Who's your money on in the takeover 'battle'?

[GrandOldTeam]

I don’t see any questions at all. I see them trying to tell bidders who we are and why they should buy us. There’s no key questions in that letter such as;

What will you offer?
Will there be money for signings?
Where do you see the club in 5/10 years time?
Are we going to be loaded with debt?
Are you here for now or to sell us quickly to make a profit?

Yeah, it confused me too. It's been executed poorly on social.

I've dug and found the questions;

https://efc-fanadvisoryboard.com/wp-content/uploads/2024/06/Everton-FAB-Considerations-for-Prospective-EFC-Bidders.pdf

 

[Eggs]

I'm confused sorry mate, so will just interrupt here.

Clearly someone isn't going to buy the club, without a plan for the debt. They'll need to demonstrate that to become owners, anyway.

Let's keep it as simple as we can.

Manoukian's bid is an all equity one.

The others' bid will borrow and put that extra debt on the club/the stadium.

I'm sure all will restructure debt, but if you're talking worry - Manoukian not making that debt even bigger should ease it considerably.

….which I would assume makes the sale happen quicker? If so, might make that bid more appealing to Moshiri.

 

[GrandOldTeam]

….which I would assume makes the sale happen quicker? If so, might make that bid more appealing to Moshiri.

God knows mate, for a long time I figured 777 was a way to kick the can as I wasn't convinced Usmanov/Moshiri was ready to walk away.

Honestly think if sanctions were lifted, they'd keep the club.

 

[blueloon]

Hi mate, I’m an M&A finance partner at a US law firm. I do actually know what I’m talking about although I obviously don’t know the specifics of these deal. Why would any bidder borrower money to buy an asset and then repay it on day 1? That would never happen because lenders always charge an arrangement fee of 2-3% of the amount borrowed which a borrower would never ever want to pay for debt borrower for such a short period, every debt package includes a non-call period, I.e. if you repay in the first or second year there will be a big repayment penalty. Also, just generally debt is much cheaper than equity so unless the investor has no interest in his return on investment they will all look to put a debt package in place eventually. An all equity bid only benefits Moshiri. Not Everton.

Thanks, could you explain this point “ . An all equity bid only benefits Moshiri. Not Everton.“ ,
I’m struggling to get my head around “ all equity bid” your view seems different from others. Does “ all equity bid of £400m “ mean Moshiri gets virtually £400 m less the amount going to buying other share holders, but the debts still remain and need to be fixed. Does it mean that somehow £400 m buys the club and the debts which I saw somewhere, that appears fantastic but unrealistic. Or something else?

 

[blueloon]

I'm confused sorry mate, so will just interrupt here.

Clearly someone isn't going to buy the club, without a plan for the debt. They'll need to demonstrate that to become owners, anyway.

Let's keep it as simple as we can.

Manoukian's bid is an all equity one.

The others' bid will borrow and put that extra debt on the club/the stadium.

I'm sure all will restructure debt, but if you're talking worry - Manoukian not making that debt even bigger should ease it considerably.

Im seeing different versions/interpretations of “Manoukian's bid is an all equity one” , I can’t see how it’s going to put £400 m into the club as has been suggested , . Whats your interpretation of “ all equity bid” mate?

 

[BNJ1878]

Honestly think if sanctions were lifted, they'd keep the club.

Undoubtedly.

I was flicking though David Diens book earlier whilst waiting for the Mrs at the shops. (I could have read it cover to cover the time she took FFS) Usmanov was DESPERATE for total control at Arsenal and was quite reckless with spending to acquire shares even then.

I'm convinced they got involved at Everton to flick the vs at Kronke.

 

[JP5]

@Kevsleftpeg whoever buys the club needs (as 777 were told) to pay off MSP.

As its not 777 and if its an outsider then perhaps they need to pay off 777 and MSP combined.

Thats what I understand from the premier league and 777 reports.

So, i believe whoever comes in would simply use all cash (Manoukian possibly) or they would borrow from MSB (2 Evertonians possibly)....or they would pay off 777 & perhaps restructure R&M (MSP possibly).

Do you disagree?



We dont know anything.

Different 'sources' have mentioned

DELL backing
DFO backing
MSD refinancing

And ESK saying MSD: have sports management expertise + that its not a similar restructure / loan.

So- we know nothing as neither them nor others have spoken.

777 is being reported as junior debt and not repayable until it matures in 2026. It’ll be refinanced rather than paid off during the takeover in my opinion.

 

[AndyRJ]

Thanks, could you explain this point “ . An all equity bid only benefits Moshiri. Not Everton.“ ,
I’m struggling to get my head around “ all equity bid” your view seems different from others. Does “ all equity bid of £400m “ mean Moshiri gets virtually £400 m less the amount going to buying other share holders, but the debts still remain and need to be fixed. Does it mean that somehow £400 m buys the club and the debts which I saw somewhere but appears fantastic but unrealistic. Or something else?

All equity to me means they are going to purchase Moshiri's shares, pay off some of our debts and finish the stadium using their own money which would be converted to equity.

How that £400m is split between existing debts/ Moshiri I don't know.

The others seem to be doing it based on part equity, part financing. Take Bell/ Downing. They are taking out a £350m loan with MDP (DELL) secured against the stadium which will presumably pay off say MSP/ R&M plus finance the rest of the stadium. They will then likely convert their existing £50m (which is part of the MSP loan) to equity, plus whatever they pay to Moshiri. They may also pay off ACAP with their own money and convert that to equity or alternatively agree a deal with them to defer payment/ interest until a later date.

I suspect at least one of the loans will be getting paid off and converted to equity to help reduce our overall debt burden. The rest will be re-financed at a lower rate over the long term, like a mortgage.

