Where Will the Creditors Get Their Money From?

[SP Saint]

If the stadium was bought by the council and the other creditors of SLH plc were paid off (either in full or via a CVA), is there any possibility that SFC Ltd could resume business with it's previous shareholders (I assume that as a subsidiary of SLH this would mean the old shareholders of the plc)?

 

It's probably a stupid question but would appreciate other peoples comments especially the experts among us.

[Give it to Ron]

A quick glance at the Balance Sheet from last year may give a clue. The plc had net assets of £2,296K as of last year. The majority of our assets, outside the value of the stadium are in the form of intangible assets (players to you and me) valued at £6,376K.

.

 

Can someone help out with a question on this.....I seem to recall a few years ago when we spoke about reserve/academy grown players these do not appear on a balance sheet as assets?

Does that mean therefore that

Gillet

Surman

Lallana

Lloyd

Thomson

 

Would not be included in GM value of £6,376K.

[Doctoroncall]

If the stadium was bought by the council and the other creditors of SLH plc were paid off (either in full or via a CVA), is there any possibility that SFC Ltd could resume business with it's previous shareholders (I assume that as a subsidiary of SLH this would mean the old shareholders of the plc)?

 

It's probably a stupid question but would appreciate other peoples comments especially the experts among us.

 

If they had a bid for the SFC asset, it would be considered against any other.

[um pahars]

Players aren't regarding as "assets" in the books in the way most people would probably imagine.

 

The only values that appear in the "books" are any transfer fees that we have paid, with the amount reducing by each year of their contract.

 

i.e. If Rory Delap was signed for £4m on a 4 year contract, then at the end of the first year he would be "worth" £3m in our books, £2m at thend of the 2nd year etc etc etc.

 

Any homegrown talent (or anyone who did not command a fee) does not have any "value" in our books.

[Give it to Ron]

Players aren't regarding as "assets" in the books in the way most people would probably imagine.

 

The only values that appear in the "books" are any transfer fees that we have paid, with the amount reducing by each year of their contract.

 

i.e. If Rory Delap was signed for £4m on a 4 year contract, then at the end of the first year he would be "worth" £3m in our books, £2m at thend of the 2nd year etc etc etc.

 

Any homegrown talent (or anyone who did not command a fee) does not have any "value" in our books.

 

Thanks...so McG would be as we owe Notts County?

[SP Saint]

If they had a bid for the SFC asset, it would be considered against any other.

 

Yes of course. That makes sense. Hopefull it won't be Lowe and co then.

[Frank's cousin]

Can someone help out with a question on this.....I seem to recall a few years ago when we spoke about reserve/academy grown players these do not appear on a balance sheet as assets?

Does that mean therefore that

Gillet

Surman

Lallana

Lloyd

Thomson

 

Would not be included in GM value of £6,376K.

 

Basically what UP said - just add up the total teh player cost and then reduce it over the life span of the contract - then at any point in time you add up the total and have you asset value - bare in mind that if you dont buy any players the value just continues to go down.

 

Academy players when sold are then pure profit on the books.

[Clapham Saint]

Players aren't regarding as "assets" in the books in the way most people would probably imagine.

 

The only values that appear in the "books" are any transfer fees that we have paid, with the amount reducing by each year of their contract.

 

i.e. If Rory Delap was signed for £4m on a 4 year contract, then at the end of the first year he would be "worth" £3m in our books, £2m at thend of the 2nd year etc etc etc.

 

Any homegrown talent (or anyone who did not command a fee) does not have any "value" in our books.

 

This may be too pratronising and if so I appologise however in basic terms palyers will first be recognised in the acconts at "cost".

 

"Cost" will include the transfer fee paid (and those payable) as well as fees paid to lawyers/agents etc in order to make the signing.

 

A proportion of the cost is then written off as an expense each year such that at the end of the players contract he is worth £0.

 

The value of the palayer at any 1 point in time in the accounts is refered to as the "Net book value" i.e the "cost" less the amount which has been counted as an expense so far.

