%. They also had no mandate to ask for assets to be shored up at all and could only lock me out and liquidate the assets if they believed that was the best course of action. I do not believe at any point in time that was a good option for the investors and hence can't point to any poor decisions that the trustees made given the information available at the time.
Of course hindsight is a wonderful thing, and there are many things I would have done differently having seen the future path available at that point. I will not however second guess decisions made in the past based on the best available information at the time (I'm not implying you are saying I should Ray).
Regards,
Eefrit
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Eefrit
Eve Financial Services
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Posted - 2008.03.19 17:13:00 -
[4]
Edited by: Eefrit on 19/03/2008 17:14:56
Edit: added comment on market prices
Originally by: Shadarle
Shouldn't someone with some better knowledge of the situation price out all the assets quickly (shouldn't take more than an hour or two to price out a bunch of T2 BPO's) and then report back?
I am more than happy to have Ray do this if he would like. It should be made clear though that nobody can be sure what selling such a large amount of T2 BPOs in a relatively short period of time would do to the market prices for them.
/Eefrit
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Eefrit
Eve Financial Services
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Posted - 2008.03.19 17:27:00 -
[5]
Originally by: Ray McCormack
Regarding the possibility of a third party liquidating the assets, I would like to put myself forward.
Should option 1 pass for FIN, I would be more than happy with you handling the liquidation, pending shareholders agreeing to the same.
/Eefrit
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Eefrit
Eve Financial Services
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Posted - 2008.03.19 17:32:00 -
[6]
Originally by: Ray McCormack
Originally by: Eefrit
Originally by: Shadarle
Shouldn't someone with some better knowledge of the situation price out all the assets quickly (shouldn't take more than an hour or two to price out a bunch of T2 BPO's) and then report back?
I am more than happy to have Ray do this if he would like. It should be made clear though that nobody can be sure what selling such a large amount of T2 BPOs in a relatively short period of time would do to the market prices for them.
That's a pointless exercise in my opinion. I could give you a low estimate based on a year's production profit, but I assume you are already working with those figures.
With regards to the time-frame for selling off the BPOs, I suggest 6 months to avoid doing exactly what you say. Some investors may have to wait for their capital to be returned, but it's a fair price to pay to avoid the loss.
I agree fully with that, as the only real way to value them is to sell them. Selling over 6 months would imho be the most logical option as well, but according to the agreement that is up to the trustees to decide.
/Eefrit
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Eefrit
Eve Financial Services
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Posted - 2008.03.19 19:21:00 -
[7]
Ray, the FIN invested amount is 250 Bill Isk. FIN-U has about 130 Bill Isk invested in it at the moment.
Originally by: Dal Thrax
I think FIN investors need a list of assets. If FIN is to be a going concern the investors will need to know how much of the asset value represents capital goods and how much represents "good will" of a going concern.
You are free to wish that, however the investors agreement clearly stated this would not be the case. It was clearly put that if you do not trust the trustees to make those decisions for you then you should not invest.
I do not believe there is such a thing as goodwill value in Eve, as there is no legal framework to back it up with. Hence I only use capital value here.
/Eefrit
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Eefrit
Eve Financial Services
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Posted - 2008.03.19 19:30:00 -
[8]
Originally by: Kane Portnoy
Hi, I am owning just a little amount of FIN-shares (5k shares) at my alt-corp.
so my question is, how long, do u think, does it take to push back FIN dividends from 2.5% to 4%?
Because if this 2.5% will stay for a longer period of time, it would make more sense to me, to get my money to ebank, where i get about 3% with all-time availability.
But if it is possible for you to say something about that time, hanging around with at least 2.5%, it would help me to calculate and maybe invest into more shares.
Kane, I honest can't tell you as it depends largely on how soon the market corrects, both in terms of CCP changing various things as well as in people that are selling below cost currently exiting the market. Also if T3 is implemented within the next year the way CCP have hinted it will, that would also change things significantly.
Assuming nothing changes at all and the market stays the way it is now, I would give it something like 18-24 months to recover to full value.
Regards,
Eefrit
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Eefrit
Eve Financial Services
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Posted - 2008.03.19 19:32:00 -
[9]
Originally by: Ray McCormack
Originally by: Eefrit
Ray, the FIN invested amount is 250 Bill Isk. FIN-U has about 130 Bill Isk invested in it at the moment.
Why do FIN dividends add up to 4% of 400b?
They shouldn't add up to that. They have always been based on 250 Billion, so I normally pay out 10 Billion Isk = 4% of 250 Billion.
/Eefrit
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Eefrit
Eve Financial Services
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Posted - 2008.03.19 19:46:00 -
[10]
Originally by: cosmoray
rabble rabble rabble
Seeing as you are non-shareholder alt, I am not responsible to answer anything at all from you.
If your main is a shareholder, at least have the guts to post with him/her.
/Eefrit
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Eefrit
Eve Financial Services
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Posted - 2008.03.19 20:56:00 -
[11]
Originally by: Marcus Baltar
...how can you be offering a 2.5% dividend if in the previous breath you are stating the bonds are worth only half their original value.
