TRA - Turners Automotive Group [previously TNR - Turners Limited]

[Beagle]

But would you listen to sense.?

Probably not when it comes to cars...best to rely on "the handbrake"...she has learned to bark very loudly lol

[Beagle]

Topped up with some more at $2.99 this morning. Working my way down to your end of the tent Percy

[blackcap]

Topped up with some more at $2.99 this morning. Working my way down to your end of the tent Percy

Not that it means much, but its looking good on the depth for the first time in a long time. 5 cent (quarterly fully imputed) dividend coming up shortly too. With these quarterlies, you get it in the bank and the following one is almost already being announced. Long term hold for me. Paul Byrnes buying more shares at these prices is a great signal. (Apart from Todd Hunter he probably knows the company best)

[Snoopy]

Subordinated notes are held as security against the securitisation warehouse (beyond that of the asset back securities), which allows Turner's to earn their 8% of waterfall distributions before the trust/SPV. Further bonds were issued to pledge more security against the facility to enable an increase in the facility limit for further growth when required.

"The quick brown fox jumps over the lazy dog." This is a sentence I had to copy out several times in finest hand script in my primary school days. Yet, I can honestly say that I never fully understood what it all meant until this moment.

It looks like you definitely have the jump on me on this matter Fox. I get the idea that used cars on which their owners have fallen behind in their repayments, may not provide great security. So the idea of Turners providing some bonds as extra 'cash' security could be appealing for those who want to buy their securitized loans.

Note 14 of AR2017 implies 8% of the securitized loan balance is funded by subordinated notes issued by the Turners Group. I have figured out that 'Waterfall Distributions' refers to the order in which funds are distributed. And you are implying that Turners, with their 8% stake in the funding, get paid out before the BNZ who fund the rest of the loans. However, I cannot find anything in the annual report that confirms this is the case. And I am left wondering why the BNZ would agree to this? What you seem to be saying is that by packaging up securitized loans, BNZ have moved down the payout order, and the BNZ would have been better off just making a straight loan to Turners in which case they would be paid out first!

As at 30th September 2017 I see the securitized receivables were up to $117m (up from $73m) at 31st March 2017 balance date. Likewise total borrowings have gone up from $265.889m to $306.786m over the same period. However in the half year report, there is no break down of how the increase in borrowing is made up. Also I can find no announcement during the year of more bonds being issued. So I am curious about your "Further bonds were issued..." statement. Hoping you can help demystify the situation for this lazy old dog?

SNOOPY

[percy]

[QUOTE=Snoopy;717474]"The quick brown fox jumps over the lazy dog." This is a sentence I had to copy out several times in finest hand script in my primary school days. Yet, I can honestly say that I never fully understood what it all meant until this moment.

Really.?
It contains all the letters of the alphabet.

[Joshuatree]

Thanks for the memories. "Pack my box with five dozen liquor jugs" as well.
And this one for Hobbit fans
”The quick onyx goblin jumps over the lazy dwarf”:

[Fox]

"The quick brown fox jumps over the lazy dog." This is a sentence I had to copy out several times in finest hand script in my primary school days. Yet, I can honestly say that I never fully understood what it all meant until this moment.

It looks like you definitely have the jump on me on this matter Fox. I get the idea that used cars on which their owners have fallen behind in their repayments, may not provide great security. So the idea of Turners providing some bonds as extra 'cash' security could be appealing for those who want to buy their securitized loans.

Note 14 of AR2017 implies 8% of the securitized loan balance is funded by subordinated notes issued by the Turners Group. I have figured out that 'Waterfall Distributions' refers to the order in which funds are distributed. And you are implying that Turners, with their 8% stake in the funding, get paid out before the BNZ who fund the rest of the loans. However, I cannot find anything in the annual report that confirms this is the case. And I am left wondering why the BNZ would agree to this? What you seem to be saying is that by packaging up securitized loans, BNZ have moved down the payout order, and the BNZ would have been better off just making a straight loan to Turners in which case they would be paid out first!