 

Players such as Surman never cost the club a fee and so as far as the accounts are concerned the "cost" is zero.

[Pedro]

The FL will have to make a decision based on facts whether we are naturally relegated or not as other clubs in financial difficulty will be watching very closely.

[Frank's cousin]

The thing is IF there is a legal loophole, irrespective of the moral arguments , we will use it. The FL would have already instigated teh penalty if it currently felt confident our situation was subject to EXISTING regulations which they have created. This forensic nonsense is because there must be some truth in the loophole? I suspect however that the FL are worried we might escape throught it because of the can of worms it might through up....

[The Incongruous Monk]

The thing is IF there is a legal loophole' date=' irrespective of the moral arguments , we will use it. The FL would have already instigated teh penalty if it currently felt confident our situation was subject to EXISTING regulations which they have created. This forensic nonsense is because there must be some truth in the loophole? I suspect however that the FL are worried we might escape throught it because of the can of worms it might through up....[/quote']

 

Indeed. If we stay up the FL are in a very tough position, they'll feel compelled to act but are likely to find their hands tied. This means they'll have to either fudge it and hit us anyway which will lead to all kinds of legal to-ing and fro-ing, or let it slide and deal with the fallout. A fallout that'll be much diminished if we're in League 1.

 

Either way, expect new rules for next season. That said, they didn't change the rules after the whole Derby situation...

[OldNick]

This may be too pratronising and if so I appologise however in basic terms palyers will first be recognised in the acconts at "cost".

 

"Cost" will include the transfer fee paid (and those payable) as well as fees paid to lawyers/agents etc in order to make the signing.

 

A proportion of the cost is then written off as an expense each year such that at the end of the players contract he is worth £0.

 

The value of the palayer at any 1 point in time in the accounts is refered to as the "Net book value" i.e the "cost" less the amount which has been counted as an expense so far.

 

Players such as Surman never cost the club a fee and so as far as the accounts are concerned the "cost" is zero.

I find it interesting reading the thoughts of someone 'in the trade' and giving the perspective how Fry may think / work. Thanks

[lordswoodsaints]

i thought i heard the league announce that we wouldnt get any point deduction until next season if any?....was i hearing things?

the way i look at it is that 10 points deducted next season in the championship will be a whole lot easier to swallow than a 10 point deduction in L1 ,but i dont believe we will have any punishment because the league havnt got a case against us.

[Doctoroncall]

i thought i heard the league announce that we wouldnt get any point deduction until next season if any?....was i hearing things?

the way i look at it is that 10 points deducted next season in the championship will be a whole lot easier to swallow than a 10 point deduction in L1 ,but i dont believe we will have any punishment because the league havnt got a case against us.

 

If, somehow we survive in the CCC, and the FL find the plc and club are the same we will be deducted 10 this season meaning we go down but start on zero points like the other teams. If we are relegated through finishing in the bottom three, and FL penalise us, we'll start the season on -10 points.

[ozzmeister]

I am slightly confused. Didn't Lowe appoint the administrators after cheques were bounced (by Barclays) so as not to be seen trading whilst insolvent?

 

If Rupert appointed the administrators it would be classed as a CVL (Company Voluntary Liquidation) - i think.

[trousers]

Indeed. If we stay up the FL are in a very tough position, they'll feel compelled to act but are likely to find their hands tied. This means they'll have to either fudge it and hit us anyway which will lead to all kinds of legal to-ing and fro-ing, or let it slide and deal with the fallout. A fallout that'll be much diminished if we're in League 1.

 

Either way, expect new rules for next season. That said, they didn't change the rules after the whole Derby situation...

 

I thought they had changed the rules in as much as they added a "we reserve the right to use our discretion if someone tries to exploit a loophole again" clause....? Doesn't mean they have the legal right to use such a catch-all clause though I guess....

[Give it to Ron]

This may be too pratronising and if so I appologise however in basic terms palyers will first be recognised in the acconts at "cost".

 

"Cost" will include the transfer fee paid (and those payable) as well as fees paid to lawyers/agents etc in order to make the signing.

