Farhad Moshiri

[catcherintherye]

Can our financial experts on here detail how this is a positive? Wouldn’t all clubs just do this with their shares to generate more cash? No other clubs seem to do this as far as I know.

It would rely on their owners being willing to swap money being owed, for more shares.

 

[catcherintherye]

Loss of £130mill. Big chunk due to covid (£63mill).
Debt is down to £2.3mill
Mosh has pumped £500mill in.
Commercial revenue is record high from £20+ mill to £60+mill. (rounded all figures for a laugh)

No chartered accountant like. But someone will be losing their rag over it. Looks fine to me.

Who might be losing their rag?

 

[catcherintherye]

I don’t know enough about this type of thing, but presumably once he gets up to 93% shareholding, if say we continue to record big losses, he’s not going to be able to bail us out and balance the books via an increase in shares, as they’ll be no shares left to buy?!

What happens then?!

You can continue to keep creating more shares, until theoretically he has 100%. It does get harder.

If a 2nd person were to buy in though, you could just rinse and repeat the same process.

 

[kenada_blue]

Who might be losing their rag?

The chartered accountants not employed by EFC who said we had no money to spend this summer

 

[catcherintherye]

So, whats that, we'd have had 70m in losses if it weren't for losses in gate money etc?

Not terrible, not great

It's an improvement on last year.

This will sound odd, but 140m loss will not be the worst this year.

 

[hibbo'sclass]

@catcherintherye Is there a problem with this - thinking that in order to increase ordinary share capital that a 50%majority is needed, but if Moshiri is on a hoovering up exercise to dilute, then his holding cannot vote on it, so needs 50%of the other shareholders to agree it?
Probably wrong, but what the hell.

 

[catcherintherye]

UEFA have rolled the next two accounting periods for FFP in to one, to allow clubs to recover from COVID. They are also ignoring losses due to COVID that is why there are two different figures for losses. The headline £139m is the actual losses, whereas of £67.3m will be ignored for FFP calculations.

As it stands we will almost certainly fail FFP but there are a couple of caveats. The significant spending on BMD will be able to be included in the accounts as soon as we gain planning permission and there is plenty of time to bring in more commercial revenue.

Not like me to say, but for the most part that is a sound summary.

There are some relevant caveats
1) Having lost a high profile court case, will UEFA actually want to impose anything other than warnings/fines on clubs who breach it?

2) My understanding is it is 120m over 3 years losses that you are done in for? Lots of clubs will be over on this year alone.

3) I can see next year being postponed too, to account for the current set of results.

4) They are currently rolling 2 years into 1. They may well end up rolling 3 into 1. If they do, and assuming the rules remain unchanged (they may well be relaxed) it makes sense to "fail" them over a 3 year period that only gets counted once.

5) In the real world, outside of bureaucrats, we are in big trouble and have just been bailed out. Lots of clubs will not be bailed out. There are ethical questions around it, and I dont seek to impose a value judgement, other than to say that is the concrete situation as I see it.

 

[catcherintherye]

He says it's a nice idea but it can't be done...

I think it just has been done.

 

[catcherintherye]

@catcherintherye Is there a problem with this - thinking that in order to increase ordinary share capital that a 50%majority is needed, but if Moshiri is on a hoovering up exercise to dilute, then his holding cannot vote on it, so needs 50%of the other shareholders to agree it?
Probably wrong, but what the hell.

I'm not sure on this mate.

 

[neil999]

I think it just has been done.

It's a joke, as in that's what he said before James signed..

 

[hibbo'sclass]

I'm not sure on this mate.

Me neither

 

[catcherintherye]

I did think this would happen last year, and said as much (from memory in the Liverpool thread on the other forum in response to some reds saying we'd be in big trouble).

Essentially he runs the debt up to himself, and when the moment is required just turns it into equity and shows as an investmment into the company thus providing cash flow.

I'm not sure how it counts on the balance sheet, if they would count as an increase of +£250m and a big profit, and if it does would be be legitimate for FFP (it should be, and I might even suggest in a court of law it would hold up).

At some point moving forward, I wouldn't rule out someone taking out a minority of Moshiri's shares. Maybe Usmanov, but probably more likely a friendly Chinese investor. Again you run up a debt, and when you want the capital in, you just dilute and repeat the process.

I don't think this will be primarily for transfers. I'd imagine it is for the stadium, and satisfying lenders that we dont have that debt.

 

[catcherintherye]

Me neither

I mean share dilutions are quite common, my very basic understanding would be, they would be given the right to purchase more shares at the set price. It would be up to the minority shareholders whether they wanted too, or whether Moshiri could hoover them up. I can't imagine why you would purchase them asa minority shareholder though, the price is artificial.

I'm also not sure how much control Moshiri has to give to them, as he owns 80% of the company.

 

[hibbo'sclass]

I mean share dilutions are quite common, my very basic understanding would be, they would be given the right to purchase more shares at the set price. It would be up to the minority shareholders whether they wanted too, or whether Moshiri could hoover them up. I can't imagine why you would purchase them asa minority shareholder though, the price is artificial.

I'm also not sure how much control Moshiri has to give to them, as he owns 80% of the company.

Oh yes, get that if it's dressed up as an underwritten rights issue, but some shareholders could call foul.

 

[Amokachi1995]

I’m miles away from being a financial expert but I’ve been expecting a capital inflow of some kind. In my naivety thought it might be more Megafon shirt sponsors but this feels like another avenue. He’s a billionaire accountant so I assume he knows what he is doing.

Hope he uses some of it to pay for improving the team rather than paying for previous mistakes.