Chapter 257 Low-Interest Loan
“I come here with good intentions today, Barron.”
Colin Hall said:
“For Solve some of your troubles"
"Trouble?"
Barron looked at the other party, showing slight doubts, and asked.
“Yes, I know that the bank you cooperate with most is Barclays Bank, and you also have some cooperation with Goldman Sachs Group.”
“Originally, your Northen Rock Bank also had opportunities. Yes, I once showed kindness, Colin, but unfortunately, you refused. "Me."
Hearing Barron's words, Colin Hall shrugged and said:
"I also know about this matter. It was once Northen Rock Bank Credit." The problem with Burris, the person in charge, he made a bad decision..."
"That's how it is sometimes, Colin. I trust people who help in times of need rather than people who are the icing on the cake."
"That's because I wasn't in London at the time, and now I'm here to repair our relationship. .”
Meet Barron to see Looking at himself and gesturing for him to continue, Colin Hall said sincerely:
“I have studied your current liabilities of DS Capital and found that there are a huge number of bank loans, mainly from Barclays Bank. and Goldman Sachs, the interest rates on these loans The interest rate is very high, higher than 12%. I know that these loans came from some leveraged buyouts you carried out. At that time, the EU bank loan benchmark interest rate was at a high of 5%. Such financing interest, for leveraged buyouts, is Normal..."
“But now the EU’s bank loan benchmark interest rate is below 3%, and even in the United States, this data has been at 1% for several months... Under such circumstances, the interest rates on your loans appear to be too high. Too high..."
Barron admitted that Colin Hall was right. In the beginning, for the acquisitions of O2, Manchester United and Argos, Barron used leveraged buyouts, paying part of his own funds, and other funds from Barclays Bank and Goldman Sachs Group are financing, and the interest rates on these financings are very high, many exceeding 12%...
Of course, compared to the future value growth of these acquisition targets, it is thought that their prices can be higher. When the price is low, or at a more appropriate time, if you get it into your hands, these slightly high financing costs can be borne by Barron's.
But after that, he also tried his best to find ways to reduce the cost of these financings.
For example, O2 Telecom raised 2 billion pounds through two issuances of corporate bonds and has already paid back part of its debt in advance.
Manchester United and Argos have each issued 500 million pounds of corporate bonds and have completed the repayment of the financing used to acquire them.
But now, Barron's is still responsible for 3 billion pounds of high-cost financing with an interest rate of more than 12% for O2 Telecom's debt.
This means that the annual interest on these debts is as high as 360 million pounds. Adding in other corporate debt interests, the annual interest is still more than 460 million pounds, which is still a high burden. .
Just like this time, Barron's has made a lot of profits from the EUR/USD foreign exchange transaction. Even after completing the acquisition of 100% of SLEC's shares, he still has more than 21.5 in his account. 100 million pounds of funds, but about 400 million pounds of them were required to pay interest on the financing of his previous leveraged transactions...
Before meeting Colin Hall today, Barron We are also preparing to cover the current high-cost financing of 3 billion pounds through new lower-interest loans or corporate bonds. After all, the EU's bank loan benchmark interest rate was already below 3% at this time, and had reached a low of 2.5% for a period of time. This was already half of the 5% figure when he was financing...
This also means that the current bank loan interest rate is far lower than that of the time. Using new low-interest loans to cover high-cost loans is itself a measure often used to reduce loan burdens after leveraged buyouts.
So after hearing Colin Hall's words, Barron had roughly guessed what the other person meant, and he said:
"So? Colin, what are your plans?"
“I said, I hope to re-establish our friendship, Barron, you know that our Northrock Bank is also very strong, we can provide you with a loan, the interest is basically the same as the current bank loan. Interest rates are limited, of course, and this is definitely the mortgage you need Use the shares you hold in O2 Telecom to mortgage, but the process is very relaxed. We can help you repay the remaining loans first, and then mortgage the shares to us.”
If it is like Ke. Lin Hall said that based on the current bank loan benchmark interest rate which is slightly higher than 2.5%, the loan cost they provide is even lower than the 3.5% interest rate for corporate bonds issued by him, which is still very appropriate. But the problem is ……
Barron asked:
“This is an option that can be considered, Colin, but what I am concerned about is, how much loan amount can you provide? In addition, what proportion of O2 Telecom’s shares need to be pledged by me? How much is it? Also, your loan term, after all, you know, you have advance There is a precedent for loan recovery, so I have to be cautious.”
Colin Hall knew that Barron’s so-called early loan recovery was referring to the previous financial crisis of the Devonshire family. Senrock Bank once urged them to repay their loans before they were due.
He explained:
“I have also learned about the previous things. To be honest, Northrock Bank was indeed worried about the repayment of the loan before it was due. I need to apologize for bothering you, but it was you who proposed to pay back the loan in advance, and we also waived the interest for the insufficient loan period. "
"We can provide you with a loan of 3 billion pounds, allowing you to repay the high-interest financing that still exists from Barclays Bank and Goldman Sachs Group. This term can be up to 5 years, and the interest rate is as I told you. , because it is a mortgage loan, the interest rate will be within 3%, well, I can give you 2.8 % interest..."
"As for the proportion of O2 Telecom shares that need to be mortgaged, I know that in your previous financing of 5 billion pounds, you mortgaged all the shares of O2 Telecom to Barclays Bank and Goldman Sachs. Group, based on this calculation, we need the mortgage share ratio of O2 Telecom For example, it should be 60%, which also corresponds to the mortgage share of the 3 billion pounds of financing in Barclays Bank and Goldman Sachs Group.”
Hearing Colin Hall’s words, Barron couldn’t help but sigh, now this. In the era of low interest rates, the interest rates on loans are really tempting. You must know that before he was reborn, Barron At that time, I also came into contact with a lot of related business. At that time, because the British Consumer Price Index (CPI) increased higher than expected, bond yields rose, causing the market's bets on the peak of the benchmark interest rate to rise from the previous 5% to 6.5%. Fixed mortgage rates also rose accordingly, reaching 6.7%.
Compared with now, it can be said to be heaven and earth.
“I can consider all of these. The only thing is that the situation now is different from that then, because you can see that O2 Telecom has a good development momentum. The number of users of this company has already It is more than twice what it was when I bought it, and it has been very successful in developing markets in Germany and France. Therefore, the current valuation of O2 Telecom is at least twice what it was originally. So for this 3 billion pound loan Mortgage, 60% of the shares is definitely unacceptable to me.”
Hearing Barron’s question about the proportion of mortgaged shares, Colin Hall smiled and said:
“But don’t forget Barron, the loan interest we give you is already very low, so We need to have security in terms of collateral, and if it is a long-term loan, we need to be more cautious, because we cannot predict the future business situation, so we can only make relatively pessimistic preparations.”
(End of Chapter)< br>