 

A proportion of the cost is then written off as an expense each year such that at the end of the players contract he is worth £0.

 

The value of the palayer at any 1 point in time in the accounts is refered to as the "Net book value" i.e the "cost" less the amount which has been counted as an expense so far.

 

Players such as Surman never cost the club a fee and so as far as the accounts are concerned the "cost" is zero.

 

Not patronising at all and explained well ..sorry another question then...so as we have a number of high rollers such as Rasiak, John, Kelvin off the books soon and that leaving only mainly very low costing players such as those mentioned above we have a paltry cost for any purchaser?

[ozzmeister]

Note Ive read the extract ref the admin posted by someone else, looks like directors did appoint.

 

Not quite sure how that works, but if that is the case then is bad management, especially if we get a point deduction. The outlook could not have been much different from mid march where we could have received point deduction this season (should it come to that)

[eurosaint]

This may be too pratronising and if so I appologise however in basic terms palyers will first be recognised in the acconts at "cost".

 

"Cost" will include the transfer fee paid (and those payable) as well as fees paid to lawyers/agents etc in order to make the signing.

 

A proportion of the cost is then written off as an expense each year such that at the end of the players contract he is worth £0.

 

The value of the palayer at any 1 point in time in the accounts is refered to as the "Net book value" i.e the "cost" less the amount which has been counted as an expense so far.

 

Players such as Surman never cost the club a fee and so as far as the accounts are concerned the "cost" is zero.

 

You calling me a prat ??

[Window Cleaner]

Note Ive read the extract ref the admin posted by someone else, looks like directors did appoint.

 

Not quite sure how that works, but if that is the case then is bad management, especially if we get a point deduction. The outlook could not have been much different from mid march where we could have received point deduction this season (should it come to that)

 

Perhaps we weren't going into admin at all but then some fans kept on and and on and the directors just thought "well f*ck this for a game of soldiers let some of those moaning bastards sort it out".

[Clapham Saint]

If Rupert appointed the administrators it would be classed as a CVL (Company Voluntary Liquidation) - i think.

 

Not quite.

 

CREDITORS Voluntary Liquidation is a different process and something far worse than Administration.

 

If the Administrator fails to sell the Club it will most likely be placed into CVL and closed down.

[Clapham Saint]

Not patronising at all and explained well ..sorry another question then...so as we have a number of high rollers such as Rasiak, John, Kelvin off the books soon and that leaving only mainly very low costing players such as those mentioned above we have a paltry cost for any purchaser?

 

The "cost" in the accounts is purely for accounting purposes.

 

It conveys no obligation upon any purchaser to pay that amount.

 

A purchaser will then pay whatever they want for him.

 

For example, we sold Kevin Davies to Blackburn for £7.5 million (all those years ago).

 

For the sake of argument lets say he had a 5 year contract.

 

He was there for a year so as far as the accounts were concerned Blackburn would have been including him at £6m ( 4/5 of £7.5m).

 

We bought him back for circa £4m (I think).

 

The £6m on Blackburns books was irrelevant, we paid what we thought he was worth.

 

 

Equally when we first bought him for Chesterfield (?) for £750k and had him for 2 years?

 

He would have been in our accounts at a value of £450k (3/5 of £750k) but we sold him for £7.5 million. Again the £450k is irrelevant and a result of how accounting stadards dictate that the accounts should show rather than the true "value"

 

Does that answer the question or have I got the wrong end of the stick?

[Legod Third Coming]

A quick glance at the Balance Sheet from last year may give a clue. The plc had net assets of £2,296K as of last year. The majority of our assets, outside the value of the stadium are in the form of intangible assets (players to you and me) valued at £6,376K.

Two interesting facts will not escape the forensic accountants and the administrators from this. The first is that the plc consists mainly of assets that are related to football, ie the Stadium and the players registrations. So, that's a 10 point deduction, as far as I can see.

