While the Mission Viejo city council presses to liquidate eight of our “cash cow” cell tower contract assets, I have just checked the financial position of the firm whom ATS hopes to use to close the deal. The Royal Bank of Scotland has itself not been immune to the global meltdown. According to the “telegraph” their shares are plunging.
“Due diligence.” What’s that? Desperation to unload a fixed revenue stream simply to pass $200,000 in commissions to the President of ATS Communications, our staff and council never bothered to read the bank’s financials while they question the ability of potential local buyers to fund this roughly $1.5 million liquidation-fire sale.
Simply go to the two following links, or read the text which follows:
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3153466/Royal-Bank-of-Scotland-shares-plunge.html
Royal Bank of Scotland shares plunge
Royal Bank of Scotland shares tumbled almost 40pc in London today as fears intensified over the health of the British banking system.
“By Graham Ruddick
Last Updated: 5:29PM BST 07 Oct 2008
Royal Bank Of Scotland Group
The shares fell 58p, or 39pc, to 90p as investors bailed out of Britain’s second-biggest bank. The tumble came despite RBS denying press reports that it has asked the Government for more capital.
The chief executives of RBS, Barclays, Lloyds TSB and HBOS met the Chancellor, Alistair Darling, on Monday night and other senior members of the Tripartite Authorities.
Sentiment in RBS was also hit by a cut in its credit rating late on Monday. Ratings agency Standard & Poor’s yesterday warned that “RBS’s financial profile may continue to weaken” and a “combination of mixed earnings prospects, deteriorating credit risk in its key geographies, and difficult market conditions.”
RBS raised £12bn of extra capital earlier this year to help cope with multi-billion investment write downs linked to the credit crunch. Shares in the bank have fallen by 79pc in the past 12 months.
Last year RBS bought Dutch bank ABN Amro in a joint acquisition with Banco Santander of Spain and Fortis of Belgium.
The €70bn (£55bn) deal is seem by some investors as overpriced and in August RBS announced pre-tax losses for the first-half of 2008 of £691m, caused in part by write-downs linked with the ABN Amro deal.”
As I try to multi source data here is another report:
http://business.scotsman.com/bankinginsurance/RBS-crisis-No-end-in.4560996.jp
Published Date: 07 October 2008
By MICHAEL BLACKLEY
Business Editor
THE Capital’s two banking giants took a battering on the stock market today as their shares continued to nosedive.
For most of the day, attention was focused on Royal Bank of Scotland as its share price plummeted, closing at only 90p – a fall of 39 per cent over the course of the day – wiping around £8 billion off its market value.
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Gilbert comments. Will our city staff and city council question ATS to confirm that RBS is still capable of this funding opportunity remains to be seen.
That’s the problem you run into when hiring a consultant and give him an exclusive agreement to market city parks for placement of cell towers. Worse yet, as of last nights meeting, Tony Ingegneri only found one bidder willing to acquire these “maintenance free assets” yet we accept whatever he says as to the level of investor interest and financial stability.
Amazing. We set “net present valuation” based on only 15 years of cell tower leases by AT&T, Sprint PCS, Verizon, etc., yet the acquisition agreement calls for a fixed period of 30 years where the future revenue, while not evident, is surely more than zero.
Even governor Paylin tried to sell the former Alaska governor’s jet plane on E-Bay.
*Lorenzo,
It is quite obvious that these people ….DO NOT READ “The Juice” EVER! If they do…they are dumber than stumps….possibly an insult to stumps! STAY OUT OF FINANCIAL entanglements for a few months at least…..but “Oh no…..we promised our consultant a fee…..and he will be upset if we don’t give him the deal. Not the sharpest tools in the shed. In any event they undoubtedly have no aspirations for higher office…which is a good thing!
Larry,
Sorry, I don’t understand why they want to sell the cell towers. What is the motive? The instant cash?
Having a continious income seems to be much better bet than a lump sum that gets eaten up, usually by BS projects that always cost more than thought and require extra money to finish.
Folks.
At Monday’s council meeting we heard a presentation from consultant True North with an overview of public opinion of our city based on 400 random calls lasting 21 minutes. Their opinions were compared to their prior study conducted in 2006.
Included in their survey residents were asked to define their source of news as it relates to blogs. Which ones do you read? The number using blogs was reported at 11 percent and included the Orange Juice.
As he was leaving the podium I asked the representative not to leave the chambers as I was about to raise a question about their firm’s survey. My first comment was to invalidate the comparison unless the same 400 residents were called in both survey’s.
My second question of the Mayor, which no one chose to pursue, related to resident opinion in August of this year on our spending $300,000 for a float in the Rose Parade. If it was asked it surely does not appear in the survey back-up material. It’s great when you control both the Q&A.
Carl.
Selling the cell towers was politically motivated plain and simple. Mission Viejo is not the flatlands of Kansas. In fact we just held a triathalon due to the many hills in our community. Our topography causes dead areas in our cell phone reception which requires more, not less, cell towers to avoid dropped calls.
As technology moves forward, and younger children join the thousands of MV cell phone users tomorrow, these towers will be part of our landscape for years to come,
As I will try to avoid litigation against the OJ I will not post rumors that I have heard regarding elected official connection to ATS and potential flowing of money for Swift Boat activity right here in OC. That may have been reduced by an action that I simply prefer avoiding.
Depending on how you play the numbers game we are in good, or poor financial shape today. Prior to a focus group meeting of corporate leaders 30 years ago a VP educated us on the term “cash cow”. These contracts are beautiful examples. As was pointed out by the Chairman of our Investment Advisory Commission, unlike sales or property taxes, which can be variable sources of city revenue, receipt of monthly checks form the cell tower leases from companies like AT&T and Verizon are rock solid.
