Lend Academy Network Forum

Lending Club Discussion => Investors - LC => Topic started by: Half Right on June 07, 2016, 08:09:43 PM

Title: You have to love Wall Street
Post by: Half Right on June 07, 2016, 08:09:43 PM

Reuters: Former LendingClub CEO Laplanche looking to take company private
Jun 7 2016, 18:42 ET | About: LendingClub... (LC) | By: Eric Jhonsa, SA Eye on Tech, SA News Editor [Contact this editor with comments or a news tip]

Reuters reports Renaud Laplanche, who last month stepped down as LendingClub's (NYSE:LC) CEO due to the circumstances surrounding a loan sale, is talking to P-E firms and banks about financing a takeover of the company.

Shares are up 5.5% after hours to $4.63. They fell 7.4% in regular trading amid news LendingClub had postponed its annual meeting and #2 shareholder Baillie Gifford had liquidated its stake.
Title: Re: You have to love Wall Street
Post by: jz451 on June 07, 2016, 08:42:02 PM
To be fair it is probably a better move to take the company private than keep it as a public company. The IPO was essentially a cash grab and now it would make strategic sense if Lending Club remained private for a while until they can maintain a higher level of loan buying  from institutional investors and significantly increase the pool of retail investors.
Title: Re: You have to love Wall Street
Post by: GS on June 07, 2016, 08:45:22 PM
I liked the company private, too.  But damn, sell the company at 15  a share and buy it back for about 5 a share.  What a screw job for investors who held on to the thier IPO shares.
Title: Re: You have to love Wall Street
Post by: Rob L on June 07, 2016, 10:38:33 PM
I liked the company private, too.  But damn, sell the company at 15  a share and buy it back for about 5 a share.  What a screw job for investors who held on to the thier IPO shares.

I'd be surprised if RL could pull it off but if someone wanted to take LC private it might be doable. The company has new owners now. Something like 80% of it's entire stock traded the week of 5/9 and I wouldn't be surprised if more than half the owners are in at $5 a share or less. Huge numbers of shares traded below $4.50. So someone comes in at $7.50 to take the company private how do you vote? I'm not saying the company's worth $7.50 at all but who knows? Sprinkle on the possibility that the acquiring party(s) could also be banks or institutions that solve LC's loan funding shortfall and the potential Madden problem then stranger things have happened I suppose. I don't know much about this stuff; just a bit of wild speculation. Would certainly expect major problems and lawsuits from former shareholders. The SEC's already investigating. That might be enough to kill it. Anyway, could be interesting. "Blue Horse Shoe Loves Anacot Steel".

Had to add one more thing. LC still has almost exactly the same cash in the bank that they raised by their IPO. The company could lose one heck of  big shareholder lawsuit and not be that much worse off than before they went public (moneywise at least). The buyer would just have to be a true believer in the future of the company and/or it's business model.
Title: Re: You have to love Wall Street
Post by: P2PFact on June 07, 2016, 11:02:17 PM
I hope he didn't pull it off. Usually PE buy out comes with leverage by issuing new debt. Those deb will certainly be more senior to retail note holders.
Title: Re: You have to love Wall Street
Post by: bobeubanks on June 07, 2016, 11:05:43 PM
<Snarky comment>

Does RL think fraud is OK in a private company?

</Snarky comment>

I'm thinking going private, esp. if RL is involved, makes the pending shareholder lawsuits stronger in front of a jury.
Title: Re: You have to love Wall Street
Post by: jz451 on June 07, 2016, 11:08:36 PM
This hasn't even happened yet. And if a party were to buy it out, it would likely be done in cash like if I were to buy a sports team.

I hope he didn't pull it off. Usually PE buy out comes with leverage by issuing new debt. Those deb will certainly be more senior to retail note holders.
Title: Re: You have to love Wall Street
Post by: jheizer on June 07, 2016, 11:12:14 PM
RL comes back I'm out.
Title: Re: You have to love Wall Street
Post by: mchu168 on June 07, 2016, 11:55:09 PM
Putting the guy who was lax on compliance back in charge of this business would be a big mistake.  Isn't this obvious?  :-\
Title: Re: You have to love Wall Street
Post by: Fred93 on June 08, 2016, 12:24:28 AM
I hope he didn't pull it off. Usually PE buy out comes with leverage by issuing new debt. Those deb will certainly be more senior to retail note holders.

Nope.  Can't happen.  Our prospectus promises us that there the company will not take on indebtedness that is senior to ours. 
Title: Re: You have to love Wall Street
Post by: Fred93 on June 08, 2016, 01:11:47 AM
Putting the guy who was lax on compliance back in charge of this business would be a big mistake.  Isn't this obvious?  :-\

The board did not accuse him of being "lax on compliance". 
Title: Re: You have to love Wall Street
Post by: mchu168 on June 08, 2016, 01:16:02 AM
Putting the guy who was lax on compliance back in charge of this business would be a big mistake.  Isn't this obvious?  :-\

The board did not accuse him of being "lax on compliance".