The second is that to have any hope of paying back Barclays, the adminstrator needs to raise well over £6M from Southampton Football Club Ltd and collect as much of the Trade Debtors and Cash Equivalents as they can. The trouble is, I can't see anyone paying anywhere near £23M for St. Mary's, so any shortfall from this will come straight out of what Barclays can get their hands on.

So, for the Administrator to get his Brucie bonus, he will want £15M for Southampton Football Club Ltd., £15M for the Stadium and Jackson's Farm and £750K for himself.

Frankly, I reckon 50p in the pound (£4.5M for the club, £10M for the stadium and farm and £500K for the Administrator after the 10 point deduction) will be a real achievement...

 

 

For a bloke who normally posts intelligently this is incredibly naive.

 

It is not about repyaing the debt now, it is about agreeing to sell the business as a going concern.

 

If the entire club was liquidated, different story.

[Guided Missile]

For a bloke who normally posts intelligently this is incredibly naive.

 

It is not about repyaing the debt now, it is about agreeing to sell the business as a going concern.

 

If the entire club was liquidated, different story.

As a person who has had first hand experience of administration and the way administrators think, I can assure you I am not naive. The only reason that the administrator would sell the club as a going concern, would be if he could raise more money, than selling the assets of SLH separately. Take it from me, there is NO way Southampton Leisure Holdings plc is, or will be sold as, a going concern. 8.5% interest on the Stadium loan, vs a 0.5% base rate is the biggest reason, for a start. The second reason is that our team is second from the bottom in the Championship and likely to get relegated to a place where 14,000 average crowds are a rarity. Liquidation occurs far later in the procedure and as Clapham Saint may tell you, when every asset of value has already been sold.

No, this is an SLH asset sale, where the buyer avoids any contingent liabilities SLH may have, together with the ability to renegotiate the terms of the loans together with any other contracts SLH may have entered into...

Edited 15 April, 2009 by Guided Missile

[Johnny Bognor]

8.5% interest on the Stadium loan, vs a 0.5% base rate is the biggest reason, for a start.

 

I totally agree with your first original point as I fail to see how we can avoid the points deduction.

 

On your second point, I don't necessarily disagree but some of the detail is spurious to say the least, especially the quoted point above.

 

Can you point me in the direction where I can get commercial finance at the BOE bank rate?

 

I use Lloyds for business banking and whilst the BOE base rate has plummeted, the Lloyds rates have gone up. Try getting a buy to let mortgage sub 5-6% with 20% equity. I am not sure of the equity in the stadium, but I guess at best, one wouldn't get much better than 5% to 6% in the current market - especially as SLH can't afford the mortage. So to draw comparisons between 8.5% and 0.5% is totally unrealistic.

[Guided Missile]

I use Lloyds for business banking and whilst the BOE base rate has plummeted, the Lloyds rates have gone up. Try getting a buy to let mortgage sub 5-6% with 20% equity. I am not sure of the equity in the stadium, but I guess at best, one wouldn't get much better than 5% to 6% in the current market - especially as SLH can't afford the mortage. So to draw comparisons between 8.5% and 0.5% is totally unrealistic.

Lloyds Bank would be delighted to offer a commercial mortgage to a qualified applicant at 6% fixed. Put that together with a discount on the outstanding stadium loan with Norwich Union, who would take £15M in a heartbeat and you very quickly go from £2M interest payments per year, to £900K per year. Who the f*** would take on this pile of sh !t (SLH) as a going concern, when they could buy the football club for, let's say, £5-£10M, renegotiate the stadium loan and save over million a year in interest payments to compensate for the reduced crowds...

[Legod Third Coming]

As a person who has had first hand experience of administration and the way administrators think, I can assure you I am not naive. The only reason that the administrator would sell the club as a going concern, would be if he could raise more money, than selling the assets of SLH separately. Take it from me, there is NO way Southampton Leisure Holdings plc is, or will be sold as, a going concern. 8.5% interest on the Stadium loan, vs a 0.5% base rate is the biggest reason, for a start. The second reason is that our team is second from the bottom in the Championship and likely to get relegated to a place where 14,000 average crowds are a rarity. Liquidation occurs far later in the procedure and as Clapham Saint may tell you, when every asset of value has already been sold.