As at 30th September 2017 I see the securitized receivables were up to $117m (up from $73m) at 31st March 2017 balance date. Likewise total borrowings have gone up from $265.889m to $306.786m over the same period. However in the half year report, there is no break down of how the increase in borrowing is made up. Also I can find no announcement during the year of more bonds being issued. So I am curious about your "Further bonds were issued..." statement. Hoping you can help demystify the situation for this lazy old dog?

SNOOPY

My apologies for the confusion, the distribution from the trust to Turner's has the lowest seniority after the more senior tranches are paid first. The reverse occurs for credit losses as well, any bad debts or impairments are covered by the lowest tranches first i.e. Turner's, then any remainder credit losses beyond that tranche are shared with the next tranche i.e. BNZ. This is why the finance receivables are still reported on the Group's balance sheet as they still retain the substantial risks and rewards of those loans.

The bonds referred to were the TRAHB sub notes of $25m that are held as security over the trust. These, along with other assets, provide that buffer to absorb any potential credit losses before BNZ up to the agreed upon 8% contribution by Turner's.

[Snoopy]

My apologies for the confusion, the distribution from the trust to Turner's has the lowest seniority after the more senior tranches are paid first. The reverse occurs for credit losses as well, any bad debts or impairments are covered by the lowest tranches first i.e. Turner's, then any remainder credit losses beyond that tranche are shared with the next tranche i.e. BNZ. This is why the finance receivables are still reported on the Group's balance sheet as they still retain the substantial risks and rewards of those loans.

OK, the fact that Turners are last on the waterfall to get the rewards of the Securitization but first on the waterfall to absorb the losses of the Securitization makes much more sense. Thanks.

The bonds referred to were the TRAHB sub notes of $25m that are held as security over the trust. These, along with other assets, provide that buffer to absorb any potential credit losses before BNZ up to the agreed upon 8% contribution by Turner's.

In the March 2018 newsletter (p1), Turners state they are looking to extend their securitization facility in the future to $250m.

8% of $250m is $20m.

There are just over $25m of TNRHB bonds outstanding. So there are more than enough bonds to satisfy the Turners Automotive Group Guarantee (amounting to 8% of the securitized loan balance) of the 'Turners Marque Warehouse Trust 1' (the loan securitization entity).

However the quantum of current loans securitised at EOFY2018 balance date has not yet been disclosed. As at the half year it was $117m. So it seems not all of the TNRHA bond capital is required to guarantee the securitised loans.

I had another look at the bond prospectus and found this quote on p21

"The Turners Group’s primary finance activities include the Bank Borrower Finance Companies which rely on borrowers to repay their loans and make interest payments on due date. The Bank Borrower Finance Companies take security over assets to secure most of the loans they make. However if a borrower fails to repay the loan on its due date and the value of the secured asset (if the loan is secured) and/or the amount recovered under any guarantee is insufficient to cover the outstanding payments, the relevant Bank Borrower Finance Company will make a loss on that loan (credit risk). If this occurs in relation to a significant number of loans, Turners may default with its lenders (including Bondholders)."

From what Fox is saying, it seems that as the quantum of securitized loans goes up, so does the quantum of TNRHB bonds tied to supporting those loans. So rather than TNRHB bonds being used as 'general loan capital' to support the wider activity of the group, we are heading for a situation where the TNRHB bonds support securitized car loans only. Thus it appears to me that the underlying risk profile of the TNRHB bonds is changing over time. It does look to me as though they have become riskier over FY2018!

SNOOPY

[percy]

Looks as though he wants $3.05....lol.

Well well well.?
Looks as though this seller of 200 shares will be gone on the open today.! ..

[oldtech]

Well well well.?
Looks as though this seller of 200 shares will be gone on the open today.! ..

Only one buyer so far at that level, everyone else down at $3.02 or lower ... I will be watching closely to see who blinks first, the buyers or the sellers.