Well I did.
Title: Re: You have to love Wall Street
Post by: P2PFact on June 08, 2016, 08:10:58 PM
Nope.  Can't happen.  Our prospectus promises us that there the company will not take on indebtedness that is senior to ours.

Where in the prospectus?? You mean they $100mm+ bank credit line they have is not senior to the note? Anyway even if it's equal seniority, it's bad for the note holders.
Title: Re: You have to love Wall Street
Post by: Fred93 on June 08, 2016, 09:41:17 PM
Nope.  Can't happen.  Our prospectus promises us that there the company will not take on indebtedness that is senior to ours.

Where in the prospectus?? You mean they $100mm+ bank credit line they have is not senior to the note? Anyway even if it's equal seniority, it's bad for the note holders.

Go to the bottom of LC's main page.  Click on "prospectus".  Select the main 2014 prospectus from the list.  Look at page 5.
Quote
The Notes will not be contractually senior or contractually subordinated to any other indebtedness of Lending Club.

Later there's a section that goes into more detail.
Title: Re: You have to love Wall Street
Post by: nonattender on June 09, 2016, 11:28:00 AM
The Notes will not be contractually senior or contractually subordinated to any other indebtedness of Lending Club.

Now, see, if you were a law-creature, you'd have bolded the two instances of the word "contractually" as being operative, in this context.

I think you might either be reading what you want to see or maybe not reading this enough like an engineer.  Parse it and it looks like, if they don't explicitly say anything in the contracts about seniority/subordination (and just let it linger), they can do whatever they want...

Even if your interpretation were ultimately to be ruled 'correct', then, the only constraint they're under is taking out debt EQUAL to notes.

That's cold comfort.

Title: Re: You have to love Wall Street
Post by: nonattender on June 09, 2016, 11:52:57 AM
Putting the guy who was lax on compliance back in charge of this business would be a big mistake.  Isn't this obvious?  :-\

The board did not accuse him of being "lax on compliance".

"Tone At The Top" - which is the exact phrase that the board used in the firing filing - is a "term of art" with a fairly definite meaning:

https://en.wikipedia.org/wiki/Tone_at_the_top

Title: Re: You have to love Wall Street
Post by: rawraw on June 09, 2016, 02:42:07 PM
Nope.  Can't happen.  Our prospectus promises us that there the company will not take on indebtedness that is senior to ours.

Where in the prospectus?? You mean they $100mm+ bank credit line they have is not senior to the note? Anyway even if it's equal seniority, it's bad for the note holders.

Go to the bottom of LC's main page.  Click on "prospectus".  Select the main 2014 prospectus from the list.  Look at page 5.
Quote
The Notes will not be contractually senior or contractually subordinated to any other indebtedness of Lending Club.

Later there's a section that goes into more detail.
I'd love for this to be correct, I'll have to read later. But I have trouble imagining that line they took out isn't at least pari passu.  If the above is true, I'd have to readjust my risk outlook. Strange I've never noticed

Sent from my SAMSUNG-SM-G935A using Tapatalk

Title: Re: You have to love Wall Street
Post by: Fred93 on June 09, 2016, 04:03:55 PM
I think you might either be reading what you want to see or maybe not reading this enough like an engineer.

I take offense at that, Sir.  Pistols at 40 paces?

I did a little legal research to figure out what "contractual" means in that context.  If you google "contractual subordination" you get a lot of stuff.  Apparently very common term.  According to various legal web sites, there are two kinds of subordination, "contractual subordination" and "structural subordination".  (Hey, I know these aren't authoritative legal books, but I don't own those books.)  Here's my legal tenderfoot summary: Structural is via debt at different subsidiaries, and contractual is everything else.

Read about it here...
http://convertarb.net/?page_id=781

So my understanding is that we're protected against everything except that they could form a subsidiary, and put debt there, and have that debt get first grab on assets in the subsidiary.   In fact, that's exactly how a BRV works, so excluding structural subordination was necessary to allow BRVs.
Title: Re: You have to love Wall Street
Post by: Fred93 on June 09, 2016, 04:12:29 PM
Go to the bottom of LC's main page.  Click on "prospectus".  Select the main 2014 prospectus from the list.  Look at page 5.
Quote
The Notes will not be contractually senior or contractually subordinated to any other indebtedness of Lending Club.
I'd love for this to be correct, I'll have to read later. But I have trouble imagining that line they took out isn't at least pari passu.  If the above is true, I'd have to readjust my risk outlook.

Just to be clear: I believe they are pari passu.  (Without the legal geek speak: "ranked equally".) 
Title: Re: You have to love Wall Street
Post by: nonattender on June 09, 2016, 04:29:45 PM
I think you might either be reading what you want to see or maybe not reading this enough like an engineer.

I take offense at that, Sir.  Pistols at 40 paces?

I believe slide rules at 10 meters is traditional. :)

(Do I need to mention "no pocket protectors"?)