No, this is an SLH asset sale, where the buyer avoids any contingent liabilities SLH may have, together with the ability to renegotiate the terms of the loans together with any other contracts SLH may have entered into...

 

The picture your original mail misleadingly painted was one where every asset was sold in order to payback creditors with no attempt made to continue the operation of the football club.

 

That's not the reality of the situation as you undoubtedly know.

 

We all know how administration works. The new buyer will take on a proportion of the debt that is deemed acceptable to the creditors and the club will attempt to trade its way back to a profit situation - or at least to service the newly agreed levels of debt.

 

Or it will be wound up. The creditors would love to avoid the latter because 50p in the £ is way beyond what they could hope for. What would the players really fetch? The stadium? Asset values have never been so low.

[Clapham Saint]

From reading the posts throughout this and several other threads I think that many people are making 2 key mistakes in their assessments when they post asserting what will happen in certain different scenarios.

 

First off. The values of the assets stated in the accounts are currently meaningless. They are based upon accounting conventions as a manner of recording transactions, they are not formal valuations.

 

(The liabilities however are as stated, or at least they were at that point in time).

 

Secondly you need to separate the companies which make up the Group operated by SLH Plc.

 

SLH Plc is a separate entity to the football club and can be imagined as the "person" that owns the club.

 

The analogy below is slightly simplified and the more technical posters can almost certainly pick holes in the fact that I have ignored cross guarantees and other potential hurdles however I hope that it helps the majority in visualising what is going on.

 

 

Imagine a sheik coming over and buying a football club.

 

If that sheik then buys a football stadium he will allow his football club to play games at that stadium (obviously) but they stadium and the club are still 2 separate assets which he could sell individually if he so chooses.

 

Now in order to buy the stadium the Sheik had to borrow £30M from a Bank. He borrows the money personally and it is his name on the mortgage application not the club's.

 

He also takes out a personal loan of £6M in order to pump the money into the club and try to get it promoted.

 

If his oil well dries up and the promotion bid fails he can no longer make the monthly mortgage repayments.

 

He goes bankrupt he will sell the club and the stadium and use the money to try to pay back the bank.

 

If he can only sell the stadium for £5m and the club for £5m he pays back £10m to the Bank but this still leaves him owing £26m which he has no way of paying back.

 

The club has been sold and carry's on its merry way under new ownership. The money that the Sheik borrowed isn't any of the Club's concern. He borrowed the money and it is his problem.

 

He will be bankrupt and the Bank will lose £26m.

 

 

The situation at saints is the same except that SLH Plc is the Sheik and it owns two entirely separate assets which it has borrowed money to help it finance.

 

The shares in a Company call Southampton Football Club Limited

The shares in a Company called Saint Mary's Stadium Limited

 

The administrator will seek to sell the shares in these companies for whatever he can get.

 

The debt will remain in SLH Plc. It is not Southampton Football Club's issue.

 

 

I cannot see a scenario whereby the administrator will raise more money by allowing the club to cease to exist.

 

If the club is not sold I expect that the players will be free to join other clubs. I haven't checked any Football league rules but I would not expect them to be anything other than free agents.

 

If this happens then the Administrator will get nothing. Selling the club for just a pound would be better (although I expect it to be more than this if a sale is agreed).

 

The doomsday scenario as far as I am concerned occurs at the end of the month.

 

If the club has been sold by then, all well and good.

 

If the club hasn't been sold by then does it have enough cash to pay the players’ salaries? Previously SLH Plc would have let the club the money (after borrowing it from Barclays).

 

If it does, all well and good.

 

If it doesn't..... We have a problem.

[Give it to Ron]

Thanks Clapham for putting it in a way I can fathom...IT and computers I can handle but accountancy stumps me.

[ozzmeister]

Not quite.

 

CREDITORS Voluntary Liquidation is a different process and something far worse than Administration.