Marcus, there is a difference between what a BPO can return per month and what it would sell for. I BPO that makes say 500 Mill Isk a month may only sell for 7 Billion Isk (which would then be its value).
/Eefrit
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Eefrit
Eve Financial Services
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Posted - 2008.03.19 21:05:00 -
[12]
Originally by: D'Tann
I am going to reread the shareholder agreements later but, I could have sworn that both FIN and FIN-U had scheduled buybacks for bond maturity?!
Neither of them ever had scheduled buybacks. They are what perpetual bonds, which do not have to have a maturity date. There are a few examples like this in the real world but they are the exception to the rule, which explains why most people assumed they had a maturity date without checking on it.
/Eefrit
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Eefrit
Eve Financial Services
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Posted - 2008.03.19 21:07:00 -
[13]
Edited by: Eefrit on 19/03/2008 21:10:20
Edit: added link
Originally by: cosmoray
Q: If you launch a bond, what is the definition?
As I understand it, it is a guarantee to make a fixed payemnt schedule, and then repurchase the bond at full price on a fixed date.
You understand it incorrectly. A bond is usually a fixed maturity investment but may be perpetual, which was always the case with both FIN and FIN-U.
Perpetual Bond
/Eefrit
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Eefrit
Eve Financial Services
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Posted - 2008.03.19 21:55:00 -
[14]
Originally by: Shadarle
Bonds are generally, especially here in EVE, based on fixed returns.
Originally by: Shadarle
This is, at least, how we here in EVE tend to refer to the two.
Shadarle, it would really save us all some time if you got educated before speaking.
Here is some homework just for you:
Go look up which corp issued the first public bonds in Eve. Then go look up who the first 3 corps were. Then you can come back and take your foot out of your mouth.
/Eefrit
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Eefrit
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Posted - 2008.03.19 22:07:00 -
[15]
Originally by: FastLearner
The document is fairly clear: the options available now are either:
1. Use the defined Exit strategy - i.e. trustees liquidate collateral and refund investors. Obviously if not enough ISK is raised then investors bear the loss - that's pretty explicit in the document.
2. Change the interest rate - at which stage you have to, by your own rules, offer a buy-back to anyone who wants it.
Your should really get someone like Ray to do a proper valuation on the BPOs.
Fastlearner, I rechecked the document and it would appear that you are correct here. Although that was not the intention when it was written, the wording is clear that your interpretation is correct. The only issue I see is that there is an unintentional loophole in that a time frame for buying back the bonds at IPO was never given - which it probably should have been. I will take the matter under advisement and get back to you and everyone else on it before any vote is put into place.
I would ask that any shareholders that have a problem with a vote changing the interest let me know via evemail along with how many bonds they hold.
Regarding Ray valuing the BPOs, both him and myself have already discussed that in the earlier parts of this thread. Essentially the market history gives something to work with when selling similar BPOs to what have recently sold. A large amount of the BPOs in question have no recent comparison to make, and hence the only reasonably accurate way of doing it would be to sell them.
I am more than happy to hand everything over to either the trustees or someone like Ray (if the shareholders agree) to take over or liquidate going forward, but making that decision right now would be premature.
/Eefrit
http://oldforums.eveonline.com/?a=topic&threadID=399241 Please visit your user settings to re-enable images.[/url]
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Eefrit
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Posted - 2008.03.21 09:27:00 -
[16]
Originally by: Elias Riikonen
I for one wish to hereby request that my 1b of shares be bought back at 95% IPO value. Eefrit, if you don't accommodate this request, can you explain your choice to be something else than breach of contract?
There is already a waiting list which has been bought up steadily over time and clearly I am not about to comply with your request immediately as you are nowhere near the top of that list. At present something like 60 Billion Isk worth has been bought back under that policy.
/Eefrit
http://oldforums.eveonline.com/?a=topic&threadID=399241Please visit your user settings to re-enable images.[/url]
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Eefrit
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Posted - 2008.03.21 09:28:00 -
[17]
Thanks for all the sincere feedback so far.
I will be going away for the long weekend and will only be back on Sunday evening or Monday morning, so I will not be able to respond until then.
Sincerely,
Eefrit
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Eefrit
Eve Financial Services
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Posted - 2008.03.28 20:19:00 -
[18]
Originally by: D'Tann
Well, after double checking and confirming that there are currently no open votes for either FIN or FIN-U (was a little concerned after seeing all the posts with "votes"). Are any 3rd options being considered for eithe FIN or FIN-U and what if any timetable has been set to hold votes?
Feel free to suggest any third options that you think would be appropriate.
Timetable wise, I am planning for this weekend but it looks like there really may not be a vote option for FIN that does not break the investors agreement. I should have word on that this weekend though.
/Eefrit
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Eefrit
Eve Financial Services
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Posted - 2008.05.11 17:59:00 -
[19]
My sincere apologies for the delay in posting here guys. I am creating a new thread with exactly what is happening in the next few minutes, so please look there for information on what is going on with FIN and FIN-U.
Regards,
Eefrit
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