Grim

[Paul Waine]

MSD got Derby by the nut sack with loans from MSD stacked on their stadium. Kinda blows your whole positive talk of MSD to smithereens

From what I read MSD are the good guys with respect to the money they lent to Mel Morris as Derby's owner. People who are prepared to put money into football teams need to be professional in what they do. MSD are professional. I've no problem with MSD enforcing their rights with respect to Derby County's administration. A bit of loan discipline and money discipline is good for football clubs and good for football fans. I'm confident that Alan Pace and ALK are also professional. How else do you expect them to handle "scouting tips" from Clarets fans?

[Paul Waine]

Just hearing SSN reporting Derby have debts of £60m. The largest creditor is HMRC, owed £30m. This will be, mostly unpaid PAYE deducted from players' and coaching staff wages. Next is MSD, owed £20m.

[Chester Perry]

That is certainly how it looks. The cashflow statement only shows £45k cash received from the sale and debtors (money owed to them) in the company jump ~ £30m which would be roughly in line with the sale of the shares.

No idea why that would be the case.

Although one slightly strange thing is that debtor is all marked as due within one year rather than reflecting the instalments.

I've now had a look at Freight Investor's accounts. I'm not sure what's going on with the accounts. Yes, the note is there, exactly as you quoted, but in the notes to the balance sheet the whole of the £29 million due to JB/FIS is shown in "prepayments and accruals" due within less than one year - even though the accounts says 5 instalments in 2021, 2022 and 2023. Some of the £29m should be shown as receivable in more than 1 year. All of the £29m should be shown as debtor rather than "prepayment and accruals." I'm tending towards the view that an error has been made in the accounts, possibly because the sale of a subsidiary is not the day to day business activity of Freight Investors, maybe also a result of everyone working from home...

Errors can happen in accounts, even after the auditors have signed them off.

Chaps.

Are these Freight investor accounts (https://find-and-update.company-informa ... ng-history) suggesting that the total value of the transaction for their 19660 shares in Burnley FC Holdings Limited is £30.022m (Notes the financial statements 17. Debtors, Due within one year on the Company for 2020; Prepayments and accrued Income page 33) with a profit to Freight Investor of £29.497m (Consolidated Statement : Total Operating (loss)/profit; Profit on disposal of Investments page 10)

If so that suggests share value of £1,527.06 in the transaction;, which extrapolated would mean:
- ALK are paying £157,061,177.21 for their 102,852 shares;
- The club was valued at £187,031,257.17 in the takeover transaction,
- the offer of £1699 per share to the small shareholders (valuing the club at £208,090,122) is a hefty value jump after 10 months and given the state of play on the field even with half being club credit. Though less than the 30% flip uplift that @TariqPanja was suggesting they were rumoured to be looking for last February.

I am avoiding the distraction of all debt falling within 1 year which could be as previously suggested and the £45k payment which could equally have come from other investments the company holds - there is certainly indication it has a number of them.

[Paul Waine]

Chaps.

Are these Freight investor accounts (https://find-and-update.company-informa ... ng-history) suggesting that the total value of the transaction for their 19660 shares in Burnley FC Holdings Limited is £30.022m (Notes the financial statements 17. Debtors, Due within one year on the Company for 2020; Prepayments and accrued Income page 33) with a profit to Freight Investor of £29.497m (Consolidated Statement : Total Operating (loss)/profit; Profit on disposal of Investments page 10)

If so that suggests share value of £1,527.06 in the transaction;, which extrapolated would mean:
- ALK are paying £157,061,177.21 for their 102,852 shares;
- The club was valued at £187,031,257.17 in the takeover transaction,
- the offer of £1699 per share to the small shareholders (valuing the club at £208,090,122) is a hefty value jump after 10 months and given the state of play on the field even with half being club credit. Though less than the 30% flip uplift that @TariqPanja was suggesting they were rumoured to be looking for last February.

I am avoiding the distraction of all debt falling within 1 year which could be as previously suggested and the £45k payment which could equally have come from other investments the company holds - there is certainly indication it has a number of them.

Figures look good to me, CP. Yes, that's the set of accounts for BFCHL that I've looked at. Your figures suggest some revisions to the "widely reported" figures at the time - and, often repeated since. Not enormous changes, of course. I wonder how the instalments are split and how much these new figures change the balance on ALK's commitment and, therefore, the club's finances?

UTC

[Chester Perry]

Just hearing SSN reporting Derby have debts of £60m. The largest creditor is HMRC, owed £30m. This will be, mostly unpaid PAYE deducted from players' and coaching staff wages. Next is MSD, owed £20m.

MSD's own accounts (period end 31/12/2020) report £15m at risk in the post period events, though interest could certainly have accrued since that time particularly if the quarter interest payments (that MSD say they always use) have not been met they would also have rolled into the debt and acquired interest o their own, possibly even pushing up the rate of interest on the whole loan rather than just a penalty on the arrears - I would have to go back to the MSD accounts to check that as their overall methodology and practise is described in detail in the notes -you should read it Paul (https://find-and-update.company-informa ... ng-history) - hence my answer to that Daily Mail article on the previous page of this thread

[Chester Perry]

Figures look good to me, CP. Yes, that's the set of accounts for BFCHL that I've looked at. Your figures suggest some revisions to the "widely reported" figures at the time - and, often repeated since. Not enormous changes, of course. I wonder how the instalments are split and how much these new figures change the balance on ALK's commitment and, therefore, the club's finances?