 

If the Administrator fails to sell the Club it will most likely be placed into CVL and closed down.

 

Is it not CVL - Company voluntary liquidation and CVA - Creditors Voluntary Arrangement?

 

But yes both are pretty bad!

[Clapham Saint]

Is it not CVL - Company voluntary liquidation and CVA - Creditors Voluntary Arrangement?

 

But yes both are pretty bad!

 

 

Company Voluntary Arrangement (CVA) - The company basically comes to a compromise deal with creditors

 

Creditors Volunary Liquidation (CVL) - Close down and break up of an insolvent company

 

Members Voluntary Liquidation (MVL) - Close down and break up of a solvent company (i.e. all the creditors will be paid in full)

[OldNick]

Company Voluntary Arrangement (CVA) - The company basically comes to a compromise deal with creditors

 

Creditors Volunary Liquidation (CVL) - Close down and break up of an insolvent company

 

Members Voluntary Liquidation (MVL) - Close down and break up of a solvent company (i.e. all the creditors will be paid in full)

Clapham I see on another thread that Dyer has been sold. How would that be viewed by the administrator and people wishing to buy the club/assets. Surely how can anybody put a value on the club /player assets if we are selling them at this time?

[Clapham Saint]

Clapham I see on another thread that Dyer has been sold. How would that be viewed by the administrator and people wishing to buy the club/assets. Surely how can anybody put a value on the club /player assets if we are selling them at this time?

 

With difficulty.

 

If there are bids for the club then they may now be reduced.

 

However more importantly if the administrator is doing deals like this then I would take that to mean that he doesn't expect to make a sale (of the club) before the end of the month (when wages are due and the money is needed).

[Window Cleaner]

With difficulty.

 

If there are bids for the club then they may now be reduced.

 

However more importantly if the administrator is doing deals like this then I would take that to mean that he doesn't expect to make a sale (of the club) before the end of the month (when wages are due and the money is needed).

 

Which would tend to reinforce my theory that Barclay's wouldn't let us have any additional leeway whatsoever without guaranteed revenues in exchange.

[OldNick]

With difficulty.

 

If there are bids for the club then they may now be reduced.

 

However more importantly if the administrator is doing deals like this then I would take that to mean that he doesn't expect to make a sale (of the club) before the end of the month (when wages are due and the money is needed).

It hadn't occured to me your thoughts in the last paragraph. Quite a sobering thought, or a case that there are so many interested parties it is going to take longer than expected.Not a pop at you Clapham, but i doubt the administrator worries if it takes months longer as long as there are assets to dispose of and get his fees.

[jonah]

It hadn't occured to me your thoughts in the last paragraph. Quite a sobering thought, or a case that there are so many interested parties it is going to take longer than expected.Not a pop at you Clapham, but i doubt the administrator worries if it takes months longer as long as there are assets to dispose of and get his fees.

 

I'd have thought the prices offered for both the stadium and SFC will be significantly different depending on where we end up come May 3rd. Hence it would be in the administrators/creditors interests to keep the companies running as going concerns until then whilst lining up the conditional bids - I wonder if they'll try to sell off Jacksons Farm asap to provide the working capital to continue until the relegation issue is decided. Or rather now, if the story is true, we have proceeds from the sale of Dyer. I guess the longer the administrator drags it out the more he can charge too?

[Legod Third Coming]

With difficulty.

 

If there are bids for the club then they may now be reduced.

 

However more importantly if the administrator is doing deals like this then I would take that to mean that he doesn't expect to make a sale (of the club) before the end of the month (when wages are due and the money is needed).

 

In your experience CL, how long might it take to conclude a sale?

I'm imagining that interested parties would want to undertake some kind of due diligence of their own?

 

So I'm not surprised that there is no news yet.

 

Are you thinking we should have had an offer at least?

[Clapham Saint]

Which would tend to reinforce my theory that Barclay's wouldn't let us have any additional leeway whatsoever without guaranteed revenues in exchange.

