Some Tweets Saying We Have Borrowed Against Future Season Ticket Sales

[The Kraken]

It could just have been a quick loan for the Ramirez deal, after all, Bologna wanted most of the money up front. However it's very worrying we need to do this considering all the talk of continued investment and support from the Liebherrs and we've been told they don't do debt. Not good at all.

 

This, for me.

 

We have yet to pay for the training ground and £30M of player purchases (plus associated wages and costs). Also what does it do for poor old MLG's 50,000 seater stadium? We're going to have to pay for that now.

[Saints foreva]

So MLG was wrong about us being a debt free club?

 

Doesn't sound good anyway, no doubt idiots will still sing the Cortese chant like he is some sort of god.

[trousers]

It could just have been a quick loan for the Ramirez deal, after all, Bologna wanted most of the money up front. However it's very worrying we need to do this considering all the talk of continued investment and support from the Liebherrs and we've been told they don't do debt. Not good at all.

 

They don't do 'bad' debt. We don't know yet whether this is good or bad debt. As Steve G says - we won't know for a year and a half. I'll reserve judgement until I know the facts.

 

Call me old fashioned...

[stevegrant]

Cortese obviously has big gonads for a little guy.

To be fair, it's not his money, so it's much easier to be brave (or to gamble, depending on which way you want to look at it)

[Turkish]

To be fair, it's not his money, so it's much easier to be brave (or to gamble, depending on which way you want to look at it)

 

Yep, it's easy to spend money using someone else's credit card. As Mrs Turkish often tells me.

[stevegrant]

Yep, it's easy to spend money using someone else's credit card. As Mrs Turkish often tells me.

[CanadaSaint]

To be fair, it's not his money, so it's much easier to be brave (or to gamble, depending on which way you want to look at it)

 

No, you're right Steve. But it's his reputation, which (his evident ego would suggest) is very important to him.

[trousers]

So MLG was wrong about us being a debt free club?

 

 

Our nett position could well be 'debt free'. We won't know until 2014. I'm sure this thread will still be guessing what the situation is until then...

[Bucks Saint]

Cortese obviously has big gonads for a little guy.

 

Breaking news

[Turkish]

So, what is everyone's view now? We've taken out a loan with an offshore company based on future revenues only months after £33m of debt was written off by the family. Are alarm bells starting to ring with people?

[Colinjb]

Are alarm bells starting to ring with people?

 

A little alarmed but as pointed out; the size of the loan is important here.

[trousers]

http://www.toffeetalk.com/index.php?/topic/23096-new-mortgage-taken-out-by-efc/page__st__40

 

In plain English, we have we've borrowed against the Premier League Basic Award Fund value (valued at £13.8m in 2010/11 for Premier League clubs and £7.6m for clubs relegated from the Premier League in the previous season), year one of a three year television deal) for the season 2012/13 AND Overseas Broadcasting Money, Title Sponsorship Money, Commercial Contract Money and Radio Contract Money of the 2011/12 season, at a cost of £1.3m from a company called Vibrac Corporation based in the British Virgin Islands. This was taken out on the 5th of August. It's not likely to be for new signings, it is for cashflow. Without it, we'd be in serious trouble. I think this is the "document to the bank which says you can’t stop the football club from trading" that Kenwright spoke of.

 

It's also a better price than the previous arrangements although borrowing from a BVI-based company may be an indication to some that Everton couldn't get another one from Barclays, South African bank Investec or another reputable bank, as Kenwright's comments may have you believe. The mysterious company, Vibrac Corporation, registered in Road Town, Tortola seems to be an entity established by http://www.icazalaw.com based on the postal address.

 

It is also the same address as Robert Earl's BCR Sports which owns 8,146 shares in Everton:

 

Vanterpool Plaza, Wickhams Cay 1, Road Town, Tortola, Virgin Islands (British)

 

It is feasible that Robert Earl has enabled Everton to continue trading, albeit at a cost of £1.3m.

[Thedelldays]

So, what is everyone's view now? We've taken out a loan with an offshore company based on future revenues only months after £33m of debt was written off by the family. Are alarm bells starting to ring with people?

maybe....the money has stopped from the family maybe...who the feck knows...