Larry,
I understand that it’s rock solid income. That’s why I asked why anyone would give it up. Your also correct about increased demand everywhere that’s the same case. I fail to understand why ANY city MV or Santa Ana is so stupid to give up any opportunity to gain revenue and increase service to residents at the same time.
It makes ZERO sense.
Today’s coverage of this action appearing in the Mission Viejo Dispatch with reference to the Juice post
MV Liquidation: Killing The Cow
October 8, 2008 by MissionViejoDispatch.com
On Monday three councilmembers voted to kill a long-term “cash cow” by pursuing the liquidation of 8 cell site leases. Similar to the J.G. Wentworth TV commercials, the city accepted an offer from another liquidator, Communications Capital Group, to take the City’s 30-years of future lease revenue in return for a single net discounted payment to the City of $1.47 million.
The three councilmembers, MacLean-Ury-Kelley (MUK), dubbed by some the MukCouncil, have taken the city on a spending spree and are looking for more cash. On Monday evening the Chairman of MV’s Investment Advisory Commission, Jay Standish, told the Council the Commission was concerned about City spending in light of depleted city reserves and the current economic climate. He suggested deferring discretionary expenses for at least a year or two. City Treasurer Irwin Borwin also expessed similar concern about reserves and the economy.
In reply, Frank Ury snapped at the IAC Chairman, pointedly critizing the Commission for commenting on the Council’s spending authority. Lance MacLean, referring to the low $5 million in discretionary reserves, also rejected criticism, stating, “That’s our fun money!”
The deal with CCG will depend upon the City working out the details of a formal contract with the company. As admitted by Tony Ingengeri of ATS Communications, a campaign contributer to M-U-K which stands to take a $200,000 commission on the transaction, the initial terms proposed by CCG are “predatory.”
Another contingency to the deal is the ability of CCG to obtain the cash from its funding source, the Royal Bank of Scotland (RBS), Britain’s second largest bank. That source may be in peril due to economic conditions in Europe over the past couple days, as reported in the Orange Juice Blog. The stock value of RBS fell 40% yesterday and its credit rating plummeted, leading to emergency meetings last night with the government and other financial institutions.
Critics of the lease sale are not concerned about the lease sale falling through because they believe, as stated by IAC Chairman Standish, that the cell leases are “cash cows” for Mission Viejo that will generate far more city income, even at net present value, than the amount generated by a sale to CCG. The leases are considered high grade investments because they generate long-term fixed revenue from large stable companies (e.g. ATT, Verizon, Sprint), without overhead costs to the City.
As pointed out by Councilman Ledesma, who joined Gail Reavis in opposing the sale, the amount received by the City would at best only be equivalent to the net present value of the first fifteen years of revenue. If we keep the leases, the second fifteen years of the 30-year leases would be “all gravy,” he said.
Despite the rocky financial environment, the Council proceeded at its meeting to initiate a construction bidding process for part of a $5 million expansion to the tennis centers and Montanoso Recreation Center locker rooms.
http://missionviejodispatch.com/2008/10/08/cell-sites-killing-the-cow/
Today’s coverage of this action appearing in the Mission Viejo Dispatch with reference to the Orange Juice blog.
MV Liquidation: Killing The Cow
October 8, 2008 by MissionViejoDispatch.com
On Monday three councilmembers voted to kill a long-term “cash cow” by pursuing the liquidation of 8 cell site leases. Similar to the J.G. Wentworth TV commercials, the city accepted an offer from another liquidator, Communications Capital Group, to take the City’s 30-years of future lease revenue in return for a single net discounted payment to the City of $1.47 million.
The three councilmembers, MacLean-Ury-Kelley (MUK), dubbed by some the MukCouncil, have taken the city on a spending spree and are looking for more cash. On Monday evening the Chairman of MV’s Investment Advisory Commission, Jay Standish, told the Council the Commission was concerned about City spending in light of depleted city reserves and the current economic climate. He suggested deferring discretionary expenses for at least a year or two. City Treasurer Irwin Borwin also expessed similar concern about reserves and the economy.
In reply, Frank Ury snapped at the IAC Chairman, pointedly critizing the Commission for commenting on the Council’s spending authority. Lance MacLean, referring to the low $5 million in discretionary reserves, also rejected criticism, stating, “That’s our fun money!”
The deal with CCG will depend upon the City working out the details of a formal contract with the company. As admitted by Tony Ingengeri of ATS Communications, a campaign contributer to M-U-K which stands to take a $200,000 commission on the transaction, the initial terms proposed by CCG are “predatory.”
Another contingency to the deal is the ability of CCG to obtain the cash from its funding source, the Royal Bank of Scotland (RBS), Britain’s second largest bank. That source may be in peril due to economic conditions in Europe over the past couple days, as reported in the Orange Juice Blog. The stock value of RBS fell 40% yesterday and its credit rating plummeted, leading to emergency meetings last night with the government and other financial institutions.
Critics of the lease sale are not concerned about the lease sale falling through because they believe, as stated by IAC Chairman Standish, that the cell leases are “cash cows” for Mission Viejo that will generate far more city income, even at net present value, than the amount generated by a sale to CCG. The leases are considered high grade investments because they generate long-term fixed revenue from large stable companies (e.g. ATT, Verizon, Sprint), without overhead costs to the City.
As pointed out by Councilman Ledesma, who joined Gail Reavis in opposing the sale, the amount received by the City would at best only be equivalent to the net present value of the first fifteen years of revenue. If we keep the leases, the second fifteen years of the 30-year leases would be “all gravy,” he said.
Despite the rocky financial environment, the Council proceeded at its meeting to initiate a construction bidding process for part of a $5 million expansion to the tennis centers and Montanoso Recreation Center locker rooms.
http://missionviejodispatch.com/2008/10/08/cell-sites-killing-the-cow/