Thoughts on the Basildon Bond - Apologies longer than a Bigfeller Post!

At the moment I’m on a learning curve for investments as I am currently converting the cash from a defined Benefit Scheme into investments via a fund manager but my thoughts are as follows – even though I’m not certain if I will invest or not.
1. I have checked and you can actually make the investment as part of a Self Invested Pension which, if I’m right, means that if you pay 40% tax you can invest £300 for every £500 of the Bond which increases the effective return to 8.333% - just under 42% in five years.

2. Where else will you get 5% interest for 5 years? – OK your capital will be eroded by inflation but at best you get 2% from a bank.

3. People seem to forget that, apart from the Huckerby Shares, for every 4 ordinary shares purchased at £25 you could buy one B share at £100 which pays 4.5% interest – giving effectively 2.25% yield which whilst not brilliant is better than you would get on £200 in the bank.

4. As per the link provided earlier to the site buying and selling the shares the value of the earlier shares appears to be around the £80 mark which is a 300% return.

5. No one seems to have mentioned the 3% credit on top of the 5% cash interest on the Bond. As I understand it this could be used as an offset on a Season Ticket which whilst appreciate that £15 for £500 doesn’t go far £510 for £17,000 will pay for a Season Ticket which is a normal expense.

6. Others may know more but I would guess that it will be possible for a secondary market to operate in respect of the Bonds allowing people to buy and sell based on demand. (also Im sure that someone will have the skill to set up a trust type deal for smaller investors).

7. I think it’s unfair to criticise the Board for lack of financial commitment at this stage – It is well known that they are not the richest club owners in the league and their income will have diminished following retirement – I’m not sure as I have thrown away my annual reports but I think that the Foulger loan which was repaid was nothing to do with the matching of refunds and even if it was you still have to ask the question whether you would want the rebate or Grant Holt? (Especially as there were many people who kept the rebate but benefitted from the contributions of others).

Has anyone considered the scenario that the Board may not be saying how much investing in this Bond as they intend to fill the gap should the supporters only raise £2m by providing an interest free loan for the balance over a longer period?

8. Does anyone really think that the club will go bust in the next five years? – unlike 1p5wich they own the ground, training facilities etc. which have a high land value due to location. Long before then they would be able to secure loans against these assets – the painful cull of players this year has hurt but if that sustains the club with minimal commercial debt which is governed at the whim of faceless bankers it can only be a good thing.

I’m not saying that everything is rosy but if we have worst case scenario of relegation next season and two years in league one then I would start to be concerned but I cannot see that happening and the optimist in me would hope for the 25% bonus to be paid before the end of the term.

Posted By: biffbro on March 9th 2018 at 15:42:36

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