 

either way, will we beat fulham on sunday..? if we go down, it will be a disaster...no matter what anyone says

 

if we have borrowed £50m then yes..WORRY

if we have borrowed the prize money for finishing bottom (no TV money) then no..im sure many clubs do this

[OldNick]

They obviously are not using the squad as a guarantee

[S-Clarke]

It's hard to make any real comment on any of this at the mo, as neither of us really know what's going on.

 

But I would agree with the general view that being relegated will put us back years. It will render the last 3 years absolutely useless. I don't care what anyone says.

 

We will have to start all over again, with less muscle and less quality players. So, for me, we have to stay up. I don't see us as being able to retain and bounce back.

[Dig Dig]

I trust Cortese (and Markus's family) to run the club prudently and responsibly. However, and they are big "howevers" IMO:

 

I was really pleased with the acquisition of Ramirez, but that was based on the assumption that we were signing him from Markus's "pot of gold" - not loan funding. If I'd thought we were borrowing money to sign him I would have been far less enthusiastic.

 

This revelation adds question marks to the issue of whether we'll be able to significantly upgrade our defence in January, as we absolutely must.

 

I can't help but wonder whether there's any connection between this and the decision to suspend Stapelwood development.

 

Having said that, it does make sense to step outside this year's business model because next year's (assuming that we survive) has a major income increase. Yes, it's a risk because it has a potentially deep downside but it also has a very high upside. Cortese obviously has big gonads for a little guy.

 

Yep, it's easy to spend money using someone else's credit card. As Mrs Turkish often tells me.

 

You've borrowed money from a credit provider against your future earnings? My alarm bells are ringing for you Turkish. Bankruptcy must be just around the corner surely?

[St Marco]

Kraken how do you know the training ground has not been paid for yet? Or you just trolling again?

[The Kraken]

Kraken how do you know the training ground has not been paid for yet? Or you just trolling again?

 

If you can show me that its been paid for, up front, then I'll consider that evidence. If not, I'll assume it hasn't.

[Turkish]

Kraken how do you know the training ground has not been paid for yet? Or you just trolling again?

 

It hasn't been paid for up front.

[S-Clarke]

I can assure you that none of our player transfers have been paid for entirely upfront. But this is pretty much common practice across the field.

[Mowgli]

For goodness are listen to yourselves. Do you honestly think you lot know what you lot are talking about? Stick to football. Most of you seem to have some decent views there....

[Gemmel]

One quick thought..... I don't know when all the Premier money is paid to the club, but assume it's stage payments ove the course of the season, so may be this is just a loan for cash flow purposes until all money is paid.

 

What I do think we can reasonably assume, is that we are no longer bank rolled by the family. The timing of coverting the loan to equity would suggest that was their final gift and the club will now self fund.

 

Not overly worried, but would welcome more details

[View From The Top]

It's hard to make any real comment on any of this at the mo, as neither of us really know what's going on.

 

But I would agree with the general view that being relegated will put us back years. It will render the last 3 years absolutely useless. I don't care what anyone says.

 

We will have to start all over again, with less muscle and less quality players. So, for me, we have to stay up. I don't see us as being able to retain and bounce back.

 

Thankfully I don't care about staying up as I already despise the Premier League but the idea of pawning the club in some misguided belief that it's where we must be makes me feel sick to the pit of my stomach.

 

That said, I have been told we do all of our deals as cash up front so if this is done as short term then so be it.

[The Kraken]

One quick thought..... I don't know when all the Premier money is paid to the club, but assume it's stage payments ove the course of the season, so may be this is just a loan for cash flow purposes until all money is paid.

 

What I do think we can reasonably assume, is that we are no longer bank rolled by the family. The timing of coverting the loan to equity would suggest that was their final gift and the club will now self fund.

 

Not overly worried, but would welcome more details

 

Good post; agreed.

[S-Clarke]

One quick thought..... I don't know when all the Premier money is paid to the club, but assume it's stage payments ove the course of the season, so may be this is just a loan for cash flow purposes until all money is paid.

 

What I do think we can reasonably assume, is that we are no longer bank rolled by the family. The timing of coverting the loan to equity would suggest that was their final gift and the club will now self fund.

 

Not overly worried, but would welcome more details

 

I think that's a fair view.

 

The long-term goal is for us to be a self sustaining club anyway, generating it's own players and not needing to spend millions on additions from Europe. But I guess you do need a jump start to get it off the ground.