We don't know the exact detail but ultimately, in theory, the Manoukian deal seems better on the face of it because they are injecting £400m of their own cash which will be converted to equity. Everyone else is doing a 'part' equity deal by taking on lower rate financing to clear some of our existing debts. Kind of like taking out a personal debt consolidation loan with your local bank to clear some credit card/ store card debt.

​

 

[Kevsleftpeg]

The all equity deal should include the debt.

Thats because while theyre buying from Moshiri theyre also buying from the other shareholders -- the company itself is currently worth nothing (a tip perhaps).

So they will be offering £400mil for 'everything back to zero'.

I may be mistaken on the details as its not my niche but @Kevsleftpeg can correct me.

If im right then it may be that hes banking on everyone taking haircuts on their loans.

I would be very doubtful that the lenders would agree to haircuts in a situation where Moshiri receives anything. My working assumption would always be that all existing secured creditors have the right to be repaid in full on a change of control so any buyer would need to take that into account when figuring out how much cash (whether from equity or new debt) they need to buy the business. The lenders would all need to be repaid in full before Moshiri receives a penny unless there is something weird in the arrangements whereby Moshiri has some sort of leverage over the lenders.

 

[Zatara]

Bell and Downing?

The chucking around of Michael Dells name knowing the majority would jump to the wrong conclusions

That leak wouldn't have come from the Dell side.

Id say if they pushed it out there then they lied. But they themselves havent said anything so we dont categorically know if they lied yet.

Makes sense actually, good point mate, paying off 777 & MSP and giving Moshiri his 40 mill.

Brings us to the Magic 400 mill number I mentioned earlier, 350 for Bell and Downing, as they have a 60 mill loan they can turn to equity.

That leaves R&M who are happy to sit there I’d imagine. Metro are being back year on year on a repayment plan, so not an issue.

You might have cracked the code here mate.

Indeed.

Thanks, could you explain this point “ . An all equity bid only benefits Moshiri. Not Everton.“ ,
I’m struggling to get my head around “ all equity bid” your view seems different from others. Does “ all equity bid of £400m “ mean Moshiri gets virtually £400 m less the amount going to buying other share holders, but the debts still remain and need to be fixed. Does it mean that somehow £400 m buys the club and the debts which I saw somewhere, that appears fantastic but unrealistic. Or something else?

Im seeing different versions/interpretations of “Manoukian's bid is an all equity one” , I can’t see how it’s going to put £400 m into the club as has been suggested , . Whats your interpretation of “ all equity bid” mate?

I posted the answer to this a page or two back.

777 is being reported as junior debt and not repayable until it matures in 2026. It’ll be refinanced rather than paid off during the takeover in my opinion.

That makes sense so the £400mil

Pays Moshiri
Pays R&M
Pays MSP
Pays the running costs as the league require

Only 777 would be left to pay in 2 years or restructure when the stadium is ready.

Very, very positive.

 

[Zatara]

I would be very doubtful that the lenders would agree to haircuts in a situation where Moshiri receives anything. My working assumption would always be that all existing secured creditors have the right to be repaid in full on a change of control so any buyer would need to take that into account when figuring out how much cash (whether from equity or new debt) they need to buy the business. The lenders would all need to be repaid in full before Moshiri receives a penny unless there is something weird in the arrangements whereby Moshiri has some sort of leverage over the lenders.

Yes i believe @JP5 nailed it with 777 being junior debt which could be ignored until 2026

Thus the £400mil pays everything else -- as i posted above

 

[Kevsleftpeg]

777 is being reported as junior debt and not repayable until it matures in 2026. It’ll be refinanced rather than paid off during the takeover in my opinion.

It will almost certainly be immediately repayable upon a change of control. Repayment and refinancing aren’t different things. When it comes to repaying debt there are two options main options, repay the debt using borrowed money from the existing lender or a new lender (I.e. a refinancing) or repay the debt using cash on balance sheet/new equity). In our scenario where we need to delever (I.e. reduce the debt to equity ratio) I would assume it would be a combination of both because unless our debt comes down our financial situation won’t be improved.

 

[davids]

I would be very doubtful that the lenders would agree to haircuts in a situation where Moshiri receives anything. My working assumption would always be that all existing secured creditors have the right to be repaid in full on a change of control so any buyer would need to take that into account when figuring out how much cash (whether from equity or new debt) they need to buy the business. The lenders would all need to be repaid in full before Moshiri receives a penny unless there is something weird in the arrangements whereby Moshiri has some sort of leverage over the lenders.

I'm imagining it's like buying any company you buy the fixtures and fittings plus whatever bank loans the company has. The only way you get away with buying the loans in total is if the company is in administration and you negotiate a deal at cents per dollar.

 

[BirkenheadBlue]

Yeah, it confused me too. It's been executed poorly on social.

I've dug and found the questions;

https://efc-fanadvisoryboard.com/wp-content/uploads/2024/06/Everton-FAB-Considerations-for-Prospective-EFC-Bidders.pdf

That's not a bad document.

However it will be entirely ignored by every bidder.

 

[Zatara]

It will almost certainly be immediately repayable upon a change of control. Repayment and refinancing aren’t different things. When it comes to repaying debt there are two options main options, repay the debt using borrowed money from the existing lender or a new lender (I.e. a refinancing) or repay the debt using cash on balance sheet/new equity). In our scenario where we need to delever (I.e. reduce the debt to equity ratio) I would assume it would be a combination of both because unless our debt comes down our financial situation won’t be improved.

If thats the case then £400mil would not be enough surely? The haircuts would be too big.