THE Ricoh Arena company sold to indebted London Wasps in a secret council deal last year on a massively extended 250 year lease may be worth £48.5million, according to a new report.
The surprising new valuation based on “trading potential” is contained in a Prospectus published today inviting fans and other investors to buy “retail bonds” in the Premiership rugby club for a minimum £2,000 each, with investors receiving 6.5per cent per year in interest.
The Coventry Observer exclusively revealed Wasps’ retail bond scheme two weeks ago – which is an appeal for fans to help pay off the Premiership rugby club’s debts, including to Coventry taxpayers.
Wasps hope the scheme will raise £35million and enable it to pay off loans including the £13.4million taxpayer loan to Coventry City Council agreed in private by councillors last October.
The Prospectus outlines a series of risks to fans and other retail bond holders ever getting their money back.
The intention is to return their money by 2022 with growth of the Wasps business, which we have revealed was £22million in debt last year when Ricoh company Arena Coventry Limited (ACL) also reported £400,000 losses.
Wasps chief executive Nick Eastwood said today repayment of the bonds was secured against the assets, with the Ricoh company acting as joint guarantors.
The Prospectus includes a report by Strutt & Parker for Wasps, placing the market value for the fully operational long leasehold of the Ricoh company at £48.5million.
The opinion assumes the success of Wasps, ACL’s business strategy and the retail bond scheme.
It is in contrast with previous valuations backed by a High Court judge last year – based on the then much shorter term ACL leasehold of 41 years – of “no less than £10.8million but less than the £14.4million” at the time the original £14.4million taxpayer loan was invested in ACL by the council in January, 2013.
Today’s Wasps retail bonds scheme prospectus reports that if ACL goes insolvent, the lease to freehold owners Coventry City Council could effectively revert back to its original short lease (now 38 years), meaning bondholders might have even less chance of having their investment returned.
The council and Alan Edwards Higgs Charity sold their shares in ACL to Wasps for £5.5million in total plus the outstanding taxpayer debt, in a total deal worth around £19million.
It is less than half today’s valuation, leading some Sky Blues fans to question on social media if taxpayers were left shortchanged in selling the indebted Coventry City Football Club’s home ground to an out-of-town rugby club.
Companies House records shows the Wasps company which bought ACL changed its name earlier this month from London Wasps Holdings Limited to Wasps Holdings Limited, while its registered address remains in London.
Wasps claim to have increased turnover from a low base since moving to the Ricoh, and have ambitious plans to develop the sporting, conferencing and leisure business.
That would enable it to pay off outstanding loans, including to its off-shore parent companies in low tax Malta and to ultimate owner Derek Richardson.
The bonds are to trade on the London Stock Exchange under Wasp Finance plc, a new company set up for the purpose.
The risks of bondholders not getting their money back, as outlined in the Prospectus, include insolvency, if the Bond scheme and Wasps’ business strategy fails to raise enough money, and lack of success on the pitch.
The Prospectus adds: “Unlike a bank deposit, the Bonds are not protected by the Financial Services Compensation Scheme (the “FSCS”).
“As a result, neither the FSCS nor anyone else will pay compensation to you upon the failure of the Issuer, the Guarantors or the Group as a whole.”
