Boston Managed Investments Limited (ACN 165 345 675) (AFSL 469808)
Phone: 1300 668 699

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2016 TT Series 1

Since the 2015 program closed Think Tank has been meeting or exceeding its business development targets on a consistent basis.  Importantly, the loans under Think Tank’s management have increased from approximately $295,000,000 to in excess of $405,000,000 as at March 2016.

That success is due to a number of factors including an expanded sales capability, particularly in Victoria.  Even more importantly, that growth in loans has not resulted in any increase in the rate or value of loans in arrears.  This is an outstanding result over that period.

The growth of the Think Tank loan book is set to continue largely in line with recent trend, with the support of its senior funder, the Commonwealth Bank of Australia, and its Junior funders being Challenger, Boston and others.

Future Growth

Since March 2015, to ensure that Think Tank has the opportunity to continue to grow its loans under management, while at the same time spreading its funding risk and ensuring competitive pressure on the pricing of senior funding,  Think Tank has been looking to introduce a 2nd senior funding provider.   This is one of the other “big 4” Australian Banks.

To do this Think Tank Group Pty Limited needs to be “approved” or “on-boarded” by the new senior funder.  During this process the optics of the “Redeemable Preference Shares” on the balance sheet has been questioned.

The Think Tank board, the Think Tank executive committee and the Boston Managed Investments Limited investment committee, have agreed to recommend the offer be first made to the TT-RPS 2015 investors, who have been, and continue to be, supportive of the Think Tank Group Pty Limited business.

Critically, this offer does not represent an increase in the debt load of Think Tank.  The offer proposed serves to enhance both the actual and apparent strength of the Think Tank balance sheet in the eyes of potential Senior funders.


 

Think Tank Group Pty Limited 2016 Series 1

This offer is made exclusively to Unit Holders in the 2015 TTRPS Unit Trust.  As you are aware the Trust holds Think Tank Group Pty Limited 2015 Redeemable Preference Shares (2015 TTRPS) (2015 Redeemable Preference Shares) on behalf of Unit Holders.

Think Tank will redeem all existing Preference Shares, known as TT-RPS, prior to the issue of securities under this offer. That redemption will result in the trustee holding $3,499,925 in cash (2,892,500 2015 TTRPS @ $1.21)

It is proposed that the Trustee, on behalf of Unit Holders, will subscribe for 4,430,285 Ordinary Shares in Think Tank, along with 1,264,971 stapled Convertible Notes issued by Think Tank.  Each of those securities will have a face value of $0.85.

Under this offer the Ordinary Shares will carry the usual rights of Ordinary shares and will rank equally with Ordinary Shares previously issued and subscribed to.  The Convertible Notes have a coupon attached which Think Tank will pay in the same manner as the 2015 TTRPS coupon has been paid, but at a fixed rate calculated by adding the prevailing Official Cash Rate (Currently 2%pa) to a margin of 10.75% pa (12.75%), payable monthly in arrears.

Whilst there is, at face value, a reduction in income style payments to Unit Holders under this plan, there is, in the Investment Committee’s view, a substantial capital gain to Unit Holders.  The ordinary Shares and Convertible Notes (which are convertible to Ordinary Shares) are being issued at $0.85.

Think Tank has agreed to hold, and the Trustee has agreed to grant, an option to Think Tank to re-purchase the Ordinary Shares and Convertible Notes at a 10% premium to the issue price at any time within the first year, and a further 10% if exercised at any time up to two years (ie. buy-back at $0.935 per share/Note up to 12 months or $1.03 per share/Note out to 24 months).  That offer to buy back has been made exclusively to the Trustee in relation to shares and notes issued under this program, and is not available to existing shareholders.

Your Committee has conducted an internal “mark to market” analysis utilising historical data as well as market place intelligence, and have relied on pessimistic valuation metrics and methods to arrive at a nominal share value of $1.15 to $1.30, fully diluted, at the present time.  At the lower end, the offer represents a 35% discount to fair value, ignoring for this purpose the coupon payment on the Convertible Notes.

Prior to recommending this offer to Unit Holders, your Investment Committee has carefully analysed the proposal to ensure that the terms offered represent a positive benefit to Unit Holders.  That analysis has been carried out within the context of Think Tank’s right to redeem the 2015 TTRPS program early in any event, which would normally result in a return of capital to Unit Holders and the termination of the investment vehicle which has served Unit Holders well since early 2013.

Of perhaps greater interest to current investors is that this offer provides Think Tank with an apparently strengthened balance sheet without seeking further contributions from current or new investors.  It will satisfy the requirements of the major Bank currently assessing its participation.

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Fund2016 TT Series 1
TrusteeBMIL Nominees Pty Ltd
ManagerBoston Managed Investments Limited
Investor TypeWholesale/Sophisticated/Institutional
StatusTrading
Inception28/6/2016
Minimum Investment$50,000.00
Unit Value$1.00
Last quarter return after fees12.25% (annualised) (March 2018)
Coupon PaymentsPaid monthly in arrears
DRP Available?No
Fund Return ProfileHigh
Income Return RiskMedium
Capital RiskLow
Closed Date19/04/2018
Fund2016 TT Series 1
TrusteeBMIL Nominees Pty Ltd
ManagerBoston Managed Investments Limited
Investor TypeWholesale/Sophisticated/Institutional
Inception28/6/2016
StatusTrading
Minimum Investment$50,000.00
Unit Value$1.00
Asset Size$3,499,925
Number of Investors14
IM Version & DatesN/A
Entry/Exit FeesNil
Management FeesNil
Performance FeeNil
Expected Asset Life2 years
Capital Growth10.00% p.a
Coupon PaymentsPaid monthly in arrears
Last quarter return after fees12.25% (annualised) (March 2018)
DRP Available?No
Fund Return ProfileHigh
Income Return RiskMedium
Capital RiskLow

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