ALK Capital or Farnell/Elkashashy takeover

[Chester Perry]

We dont even know how much we're borrowing though ..

at the moment we haven't borrowed anything - ALK have though their vehicles, which may all be used in the takeover - it is that which brings the debt into our sphere

[joey13]

Aren't what?

Someone suggested that we were always going to end up in debt with a takeover, which obviously isn't true. If ALK have the funds to buy the club without borrowing money then the club wouldn't need to take on any debt. Likewise, if ALK borrow money to purchase the club then the debt could be secured against ALK, rather than the football club.

I haven't looked through the report linked above and I'm happy to wait until this completes before casting judgement. But it appears that when the takeover is completed, the club will be taking on a debt - which definitely wasn't a certainty to happen.

The debt won’t be secured against ALK though

[Rileybobs]

The debt won’t be secured against ALK though

Exactly. Isn't that why some people are concerned - that the club may inherit a debt?

[joey13]

Exactly. Isn't that why some people are concerned - that the club may inherit a debt?

The club will inherit the debt

[fatboy47]

Dipping into this thread I find it so sad to see how little some people have learned from the experiences of so many clubs across the country.

Some of whom I'd presumed would know better.

Naivety simply doesn't get close to covering it.

[Jakubclaret]

What facts are an inconvenient obstacle to me? Your post doesn't seem to have any relevance to the conversation that I'm having with other posters.

More of a general observation not necessarily applicable to this particular subject, it’s naive to think the takeover wouldn’t be attached with some sort of debt in every shape & form.

[Paul Waine]

As you know Paul - a staged payment profile/share transfer for a takeover is not unusual even in football - it could easily be 60% of shares initially which would allow finance for squad development/new contracts - I am sure many would say tying Tarks to a new deal would be excellent business (though I worry about our salary ceiling being raised to high, given our underlying revenues)

Hi CP, yes, a staged payment profile may reconcile the two different figures. However, would that be 60% of shares changing hands, or paying 60% of the agreed purchase price, with the balance due when agreed performance targets have been met - the most obvious being starting 2021/22 season in the Premier League.

Signing a new deal with Tarks would be my first business in the transfer window for the new owners, (yes, I know it doesn't need to wait until then). I'd expect that there is scope to raise wage ceilings under new owners, because that's the only way the investment makes sense and creates the opportunity to move the club forward.

One or two other key incomings will be encouraged and facilitated by Tarks re-committing. Maybe also demonstrated support tying Sean Dyche to the club - which I think share options will do (if the corporate structure allows...).

We will see in...... hours and days ahead.

Exciting times

UTC

EDIT:

PS: Pleased you edited "605" - I was wondering what I'd missed!

[Rileybobs]

The club will inherit the debt

That's exactly what I'm saying. I don't understand your point?

[mill hill claret]

Regarding various comments in the media, Burnley Football Club confirms that the club’s ownership remain in discussions with interested parties regarding future investment in the club.

In full respect of ongoing processes, the club will not be providing any further commentary on this matter until those discussions have reached a conclusion.

The club wishes to assure supporters and the local community that the future of Burnley Football Club remains the primary concern in these issues, with any potential investment needing to support the club’s long term sustainability and retain its position as a cornerstone of the local community.

I'm still going off this statement released by the club on the 12th november ..I trust the board to have explored every Avenue to safeguard the future of the club

[NewClaret]

Possibly just a bridging loan to buy the club before issuing equity to other investors and repaying the debt.

[dsr]

This particular loan is for Calder Vale Holdings Ltd to borrow money. Not BFC. Though of course they might take money out of BFC to pay for it.

I thought the point of this takeover was to add money to the club, not to take money out.

[Vegas Claret]

panic panic panic

[Rileybobs]

More of a general observation not necessarily applicable to this particular subject, it’s naive to think the takeover wouldn’t be attached with some sort of debt in every shape & form.

Being accused by Jakubclaret of ignoring facts is a late contender for my personal highlight of an otherwise crap year.

[Chester Perry]

If you’re worried that makes me worried.

not sure why that should be - I am not trained in financial management - though I have picked up a few things along the way - the vast majority would view my financial take on things very old fashioned (a few have told me so too) - I do like to know I have solid foundations, and this to my way of thinking in this economy undermines them.

[Rileybobs]

This particular loan is for Calder Vale Holdings Ltd to borrow money. Not BFC. Though of course they might take money out of BFC to pay for it.

I thought the point of this takeover was to add money to the club, not to take money out.

Won't Calder Vale Holdings Ltd own the majority share in Burnley Football Club?

[Chester Perry]

Won't Calder Vale Holdings Ltd own the majority share in Burnley Football Club?

to underline your point - Calder Vale Holdings only asset will be the football club once the sale goes though - the borrowed money will be secured against the assets of Calder Vale Holdings

[Vegas Claret]

pretty sure all this side of things also has to be run via the PL, the sudden fear is pretty laughable. These guys haven't just turned up without a business plan.....