 

If we fail to pay wages and the club ceases to exist Barclays will get nothing and the administrator will probably face a shortfall on his fees.

 

It is heavily in both their interests for us to make it to the end of the season and a sale.

 

However... if there is no realistic prospect of a sale Barclays would be foolish to throw good money after bad funding us to the end of teh season.

 

As the end of the season gets closer the administrator becomes more desperate and the morelikely that a consolrtium will be able to get away with a lower bid.

 

A case of brinksmanship on all sides.

 

And brown trousers time for those of us who are not ITK.

 

(It still amazes me how many people claim to have the inside track)

[Clapham Saint]

In your experience CL, how long might it take to conclude a sale?

I'm imagining that interested parties would want to undertake some kind of due diligence of their own?

 

So I'm not surprised that there is no news yet.

 

Are you thinking we should have had an offer at least?

 

I know this isn't the answer that you are looking for but it could be anything.

 

I have seen deals done in just a couple of days and others that have taken over 9 months.

 

I suspect that we should at least have had some indicative offers if not full bids by now, however the administrator has a duty to get the highest amount possible. With a reported 30+ bidders there is a LOT of haggling and horse trading to get done before he can finalise a deal.

[OldNick]

If we fail to pay wages and the club ceases to exist Barclays will get nothing and the administrator will probably face a shortfall on his fees.

 

It is heavily in both their interests for us to make it to the end of the season and a sale.

 

However... if there is no realistic prospect of a sale Barclays would be foolish to throw good money after bad funding us to the end of teh season.

 

As the end of the season gets closer the administrator becomes more desperate and the morelikely that a consolrtium will be able to get away with a lower bid.

 

A case of brinksmanship on all sides.

 

And brown trousers time for those of us who are not ITK.

 

(It still amazes me how many people claim to have the inside track)

If there are more than offers will the administrator be able to contact the lower bidder and ask them to raise theirs (to get an auction going)or will he just say 'you had your chance and so it's sold'

[Clapham Saint]

If there are more than offers will the administrator be able to contact the lower bidder and ask them to raise theirs (to get an auction going)or will he just say 'you had your chance and so it's sold'

 

Yes of course.

 

It is just like trying to sell anything.

 

When trying to sell your house you ideally want to get a bidding war going.

 

If at the end of the bidding war the higher offer falls through you go back to the next highest bid and try to conclude the deal with them instead.

 

 

Alternatively if you have several interested parties some sellers prefer to give a deadline by when they want to have received sealed bids. (I doubt thiis is the case with saints or the deadline would probably have been announched).

[OldNick]

Yes of course.

 

It is just like trying to sell anything.

 

When trying to sell your house you ideally want to get a bidding war going.

 

If at the end of the bidding war the higher offer falls through you go back to the next highest bid and try to conclude the deal with them instead.

 

 

Alternatively if you have several interested parties some sellers prefer to give a deadline by when they want to have received sealed bids. (I doubt thiis is the case with saints or the deadline would probably have been announched).

I had thought this to be the case but wanted confirmation thanks

[John]

 

What might be interesting is how secure Barclays feel they are.

 

Not least because they appear to have security on the overdraft (as per the accounts), but also as Lowe recently stated with regards the two biggest debtors of Aviva and Barclays,

 

"Barclays position was very simple 'we're better secured than them (Aviva) and really as far as we're concerned we're very comfortable with our own position' ".

 

That's an interesting comment Um, because usually an overdraft is considered an 'unsecured debt' and as such, is right down the bottom of the list in terms of pay-back. It sounds as if Barclays may have tied Lowe to some ingenious contract to avoid this scenario; but I'll bet it doesn't make any difference...they will still be behind Aviva in the queue and on the basis there isn't enough money to pay half the amount they are owed, it 'aint getting to Barclays, it 'aint getting to the shareholders or anyone else SLH owed money to. The best option is to hope Aviva take the few million we can scrape together from player sales and agree to do so in exchange for writing the rest off. Nobody is going to take over their debt unless they have more money than sense...and while I am on this topic I can kill off any talk of Staplewood being an asset...Cowan told me it can only be used for very restricted purposes i.e. it can't be developed for housing etc so has no great sell-on value...and as for Jackson's Farm, you can put any price you like on it, the only price that matters is the one somebody is prepared to pay for it; but without planning rights that isn't much.

