Did any one read the fine print in this CLO bond prospectus?
Because ACA Europe 2007-1, a €400m collateralised loan obligation issued by a UK unit of ACA Capital Holdings is in a spot of trouble.
From the deal prospectus:
“Senior Expenses Cap” means, in respect of each Due Period, €100,000 per annum plus 0.06 per cent per annum (both calculated on the basis of a 360-day year and the actual number of days elapsed in such Due Period) of the Aggregate Collateral Balance as at the Determination Date immediately preceding the Payment Date in respect of such Due Period.
Whoops!
According to a statement filed to the Irish Stock Exchange on Friday, ACA owes fees including €24,501.82 to its auditors Deloitte & Touche (who, the statement says, “have reluctantly agreed to undertake this year’s audit despite the fact that their fees for last year (2009) remain unpaid”) and €645.21 to the Irish exchange itself.
Oh, and €122,955 to Standard & Poor’s for rating the thing.
(Stifles giggling)
No surprise, deal managers are trying to corral noteholders to agree to a change in the deal’s terms — upping the senior expenses cap to about €500,000 a year.
And a prize goes to Creditflux for most amusing CLO-related headline of the year;
Failure to pay Standard & Poor’s could lead to CLO bankruptcy
And another prize for amusing understatement:
“The CLO therefore finds itself in the surprising position of having its bankruptcy remote status imperilled by a bill from Standard & Poor’s — which presumably rated the deal on the presumption that it was remote from bankruptcy.”
(Starts giggling again).