ETA:  BTW, speaking of "pocket protectors", here's one implementation:  http://www.lendacademy.com/forum/index.php?topic=583.0
Title: Re: You have to love Wall Street
Post by: bobeubanks on June 09, 2016, 04:41:12 PM
"Tone At The Top"

Isn't Tone at the Top a workout video by Jane Fonda? Now available on VHS and Beta.
Title: Re: You have to love Wall Street
Post by: bcartpa on June 09, 2016, 05:03:18 PM
Quote
Isn't Tone at the Top a workout video by Jane Fonda? Now available on VHS and Beta.

LOL!
Title: Re: You have to love Wall Street
Post by: nonattender on June 09, 2016, 05:25:05 PM
"Tone At The Top"

Isn't Tone at the Top a workout video by Jane Fonda? Now available on VHS and Beta.

Yes, I believe you get 10,000 copies of it (with Chinese subtitles) if you invest in Kickfurther and they have to recover the "assets"... ;)
Title: Re: You have to love Wall Street
Post by: Fred93 on June 11, 2016, 12:23:21 AM
Here's some Wall Street insight.  (Pls don't attack me.  I'm not the guy who made either prediction.  I'm just the messenger.  I'm pretty sure that at least one of these is bonkers.)

http://www.lmkat.com/2016-06-10-fbr-co-weighs-in-on-lending-clubs-fy2016-earnings-lc/
Quote
FBR & Co. analyst B. Ramsey now forecasts that the firm will earn ($0.01) per share for the year, down from their previous forecast of $0.09. FBR & Co. currently has a “Market Perform” rating and a $4.00 target price on the stock.
...
RBC Capital started coverage on shares of Lending Club in a research note on Wednesday, March 16th. They issued an “outperform” rating and a $92.00 price objective for the company.

Edited to add: If anybody has access to that RBC report, please share with us what logic and calculations got them to that $92 number.
Title: Re: You have to love Wall Street
Post by: jz451 on June 11, 2016, 01:42:06 AM
I don't know but I'll have whatever they are drinking.


Here's some Wall Street insight.  (Pls don't attack me.  I'm not the guy who made either prediction.  I'm just the messenger.  I'm pretty sure that at least one of these is bonkers.)

http://www.lmkat.com/2016-06-10-fbr-co-weighs-in-on-lending-clubs-fy2016-earnings-lc/
Quote
FBR & Co. analyst B. Ramsey now forecasts that the firm will earn ($0.01) per share for the year, down from their previous forecast of $0.09. FBR & Co. currently has a “Market Perform” rating and a $4.00 target price on the stock.
...
RBC Capital started coverage on shares of Lending Club in a research note on Wednesday, March 16th. They issued an “outperform” rating and a $92.00 price objective for the company.

Edited to add: If anybody has access to that RBC report, please share with us what logic and calculations got them to that $92 number.
Title: Re: You have to love Wall Street
Post by: AnilG on June 11, 2016, 01:57:26 AM
IMO, one of the reporting service messed up in scrapping report or data entry and now everyone else is running with the error. It mixed up Lam Research Corporation (LRCX) with Lending Club (LC). RBC Capital issued a report 03/16/2016 on LRCX with Price Target of $92.00 and Outperform Rating.

Also the linked article appears to be computer generated. It has that vibe of robo-writer filling in the blanks.

Here's some Wall Street insight.  (Pls don't attack me.  I'm not the guy who made either prediction.  I'm just the messenger.  I'm pretty sure that at least one of these is bonkers.)

http://www.lmkat.com/2016-06-10-fbr-co-weighs-in-on-lending-clubs-fy2016-earnings-lc/
Quote
FBR & Co. analyst B. Ramsey now forecasts that the firm will earn ($0.01) per share for the year, down from their previous forecast of $0.09. FBR & Co. currently has a “Market Perform” rating and a $4.00 target price on the stock.
...
RBC Capital started coverage on shares of Lending Club in a research note on Wednesday, March 16th. They issued an “outperform” rating and a $92.00 price objective for the company.

Edited to add: If anybody has access to that RBC report, please share with us what logic and calculations got them to that $92 number.
Title: Re: You have to love Wall Street
Post by: Fred93 on June 11, 2016, 02:12:07 AM
IMO, one of the reporting service messed up in scrapping report or data entry and now everyone else is running with the error. It mixed up Lam Research Corporation (LRCX) with Lending Club (LC). RBC Capital issued a report 03/16/2016 on LRCX with Price Target of $92.00 and Outperform Rating.

That's the most rational explanation I can imagine.

Quote
Also the linked article appears to be computer generated. It has that vibe of robo-writer filling in the blanks.

Yea, dontcha hate that.  A few years ago I started calling them "echos".  Something will appear one place online, and then within hours lots of echos appear.  Someone looking around to check a fact is presented with dozens of apparently corroborating stories.  I found 5 articles containing this particular "fact", but I couldn't access the source.