Alpha Plus Launches 5.00% Secured Sterling Retail Bond Due 2024

Alpha Plus Holdings plc – a provider of private education which owns and operates 18 high quality independent schools, nurseries and sixth form colleges, predominately in London – has today launched an eight year 5.00% retail bond.

• This is the second secured issuance by the Company; the first has traded consistently at a premium to its issue price on the London Stock Exchange’s ORB since its issuance in December 2012
• The bonds are secured against real estate and other assets
• Minimum subscription amount is £2,000 with further purchases in increments of £100
• The first interest payment shall be made on 30 September 2016 in the amount of £2.50. Thereafter, interest shall be paid semi-annually, on 31 March and 30 September, in arrears in equal instalments of £2.50 per £100 of investment
• The offer period is expected to close on 23 March 2016
• Authorised Distributors are Interactive Investor, Redmayne Bentley LLP, Barclays Stockbrokers


The Alpha Plus Retail Bond prospectus and information booklet can be found at http://www.alphaplusgroup-retailbond.co.uk/

Comments

  • 5%, No ta, I like fishing in more shark infested waters
  • Given the trading history of the previous issue, it would not be unreasonable to assume that it would trade at a yield to maturity of around 4 to 4.5%, that would mean that it would be priced around 103 to 107 shortly after trading. That's enough of an incentive to take a look. The different term and smaller coupon might might make it less popular at issue and that might affect the whole dynamic, however.
  • Could be tempted to apply for a few. In dropping interest rate environment cant really expect much more than 5%. Hope we get a bond of the week analysis in the meantime
  • Does anybody know if these bonds will be allocated on a 'when it's gone it's gone' basis or a 'scale back' basis?
  • No idea, but all the bonds i have ever applied for have been first come, though i think the rugby club was scaled back. I am reviewing over the weekend and will put my order in - with my broker I can always cancel if they declare an early close providing its before the deadline - that way I know I have an option
  • See Oliver has done a bond of the week (many thanks). Decided to get my order in over the weekend so good to see this giving positive support now.
  • Hargreaves are offering this. Just placed an order.
  • Many thanks again Oliver.

    Had already ordered as I think these may well go quickly seeing as how this is first ORB issue for yonks and the low interest rate environment forecasts are still getting extended.

    Quite happy to hold for 8 years even if rates creep up as incremental interest gain in short term will help balance out any increase in longer term, plus it's nice to get away from financial related Fixed Interest investments.

    I'm not going overbaord but these will help maintain my "ladder"

    007
  • Morning all,

    iDealing tell me they are not handling this issue (which is a shame - perhaps there is too little demand) and Barclays are much too expensive for a small holding. My alternative is to buy a parcel in the market .

    Can anyone help me by posting when they commence trading in case it passes me by

    Whitey
  • Why not open HL account? They are taking orders for this and are pretty good for bonds - they offer quite a wide range for online trading. For many new launches they don't participate officially but take individual orders upon request at no charge.
  • Youinvest now offer online dealing in retail bonds. I've just placed an order for this issue online.
  • Barclays should allow you to place an order on a new issue at no dealing charge. Although obviously their outrageous £65 dealing charge is problem when it comes to selling ...
  • For bonds Youinvest currently only offer new issue purchases online, everything else is via telephone I believe.
  • Just had an email saying that they have issued an amendment to the prospectus. They claim good demand and want to raise more than the £130m limit quoted and have added more security - raising it from £109 to £147m (I hadnt noticed that the original security didnt cover the original £130m). Still reading but I cant see a new upper limit on what they might borrow. I hope they dont try and take more than they can earn a return on - we do want some buyers after the issue. People's thoughts?
  • Hi

    I omitted to mention of course that our bonds portfolio is held in our ISA therefore I receive the interest gross (hurrah) and my ISA is with iDealing because of the low costs. So I will be buying some in the market. I will be looking at LSE/ORB website each day to see when it starts trading

    Barclays new issues part of their website say the offer is now closed

    Whitey

  • That's curious from Barclays given my earlier post. They have told me that I have until 21st to decide if I want to proceed with my order give the the prospectus change and there is nothing on Alphaplus to suggest this is now closed
  • You are quite right -Hl closed too. Assume they went over the limit and took the extra but closed offer which is good
  • Good trading start this morning - ticker code = ALP2
    Mid Price 101.72
    Time/Date Price Volume Trade Value Type
    13:01:25 22-Mar-2016 101.50 4,800 487,200.00 Ordinary Trade - delayed publication
    12:28:00 22-Mar-2016 101.26 10,000 1,012,571.70 Ordinary trade
    12:11:35 22-Mar-2016 101.60 6,000 609,600.00 Ordinary Trade - delayed publication
    11:56:39 22-Mar-2016 101.50 30,000 3,044,895.00 Ordinary Trade - delayed publication
    11:56:28 22-Mar-2016 101.50 46,000 4,669,000.00 Ordinary Trade - delayed publication
    11:55:07 22-Mar-2016 101.50 46,000 4,669,000.00 Ordinary Trade - delayed publication
    08:48:40 22-Mar-2016 103.00 3,000 309,000.00 Ordinary Trade - delayed publication
    08:06:24 22-Mar-2016 102.00 37,000 3,774,000.00 Ordinary Trade - delayed publication
  • Good morning all. Just seen Alpha bonds ( both ) are on the slide again today and not quite sure why except of course the Labour party manifesto. ! I get the 2024 could be spec. targeted but not sure why the 2019's due in December. According to the last accounts from February Alpha's bank still had around £50m of stock of 2024 issue to hand which could be used to repay/part repay the 2019.
    Am i missing something here. ? Specific news from Alpha i am finding difficult to find.

