From: "Marcus Collie" 
Newsgroups: uk.finance
Subject: Re: 20k loan over 6 months?
Date: Sat, 18 Dec 2004 17:11:44 -0000


"Paulio Kwazakki"  wrote in message 
news:41c1f8d8$0$16588$cc9e4d1f@news-text.dial.pipex.com...
> Hello all,
>
> I completed a management buyout in May 2004 of a company that I have 
> worked
> for since June 2000.  I had to borrow heavily to do this, which left me 1k
> in the red each month; my savings have now depleted.
>
> The company was sold last month for three times the initial purchase 
> price,
> leaving me with a multi-million pound sum.  50% of that sum has been
> re-invested into the company in the form of an earn-out.
>
> The other 50% has been paid to me in the form of bank guaranteed loan 
> notes,
> which cannot be redeemed until Jun 2005.

Why did you agree to this?

> I have no cash at present.  A well known private bank are keen to lend
> against the loan notes but are having difficulty with their legal dept as
> the supporting letter of credit is in my name and not transferrable, so 
> they
> cannot take it as security thus far.

Fair enough - they can hold the paper but only you can cause it to be 
encashed, and even then they can't force you to pay them back against it.
Why don't you offer a second charge against your property as well - then 
they can take the 20K from your home if your co buyout does not reap the 
rewareds you claim......

> I need to borrow 20k over 6 months in order just to live.  I have tried 
> many
> banks but all are uninterested and want to see 6 months worth of bank
> statements, etc, etc.  Not a problem - but as I have made clear to them, 
> my
> outgoings currently exceed my income by 1k per month.  They lose interest
> after hearing this!  They just don't seem to realise that I'm showing them 
> a
> 7 figure loan note issued by a FTSE 100 company and backed up with an
> irrovocable letter of credit; who cares about my credit cards and loans?
>
> So in summary, I need 20k over 6 months whereby the lender wouldn't care
> that the proceeds of the 20k loan would actually go towards it's own 
> payment
> for the 6 months.  After 6 months, the loan notes will be redeemed, I will
> have plenty of cash and clear the loan.
>
> The loan notes are bank guaranteed with an irrovokable letter of credit
> issued by Natwest.  Even Natwest wouldn't give me 20k loan today though!

Who did you talk to in NatWest?  Did you talk to the person responsible for 
issuing the letter of credit?  They will know how to lend against it and 
therefore will be able to assist.  If you actually walked into a branch and 
said 'lend me money agianst this piece of paper', then I am not suprised 
they said no!

Either that, or your letter of credit is not as good as you think it 
is..........Oh, and BTW, NatWest generally only issue letters of credit 
against cash, or other easily liquidated assets, so I still have to ask why 
you agreed to accept a loan note as payment?!