The Scheme looks agreeable, so Vote 'Yes'.. . Review on City Limouzines

The Scheme which requires votes on 14th and 15th looks beneficial to the investors and the company. It is not very clear just by reading the scheme but an in-depth analysis to the scheme sounds interesting. For Guys who have invested in City limouzines alone, they will not form part of creditors if they had invested just in the 1 lakh(+/- approx) scheme.

Their due amount would be only the 70, 000 promised at the end of 5 years. Those who have invested about 1.3 lakhs(+/- approx), would form part of creditors. Class A if they haven't received it for about approx 50 months+ which means, if someone has received payments for more than approx 50 months, they would be class B creditors.

The calculation is based on the interest rates involved. But all the non-cummulative preference shares of 70K would be either redeemed or paid back in 12 months instalments. The agreement states - This scheme doesn't alter the rights of the shareholders.I feel all should vote Yes.. you will definitely get back 70K in 12 instalments right away even though you may not get the 4k or 7k per month. something is better than nothing. If there are cases piled up against the company, we will be the losers. If we agree, then there is a clause in the proposed scheme that all cases will be set aside and the scheme would get effective when it gets approved.

Now regarding the Combo(City Limouzines+city realcom) The total initial amount was - 2, 79, 825/- repayable at 4664 per month as principal repayment(4664*60=2, 79, 840). The entire combo investors would be a part of Class A creditors provided they have received the amounts for approx 50 + months(again, based on interest rates calculation - because the current scheme says 7%). The combo agreement has the amounts 6250 for vehicle rent and 3210(1st year and 10% addition every year) for house rent. The remaining amount is the repayment of principal 4664 + 10.5%(approx per anum) interest on 2, 79, 825 every month. Now what the company in its new scheme suggests is that it wont pay the vehicle rent and house rent going forward which was their business income sharing but in turn would pay off the balance principal amount outstanding in 12 equal instalments. I'll give an example.

If a person Mr A has invested in combo 12 months ago, he would have received 16541 for 12 months. this includes 4 parts - 1. vehicle rent 6250 2. house rent 3210 3. repayment of principal 4664 4.Interest on the initial payment of 2.8lakhs which would be (16541-6250-3210-4664)=2417.

So, this Mr A will get back 466448 months = 223872(less additional interest received above 7%) 2417 is what we received as interest but if we calculate at 7% it will come to approx 1625 or so per month. So the additional interest(80012=9600 approx) would be deducted from the 223872. therefore this Mr A would be getting back 214272 (223872-9600) approximately in 12 equal instalments which would be 17856/- approx each month for 12 months(+interest at 7%). Once this is received, the entire agreement will come to an end. Apart from this, Mr A will not get/encash any other monthly cheques.

If my explanation is what the management would explain on 14th and 15th, this sounds justified. This would mean that proportionately, our Principal is being returned in 12 equal instalments with 7% interest. I would have high regards to Mr Masood if my above explanation is what he intends.

If you understand my explanations clearly, and if this is what the management explains on 14th and 15th, then please vote 'YES' for this scheme. If you find any malafide intent in their explanation, then please ask people around you who would have better understanding and then vote YES or NO. Please do not vote in haste.

This scheme will return our proportionate principal investment in 12 months and also bring Mr Masood out of this crisis in 12 months if he is able to pay off as promised in this scheme.

If any highly learned person feels my explanation is wrong, please let me know. I would be available at piecemealcity@rediffmail.com .

Disclosure: I'm basically a Chartered.Accountant and have 3 Combos invested. My family has about 7 Combos and other investments in City.