    Thanks in advance for any comments.
  • How much cash on hand do they have?

    Are investors interested in being repaid using 2024 issue?

    Alp1 could be liquidity driven, someone didn't want to hold on and mess up with their Christmas.
  • Perhaps they are doing an IPF2, whereby they encourage existing ALP1 to transfer into a new ALP3 bond?
    The market for a new bond maybe unsettled by the losses from the current school business? Just a guess
  • edited September 28
    https://www.alphaplusgroup.co.uk/wp-content/uploads/2019/06/Interim-Results-to-28-February-2019-FINAL.pdf

    The Group held £5.0m of cash as at 28 February 2019 (2018: £5.1m).

    At the most recent valuation date, 1 March 2019, the security portfolio was valued at 2.18 times (1 March 2018: 2.14 times) the principal amount of the bonds in issue.

    They'll have to get some funding to pay-off ALP1, have they not announced any plans for this, looks like they are going to use the 50mm 2024 issue held by dbk to transfer investors over, folks are not going to be happy being forced into maturity extension, so yeah, they'll have to sweeten the deal like ipf2, and good luck doing that in parallel to brexit.
  • Thanks Shaunm and arjungaur. I had already seen the interims from February but can't find anything else that's new. I guess price drop is partly Labour manifesto and part uncertainty on where the funds will come from to pay the Dec 2019 and any extension offer wouldn't be too popular at the moment.
  • edited September 28
    Markets can at most focus on next couple of quarters, beyond that, any prediction is really a fantasy, now ipf got ahead of it and was rewarded with decent issuance during difficult conditions, and thankfully before more bad news came out from the polish folks

    on the other hand these alp folks here are gambling their shirts off, thankfully somebody has spotted this opportunity and decided to hit some bids, alp should announce something soon before it becomes all out panic and the bonds slips into distressed territory, the recovery from which would be pretty much impossible as then everyone would naturally assume that company is 'hiding' something, Reflexivity asserts that prices do in fact influence the fundamentals and that these newly influenced set of fundamentals then proceed to change expectations, thus influencing prices; the process continues in a self-reinforcing pattern - https://en.wikipedia.org/wiki/Reflexivity_(social_theory)#In_economics

    one thing alp folks should not do is to start pressuring the short sellers and distract themselves from the inertia they need to break -

  • arjungaur "one thing alp folks should not do is to start pressuring the short sellers"
    For a private school group, you are talking nonsense, what short sellers?
    Alpha Plus Schools is not a public listed company
    As per their web-site
    "Alpha Plus is the largest private education company in London and the
    second largest private education company in the UK. However, although
    we own many Schools, each of which has their own distinctive approach
    and ethos, there is a single common purpose for all our Schools and that
    is to ensure the best possible start in life for every child in our care."

    Annual Revenue £104m pa
    Equity 31/8/18 £16m
    Losses 31/8/18 £13m pa
    The main concern is that if they don't stem their P/L losses, then they will be in negative equity; it this which must be alarming potential investors
  • edited September 30
    of-course i am talking nonsense : )

    Short sellers who borrow bonds from long-only folks like you and hit bids

    Alpha Plus Schools Credit is publicly listed, the market for which according to you maybe unsettled by the losses from the current school business? Just a guess

    Which is the largest private education company in the UK, i think that should be good hedge against alp1 short, if it has any public securities

    they should update their purpose, ensuring best possible start is not tangible enough, also the kids are not in your care, they are not cattle, they are people, much more importantly do you actually care for the kids, there's a difference between journey and destination - https://www.phrases.org.uk/meanings/387450.html

    Going back to https://www.alphaplusgroup.co.uk/wp-content/uploads/2019/06/Interim-Results-to-28-February-2019-FINAL.pdf

    As in previous periods, reported EBITDA has again been impacted by additional operating costs incurred as the Group expands and creates additional capacity.

    The Group’s policy is to carry property, plant and equipment at cost less accumulated depreciation. Many of the Group’s freehold and leasehold properties form part of the security portfolios in respect of the Group’s retail bonds. As such, they are subject to an annual professional valuation, the most recent of which was carried out in March 2019. Had the valuations included therein been reflected in the Group’s financial statements, the net asset value would have increased by £120m less any attributable deferred tax liability.

    The situation seems lot more benign than the worst case scenario i feared, still they should not leave it to last minute specially with brexit overhang.
  • I don't see there being a problem with the two bonds, due to the good security being provided.
    Extract from it's half yearly report
    "Whilst the Group’s primary focus is on improving the trading performance of its existing schools and
    colleges, the Group does continue to look for opportunities to further expand its school and college
    portfolio both in the UK and overseas."

    Improved trading performance of it's existing operations is key to ensure future profitability and sustainability.

    Note 15 of half year accounts (see below) re Bond Security

    "The secured sterling bonds are secured by way of a first legal mortgage over a portfolio of assets held by certain of
    the Company’s subsidiaries and other related companies. This security portfolio is subject to annual external
    professional valuation and the Company is obligated to ensure that the value of the security portfolio is not less than
    1.5 times the principal amount of the bonds in issue. Additional properties can be added to the security portfolio in
    the event of a shortfall. The properties currently constituting this security portfolio are detailed on the Group’s
    website at www.alphaplusgroup.co.uk/investors. At the most recent valuation date, 1 March 2019, the security
    portfolio was valued at 2.18 times (1 March 2018: 2.14 times) the principal amount of the bonds in issue."

    The Alpha Plus two bond holdings represent just 1.57% of my overall well diversified fixed income (mostly) portfolio. The yield is worth the risk!
    arjungaur, as you say "brexit" is a concern, in particular if we an exit with no deal, thus possibly resulting in an economic major downturn for the UK.
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