[dpinsussex]

Possibly just a bridging loan to buy the club before issuing equity to other investors and repaying the debt.

That is exactly how I see it. Short term debt at a premium but then that's is the market.
Repay with own funds or own borrowed funds at a better rate.

[Goalposts]

This is the same principle as the glazers at Utd , danger is club get loaded with debt, though it wont be on a level of Utd , but could be similar to derby southampton and Sunderland , and I don’t think that’s great company to be in

[mill hill claret]

pretty sure all this side of things also has to be run via the PL, the sudden fear is pretty laughable. These guys haven't just turned up without a business plan.....

This

[ClaretTony]

pretty sure all this side of things also has to be run via the PL, the sudden fear is pretty laughable. These guys haven't just turned up without a business plan.....

I can assure you they haven’t turned up without a business plan. Quite funny seeing the overreaction on here when none of us have the facts.

[dsr]

Won't Calder Vale Holdings Ltd own the majority share in Burnley Football Club?

Yes, but if the new owners have personally (or corporately) borrowed money to buy the club, it won't necessarily mean it costs the club money.

But if Calder Vale Holdings has no other income, the implication is that they will at least need to take money from the club to service the interest.

[Rileybobs]

to underline your point - Calder Vale Holdings only asset will be the football club once the sale goes though - the borrowed money will be secured against the assets of Calder Vale Holdings

Thanks CP - I'm not a money man. So you may be able to clarify this better than me, but it appears that BFC (as we know it) will be taking on a debt that will be secured against what we would currently refer to as the club's assets?

[Chester Perry]

pretty sure all this side of things also has to be run via the PL, the sudden fear is pretty laughable. These guys haven't just turned up without a business plan.....

absolutely - but given that every other club in the league is run this way, there was no way the Premier League were going to block it. It just means that we are now like everyone else. and in this particular circumstance I am unhappy to be like that

[clarethomer]

This company is referenced in the charge - assume this is who is ultimately supplying the funding.

https://www.msdpartners.com/

You have to accept that our structure is going to change and we have to trust that the owners have been sufficiently vetted and are trusted to want to make this a success.

[Nonayforever]

Managing the debt, when your income could plummet, at any time through relegation from the premier league, could be extremely difficult.

Burnley's income ( turnover ) is plummeting due to corvid.
This is how ALK ( Alan Pace ) passed the owners and directors test. He ultimately controls the money he has borrowed. Unfortunately for him he doesn't control the circumstances that could lead to him having to repay the money.

[Rileybobs]

I can assure you they haven’t turned up without a business plan. Quite funny seeing the overreaction on here when none of us have the facts.

With respect, I don't think there's much of an overreaction - the scenario of the club taking on debt is just being discussed. Is this any different than people 'overreacting' when Chris Farnell was linked? We didn't have the facts then either.

[Chester Perry]

Thanks CP - I'm not a money man. So you may be able to clarify this better than me, but it appears that BFC (as we know it) will be taking on a debt that will be secured against what we would currently refer to as the club's assets?

if the sale goes through using these vehicles

[randomclaret2]

This is the same principle as the glazers at Utd , danger is club get loaded with debt, though it wont be on a level of Utd , but could be similar to derby southampton and Sunderland , and I don’t think that’s great company to be in

But surely the current custodians of the club wouldnt sell their shares to a group who would allow this to happen, would they ?

[Murger]

But surely the current custodians of the club wouldnt sell their shares to a group who would allow this to happen, would they ?

Of course they would. They're businessmen before owt else.

[Grumps]

I can assure you they haven’t turned up without a business plan. Quite funny seeing the overreaction on here when none of us have the facts.

I can trace that behaviour to the first page of this thread, and every subsequent page, whether it be ALK, Farnell, Egyptians and Uncle Tom you know who.

[DCWat]

I look forward to hearing what Pace has to say. Hopefully it’s a bright new beginning but there are certainly concerns that need to be addressed.

[dpinsussex]

There is no issue with debt in business. The key is servicing it.

That said wealthy benefactors may decide to convert what is effectively a directors loan in to share capital at a later date thus reducing the short term debt in the business.
This will / can be used as an offset against tax incurred elsewhere in the individuals business entities.

Similar to the sheik and man City

[Vegas Claret]

absolutely - but given that every other club in the league is run this way, there was no way the Premier League were going to block it. It just means that we are now like everyone else. and in this particular circumstance I am unhappy to be like that

well, i'd rather be like everyone else in the PL than everyone else in League One (we've already done that). Nobody can predict the future be it bright or gloomy but I for one am ecstatic that Dyche might actually be able to build a better team for us all to watch - that's the be all and end all at this point.

[randomclaret2]

This company is referenced in the charge - assume this is who is ultimately supplying the funding.

https://www.msdpartners.com/

You have to accept that our structure is going to change and we have to trust that the owners have been sufficiently vetted and are trusted to want to make this a success.

