Everton FC - Finances

[The Esk]

That WatchedToffee twitter account has made some pretty sweeping assumptions tbh. They may turn out to be correct for all I know but their method of linking events is pretty weak. They make a big detailed analysis of Vibrac and a couple of other companies, and sum it up at the end with "And that investor? Philip Green." without providing any linkage between the two.

Totally agree - he/she/they have been excellent at presenting information already in the public domain, however when straying from that brief there seems to be a lack of understanding and a huge amount of assumptions based on no visible evidence.

 

[orchard]

No business goes to a bank or commercial lender and goes through the painful process of arranging a multi million pound loan, with no plan as to what they're going to do with the cash. It simply doesn't happen and it's not the case here either.

That plan can be arbitrary, surely.

 

[Foot Long Hot Dog]

That plan can be arbitrary, surely.

What lend us £10m - 'just in case I think of something to spend it on' ?

Come on mate ffs lol

 

[orchard]

--eg. 'ring-fenced' money available for development that doesn't occur.

 

[mikewex]

No business goes to a bank or commercial lender and goes through the painful process of arranging a multi million pound loan, with no plan as to what they're going to do with the cash. It simply doesn't happen and it's not the case here either.

Bear in mind what you are looking at here is a charge, not a loan agreement as such. The club is providing a method of security to a third party for any monies they may draw down. They may not draw any or all of it down

 

[marty mcfly]

Market rates ??? Is this even a thing ? The minority shareholder's have some rights, I believe, not a lot though, I think @the esk mentioned them a while ago.
I'm not suggesting it's the case, but it's possible I reckon, and like I said, Lerner did it with Villa (although he's waived interest a couple of times), and it's probably fairly common.

It is a thing however like all these issues the only way to test it would be in court. I do know of situations where minority share holders have sued to get a look at the books.

Generally the law isn't wrong. What's wrong is the amount you need to spend to get justice.

 

[Foot Long Hot Dog]

Bear in mind what you are looking at here is a charge, not a loan agreement as such. The club is providing a method of security to a third party for any monies they may draw down. They may not draw any or all of it down

Fair point, but the mere fact that they've put it in place shows that there's patently a plan to do so.

 

[mikewex]

Fair point, but the mere fact that they've put it in place shows that there's patently a plan to do so.

Oh, I agree, and that purpose is probably transfer related, however if plans fall through they may just not draw it down, have to wait and see.

 

[The Esk]

Market rates ??? Is this even a thing ? The minority shareholder's have some rights, I believe, not a lot though, I think @the esk mentioned them a while ago.
I'm not suggesting it's the case, but it's possible I reckon, and like I said, Lerner did it with Villa (although he's waived interest a couple of times), and it's probably fairly common.

It's quite common for companies under common ownership to have an offshore tax advantaged company lend (for example) a UK company as a means of distributing profits or revenues tax free through interest payments to the lender and then to the commonly held shareholders. The private equity industry has done this for years as have the Glazers and other foreign owners in football.

It would be highly irregular if a company not under common ownership (ie not having the identical shareholder base) did the same thing as clearly some shareholders in those circumstances would benefit at the expense of others.

In the case of Everton, shareholders need to be satisfied that the borrowing is necessary and has a legitimate business purpose. Because the lender is based in the BVI it is not possible to see who the shareholders/beneficiaries of the lender are. However if there were common shareholders (ie the same shareholders in Everton and the lender) then given the size of lending I'm sure the Directors of Everton would be under a duty to disclose such in the Annual Accounts, even more so if one happened to be a Director.

 

[mikewex]

However if there were common shareholders (ie the same shareholders in Everton and the lender) then given the size of lending I'm sure the Directors of Everton would be under a duty to disclose such in the Annual Accounts, even more so if one happened to be a Director.

There is actually an explicit clause in the charge (which is a UK legal doc, not BVI) saying there are no common shareholders, directors or shadow directors.

 

[orchard]

It's quite common for companies under common ownership to have an offshore tax advantaged company lend (for example) a UK company as a means of distributing profits or revenues tax free to the commonly held shareholders. The private equity industry has done this for years as have the Glazers and other foreign owners in football.

It would be highly irregular if a company not under common ownership (ie not having the identical shareholder base) did the same thing as clearly some shareholders in those circumstances would benefit at the expense of others.

In the case of Everton, shareholders need to be satisfied that the lending is necessary and has a legitimate business purpose. Because the lender is based in the BVI it is not possible to see who the shareholders/beneficiaries of the lender are. However if there were common shareholders (ie the same shareholders in Everton and the lender) then given the size of lending I'm sure the Directors of Everton would be under a duty to disclose such in the Annual Accounts, even more so if one happened to be a Director.

It only takes an agreement between the controlling shareholders surely ?

An ethical or legal duty to declare that to minor stakeholders ?

 

[Neiler]

It's quite common for companies under common ownership to have an offshore tax advantaged company lend (for example) a UK company as a means of distributing profits or revenues tax free to the commonly held shareholders. The private equity industry has done this for years as have the Glazers and other foreign owners in football.

It would be highly irregular if a company not under common ownership (ie not having the identical shareholder base) did the same thing as clearly some shareholders in those circumstances would benefit at the expense of others.

In the case of Everton, shareholders need to be satisfied that the lending is necessary and has a legitimate business purpose. Because the lender is based in the BVI it is not possible to see who the shareholders/beneficiaries of the lender are. However if there were common shareholders (ie the same shareholders in Everton and the lender) then given the size of lending I'm sure the Directors of Everton would be under a duty to disclose such in the Annual Accounts, even more so if one happened to be a Director.

If true i am not overly happy about i bashed Lerner for doing the same thing at Villa, interestingly though many think he is the ideal owner.

That said, i think it would be an interesting study to look at 2007 summer transfer window were my understanding in Earl guarentured much of the loan/spending on Baines, Yak etc. I presume with Barkelys as a lender of choice, the interest rate to this lending would be something i love to know. If we are borrowing from Earl at 8% which is the allegation it may be better then borrowing from Barkleys at say 12%, if the interest rate from Barkleys is less, then there are big questions to answer and an absolute scandal.

I would protest on that basis.

 

[The Esk]

It only takes an agreement between the controlling shareholders surely ?

An ethical or legal duty to declare that to minor stakeholders ?

The point being if the borrowing was unnecessary and used purely for the purposes of moving taxable revenue to a non-taxed environment through interest payments for the benefit of some shareholders not all.

Decent explanation of connected parties and disclosure requirements here:

http://www.slideshare.net/ramakrishnaguptar/companies-act-2013-related-party-transactions

 

[deipnosophist]

I posted this breakdown a few days ago in the Stones thread...with news of the roll over/ draw down of fresh debt, it is timely to import it here:


Everton had 28mio of debt maturing in the May 2015 year. Assume paid off and you get the following cash flows

Bank Balance open 18mio
Cash from 2015 ops 20 mio
Debtors money received 30mio
Creditor monies paid (10 mio)
Lukaku payment (12mio)
Barry (plus odds and sods) (5mio)
Finance costs (4mio)
Debt Repayment (28 mio)
Cash from 2016 ops to date (0)
Deulofeu (4mio)
Sth American guys (5 mio)

Overall (Bank Balance now) NIL

So any body coming in post these latin american blokes was either going to have to be a loan, or funded from fresh debt

 

[D410]

http://www.bloomberg.com/news/artic...fueled-by-secretive-loans-beat-uefa-clampdown

Is it possible that the reporter was contacted after this article and passed on his thoughts who might be the single investor who controls VIBRAC and Mousehole who are linked in the documents published on @watchedtoffee.