 

I don't think it's massively concerning, but it's hard to make a real conclusion on it without any real detail.

[St Chalet]

Concerning news to be honest. That said the are so many hypotheticals around this that it is difficult to come to any rationale conclusion with what we currently know.

[Rational Rich]

I've just downloaded the MG01 (charge registration) form from Companies House. A few things to note:

 

1) the charge includes an assignment of rights to all income from the Premier League (either parachute payments or usual TV etc payments) for the 2013/2014 season only

 

2) as well as this assignment, it also creates fixed and floating charges over ALL assets - meaning that if we don't pay they can appoint an administrator.

 

3) the debt it secures ranks ahead of debt advanced to the club by the holding company.

 

As has been said above, kind of goes against the whole "no debt" thing and, whilst debt itself, or even secured debt, isn't unusual or inherently bad (it can be positive depending on the terms), it would be interesting to know how much the debt is (as is usual, the form doesn't specify an exact amount, just cross references to amounts due under the relevant finance documents).

 

Assume the debt would be for significantly less than the parachute payments. Only the likes of Chanrai lend cash secured on assets worth less than their loan.

[Sour Mash]

Kraken how do you know the training ground has not been paid for yet? Or you just trolling again?

No-one ever pays for construction projects upfront.

[Colinjb]

Only the likes of Chanrai lend cash secured on assets worth less than their loan.

 

We sincerely hope so.......

[The Kraken]

I've just downloaded the MG01 (charge registration) form from Companies House. A few things to note:

 

1) the charge includes an assignment of rights to all income from the Premier League (either parachute payments or usual TV etc payments) for the 2013/2014 season only

2) as well as this assignment, it also creates fixed and floating charges over ALL assets - meaning that if we don't pay they can appoint an administrator.

 

3) the debt it secures ranks ahead of debt advanced to the club by the holding company.

 

As has been said above, kind of goes against the whole "no debt" thing and, whilst debt itself, or even secured debt, isn't unusual or inherently bad (it can be positive depending on the terms), it would be interesting to know how much the debt is (as is usual, the form doesn't specify an exact amount, just cross references to amounts due under the relevant finance documents).

 

Assume the debt would be for significantly less than the parachute payments. Only the likes of Chanrai lend cash secured on assets worth less than their loan.

 

That, in itself, worries me greatly. The rest is also quite worrying. So much for no debt, we're now basing this season's fortunes upon next season's income.

[View From The Top]

That, in itself, worries me greatly. The rest is also quite worrying. So much for no debt, we're now basing this season's fortunes upon next season's income.

 

It would certainly appear so.

[Matthew Le God]

So MLG was wrong about us being a debt free club?

 

It only happened 2 weeks ago.

[Maggie May]

In the words of Electric Six - 'Danger! Danger! Debenture!'

[trousers]

I've just downloaded the MG01 (charge registration) form from Companies House. A few things to note:

 

1) the charge includes an assignment of rights to all income from the Premier League (either parachute payments or usual TV etc payments) for the 2013/2014 season only

 

2) as well as this assignment, it also creates fixed and floating charges over ALL assets - meaning that if we don't pay they can appoint an administrator.

 

3) the debt it secures ranks ahead of debt advanced to the club by the holding company.

 

As has been said above, kind of goes against the whole "no debt" thing and, whilst debt itself, or even secured debt, isn't unusual or inherently bad (it can be positive depending on the terms), it would be interesting to know how much the debt is (as is usual, the form doesn't specify an exact amount, just cross references to amounts due under the relevant finance documents).

 

Assume the debt would be for significantly less than the parachute payments. Only the likes of Chanrai lend cash secured on assets worth less than their loan.

 

Cheers for posting the companies house summary. Interesting stuff.

Edited 3 October, 2012 by trousers

[Turkish]

It only happened 2 weeks ago.

 

Hello again Mr Wrong.

[Thedelldays]

well..certainly added an extra bit of spice to the season..and a little bit more pressure on nigel to succeed...

 

exciting times

[trousers]

It only happened 2 weeks ago.

 

Yeah...but you should have foreseen the future young man. You're slacking McFly!

[buctootim]

It is disconcerting, but maybe seen in the context of spending c£50m in one season (c£20m on Staplewood and £30m in the transfer market) its not too surprising if the cashflow is a bit stretched. These are multi year investments so if they are paid for over several years its not the end of the world.