[Legod Third Coming]

That's an interesting comment Um, because usually an overdraft is considered an 'unsecured debt' and as such, is right down the bottom of the list in terms of pay-back. It sounds as if Barclays may have tied Lowe to some ingenious contract to avoid this scenario; but I'll bet it doesn't make any difference...they will still be behind Aviva in the queue and on the basis there isn't enough money to pay half the amount they are owed, it 'aint getting to Barclays, it 'aint getting to the shareholders or anyone else SLH owed money to. The best option is to hope Aviva take the few million we can scrape together from player sales and agree to do so in exchange for writing the rest off. Nobody is going to take over their debt unless they have more money than sense...and while I am on this topic I can kill off any talk of Staplewood being an asset...Cowan told me it can only be used for very restricted purposes i.e. it can't be developed for housing etc so has no great sell-on value...and as for Jackson's Farm, you can put any price you like on it, the only price that matters is the one somebody is prepared to pay for it; but without planning rights that isn't much.

 

The way I see it, there is no money to giveback to anyone!

 

We can hand the keys back to the stadium. Presumably the players' contracts are null and void because we cease to exist.

 

And we have a training ground and a farm...

 

Oh and we might raise a few thousand by selling some merchandise for a club that used to be quite big on the south coast - ironically when it was a lot smaller...

[benjii]

What might be interesting is how secure Barclays feel they are.

 

Not least because they appear to have security on the overdraft (as per the accounts), but also as Lowe recently stated with regards the two biggest debtors of Aviva and Barclays,

 

"Barclays position was very simple 'we're better secured than them (Aviva) and really as far as we're concerned we're very comfortable with our own position' ".

 

This is very interesting and is not what you would usually expect. Would the provider of an overdraft hold priority security over the provider of a large long-term secured loan? Not usually.

 

Seems to confirm my theory that I mooted before that the stadium finance is provided in a limited recourse capacity. In other words, Aviva probably only hold security over the SPV that owns the stadium, rather than having an all encompassing debenture that includes the PLC and all its assets.

 

I imagine Barclays hold security over all other assets of the PLC, apart from the stadium SPV and its assets.

 

Good news for the chances of avoiding a points deduction IMO and should also make negotiations with the credtiors "cleaner".

Edited 16 April, 2009 by benjii

[benjii]

That's an interesting comment Um, because usually an overdraft is considered an 'unsecured debt' and as such, is right down the bottom of the list in terms of pay-back. It sounds as if Barclays may have tied Lowe to some ingenious contract to avoid this scenario; but I'll bet it doesn't make any difference...they will still be behind Aviva in the queue and on the basis there isn't enough money to pay half the amount they are owed, it 'aint getting to Barclays, it 'aint getting to the shareholders or anyone else SLH owed money to. The best option is to hope Aviva take the few million we can scrape together from player sales and agree to do so in exchange for writing the rest off. Nobody is going to take over their debt unless they have more money than sense...and while I am on this topic I can kill off any talk of Staplewood being an asset...Cowan told me it can only be used for very restricted purposes i.e. it can't be developed for housing etc so has no great sell-on value...and as for Jackson's Farm, you can put any price you like on it, the only price that matters is the one somebody is prepared to pay for it; but without planning rights that isn't much.

 

It's not at all uncommon to have a secured overdraft in a commercial context.

 

What is unusual, on a "traditional" model, is for an overdraft provider to have a senior priority position over the provider of a secured long-term loan.

[Clapham Saint]

It's not at all uncommon to have a secured overdraft in a commercial context.

 

What is unusual, on a "traditional" model, is for an overdraft provider to have a senior priority position over the provider of a secured long-term loan.

 

Spot on.

 

Overdrafts are usually only unsecured in smaller companies.