Brendan Rogers is a partner

[randomclaret2]

Of course they would. They're businessmen before owt else.

Good Luck arguing that point on here

[Mala591]

So, if ALK borrow £150 million to buy the club then the club will be £150 million in debt from day 1 of new ownership.

[Murger]

Isn't borrowing money from the same source as the other clubs mentioned not a conflict of interest?

[Rileybobs]

Isn't borrowing money from the same source as the other clubs mentioned not a conflict of interest?

No more so than competing companies borrowing money from the same bank for example.

[Chester Perry]

I can assure you they haven’t turned up without a business plan. Quite funny seeing the overreaction on here when none of us have the facts.

Not seen any suggest they haven't arrived without a plan - what we are seeing is that they do not appear to have the necessary finances to run us in a way we have repeatedly been told they found attractive - it has been recognised by a few that the financing may be short term, possibly a matter of weeks, but given the drawn out process so far that is unlikely.

It now appears that we are to be run in the same way as all the other clubs and I am very disappointed by that - the majority of others won't be - at least till they are asked to part with more money to service it - and (given your reaction to certain cost increases this year) I suspect you won't enjoy that aspect either, though improved quality of service may allay that for you and some others

[aggi]

Thanks CP - I'm not a money man. So you may be able to clarify this better than me, but it appears that BFC (as we know it) will be taking on a debt that will be secured against what we would currently refer to as the club's assets?

It's possible. The charge currently isn't secured over any assets which does suggest that it is likely to be assets yet to be acquired. However, it is possible it could use something totally different for security. Maybe ALK owns some real estate it could be secured on for instance.

There's nothing that says the security has to be the asset that is being purchased.

It could also be that this is just a few million, maybe some working capital during these awkward times, and wouldn't really impact on us.

Or it could be a large amount but it won't need to be repaid until ALK sell and it's contingent on a profit being made.

There are lots of scenarios.

[Murger]

No more so than competing companies borrowing money from the same bank for example.

I'm as far removed as could be when it comes to understanding finance, but couldn't this Dell fella pull the plug, increase interest rates etc, to put us at a disadvantage against the other clubs? That's where the conflict could be.

[dpinsussex]

Isn't borrowing money from the same source as the other clubs mentioned not a conflict of interest?

No as long as the source of funds owner has no say in the operating of the club.

A bridging loan is effectively a 6 to 12 month term at a set interest rate. If ALK fail to repay then that is where things get messy

[Nonayforever]

There is no issue with debt in business. The key is servicing it.

When turnover slips and the wage bill increases the only way to service the debt is to sell assets.

[NewClaret]

That is exactly how I see it. Short term debt at a premium but then that's is the market.
Repay with own funds or own borrowed funds at a better rate.

Other thing we have to remember here is that something at the club had to change because the Manager/Chairman’s relationship is broken beyond repair.

[Rileybobs]

I'm as far removed as could be when it comes to finance, but couldn't this Dell fella pull the plug, increase interest rates etc, to put us at a disadvantage against the other clubs?

It's not my bag either, but there will be terms attached to the loan to prevent this as with any agreement.

[Newcastleclaret93]

So, if ALK borrow £150 million to buy the club then the club will be £150 million in debt from day 1 of new ownership.

Am I missing something? But what the hell did people expect, unless they are in the top 1% of people in the world barely anyone can purchase 200m worth of football club without a loan.

It’s not negative, I imagine they have taken a low interest loan and kept large sums of money for transfers and running the club.

The club with a proposed new business plan to improve commercial income will then pay of the loan long term.

[Chester Perry]

well, i'd rather be like everyone else in the PL than everyone else in League One (we've already done that). Nobody can predict the future be it bright or gloomy but I for one am ecstatic that Dyche might actually be able to build a better team for us all to watch - that's the be all and end all at this point.

I have said my position is not widely accepted/adopted and is considered very old fashioned - but I prefer it, it just feels right

[dpinsussex]

When turnover slips and the wage bill increases the only way to service the debt is to sell assets.

Correct as any business that falls on hard times has to do.

Our assets are our players and ground.
The ground is a fixed asset, the players (current assets) are easily liquidated (sold) and produce cash. This cash services the debt. If we can moneyball ie buy cheap and sell at a profit then the current asset increases and we become a much more.liquid club.
Cash is king as they say

[Rileybobs]

Am I missing something? But what the hell did people expect, unless they are in the top 1% of people in the world barely anyone can purchase 200m worth of football club without a loan.

It’s not negative, I imagine they have taken a low interest loan and kept large sums of money for transfers and running the club.

The club with a proposed new business plan to improve commercial income will then pay of the loan long term.

Well the debt could be secured against ALK Capital rather than BFC. Meaning that if the debt couldn't be repaid, the club wouldn't go into administration.