[shurlock]

That, in itself, worries me greatly. The rest is also quite worrying. So much for no debt, we're now basing this season's fortunes upon next season's income.

 

Why? We need to borrow money against something and revenue streams like TV money/parachute payments are as liquid and certain as they come. Indeed, when has debt been wrong? More important are the terms/interest we've agreed with the company - more worrying is if we were forced to borrow on onerous terms. And just because we've borrowed from a third party doesn't mean the liebherr's money has dried up - it might just involve a rebalancing between internal and external financing.

Edited 3 October, 2012 by shurlock

[trousers]

@SOSPompey: It looks like Barcelona of the South are following in our footsteps. The Liebharr Estate are no longer covering the losses so guess what????

 

@SOSPompey: @mattslaterbbc have you heard the latest for Soton??

 

@SOSPompey: That silly ****er Cortese has borrowed money from a company listed in the British Virgin Islands in return for a controlling 'charge' !!!!!!

[Thedelldays]

where do we stand on the moral high ground with pompey about borrowing money....are we now spending what we cant afford (upfront)?

[Colinjb]

where do we stand on the moral high ground with pompey about borrowing money....are we now spending what we cant afford (upfront)?

 

Time will tell. At least we are astute enough to be concerned rather then dragging our knuckles.

[Thedelldays]

Time will tell. At least we are astute enough to be concerned rather then dragging our knuckles.

define "we"

 

the fan base or 10 people from all over the country on a message board

I doubt, come sunday, anyone will give a toss and will chant "ooooh gaston ramirez"...a player we have broken the bank for...obviously

[JustMike]

Not worried about this at all, NC knows what he is doing

[The Kraken]

Why? We need to borrow money against something and when has debt been wrong? More important are the terms/interest we've agreed with the company - I would worry if we were forced to borrow on onerous terms. And just because we've borrowed from a third party doesn't mean the liebherr's money has dried up - it might just involve a rebalancing.

 

It's limited information, so don't go getting your knickers in a twist about a throwaway comment just yet.

 

However; I would be very comfortable about this loan were it tied in with payments from this season, and not next. That would suggest a cash-flow loan, and not an equity loan. And we don't know what terms it is on so there is no point speculating right now one way or the other.

 

I'm suggesting nothing more than, until I know further details about this loan, I remain very worried about it. Borrowing against next year's revenues is a risk, quite clearly. Especially so for a club who have shouted from the rooftops their desire to live within their own means.

[View From The Top]

define "we"

 

the fan base or 10 people from all over the country on a message board

I doubt, come sunday, anyone will give a toss and will chant "ooooh gaston ramirez"...a player we have broken the bank for...obviously

 

Don't be daft Jamie, we've clearly not broken the bank.

[Gemmel]

where do we stand on the moral high ground with pompey about borrowing money....are we now spending what we cant afford (upfront)?

 

Huge difference (Regardless if this turns out to be a bad thing) we are borrowing against money that is ours - Just not in the bank yet.

 

What we can be certain of, is that the loan is less than the parachute payments.... as in the debt is less than the asset.

[shurlock]

where do we stand on the moral high ground with pompey about borrowing money....are we now spending what we cant afford (upfront)?

 

We'd still be living in the stone age if we couldnt borrow and take on debt. Then again perhaps you are....

Nobody is berating the skates for borrowing money -it's the amount they borrowed and the assumptions they made regarding their ability to repay it.

[Gemmel]

Actually just working that through, if it is only for one year, then the debt couldnt be larger than the the first years parachute payment.

 

Anyone know how much that is

[shurlock]

It's limited information, so don't go getting your knickers in a twist about a throwaway comment just yet.

 

However; I would be very comfortable about this loan were it tied in with payments from this season, and not next. That would suggest a cash-flow loan, and not an equity loan. And we don't know what terms it is on so there is no point speculating right now one way or the other.

 

I'm suggesting nothing more than, until I know further details about this loan, I remain very worried about it. Borrowing against next year's revenues is a risk, quite clearly. Especially so for a club who have shouted from the rooftops their desire to live within their own means.

 

Why is it a risk -tv money/parachute payments are as liquid as they come. Either eventuality -whether survival or relegation- we'll be paid and that will probably mean we're borrowing on relatively favourable terms.