UTC

thank you
hell of a difference in value for bought and sold it would seem - a factor of over 52 times it would seem

[Long Time Lurker]

MSD UK Holdings Ltd

Four loans listed on the International Stock Exchange according to TISE

https://tisegroup.com/market/companies/8061

Securities:

MSD UK Holdings Ltd
GBP52,000,000 9.00% unsecured loan notes due 2030

MSD UK Holdings Ltd
GBP15,000,000 7.75% unsecured loan notes due 2030

MSD UK Holdings Ltd
GBP65,000,000 8% unsecured loan notes due 2031

MSD UK Holdings Ltd
GBP18,353,364.33 8.25% variable rate unsecured loan notes due 2031

Looking at these listings, I don't know where the news article ( could have been the Daily Mail ) got the repayment date of 2026 from. I think it is fair to believe that one of more of the above loans are linked to ALK. However, nobody outside of the club has the accurate figures and information that would permit a statement of certainty. Ball park guesses are the best any of us outsiders can do.

[Chester Perry]

MSD UK Holdings Ltd

Four loans listed on the International Stock Exchange according to TISE

https://tisegroup.com/market/companies/8061

Securities:

MSD UK Holdings Ltd
GBP52,000,000 9.00% unsecured loan notes due 2030

MSD UK Holdings Ltd
GBP15,000,000 7.75% unsecured loan notes due 2030

MSD UK Holdings Ltd
GBP65,000,000 8% unsecured loan notes due 2031

MSD UK Holdings Ltd
GBP18,353,364.33 8.25% variable rate unsecured loan notes due 2031

Looking at these listings, I don't know where the news article ( could have been the Daily Mail ) got the repayment date of 2026 from. I think it is fair to believe that one of more of the above loans are linked to ALK. However, nobody outside of the club has the accurate figures and information that would permit a statement of certainty. Ball park guesses are the best any of us outsiders can do.

These have provoked an on/off discussion since before the takeover was confirmed

the first two are dated October 8 2020 - and may be related to Southampton (borrowed £78.8m June 29 2020) and possibly Derby

the third dated February 4 2021 - may be related to us, but we know West Ham opened a flexible facility around that time with a reputed maximum value of £120m. though that club stated they were planning to use it to consolidate existing debts of around £79m and given themselves worst case leeway in regard to the Covid situation (they had already had a £30m share issue prior to Project Restart). West Ham did say they were not planning to exercise the facility immediately.

the fourth is dated May 14 2021 and has a variable interest rate which is very different

In each there is a 10 year life which is certainly a different number to the deals we have heard about

[Paul Waine]

MSD's own accounts (period end 31/12/2020) report £15m at risk in the post period events, though interest could certainly have accrued since that time particularly if the quarter interest payments (that MSD say they always use) have not been met they would also have rolled into the debt and acquired interest o their own, possibly even pushing up the rate of interest on the whole loan rather than just a penalty on the arrears - I would have to go back to the MSD accounts to check that as their overall methodology and practise is described in detail in the notes -you should read it Paul (https://find-and-update.company-informa ... ng-history) - hence my answer to that Daily Mail article on the previous page of this thread

Thanks, I've now read MSD UK Holdings Limited financial report to 31-Dec-2020.

I understand the difference between the £15 million reported by MSD in their accounts (Derby isn't named, of course, just one of MSD's borrowers being in administration) and the £20 million is interest, because the press reports have said that. I've not found it anywhere to read myself, but I understand that the Administrator will have published reports to the creditors and that this is what the media is quoting. I'm not sure how interest accrues of £5 million. If MSD's loan to Derby was £15m an interest rate of 10%, for example, would only result in interest of £1.5 million per annum.

I didn't see anything in MSD's accounts that said that interest was payable quarterly on the loans. 3-month Libor is mentioned, but that would only be re-setting interest rates that we determined by reference to Libor. MSD stated that the loans were all/mostly fixed interest rates.

Pity MSD's accounts don't name their borrowers, it would be easy then to know how much BFC have borrowed. There is some detail, of course, about the GBP and Euro loan values, including that Euro 24m (approx) was repaid in Jan-21 and a new loan of GBP 25m issued also in Jan-21. (Nothing on what loan activity in Dec-20 which may have been relevant to ALK/BFC).

[Chester Perry]

This is interesting, https://www.burnleyfootballclub.com/company-details

I have never come across it before - it does tie-up with this Athletic article from October

https://theathletic.com/2891212/2021/10 ... ball-club/

What is not explicit in my reading is whether the shareholding described for the ALK Three is in Burnley FC Holdings Limited or Velocity Sports Limited in Jersey (even though it adds up to 83.97%). If it is the former then they would be no other ALK/Velocity Sports investors holding shares in the club. If it is the latter then Dave Checketts and Antonio Parra may be investors in Velocity Sports Limited. There could be others too such as John Dewey and Morgan Edwards. Anyone care to give me their take?

The second paragraph is the one that is confusing me

Significant Interest: The Club is a member of the English Premier League (EPL) and English Football League (EFL) and is subject to the EPL and EFL’s rules and regulations. As required by those regulations, the Club can confirm the following person(s) have a ‘significant interest’ (as that term is defined within the EPL and EFL regulations) in the Club:

Burnley Football & Athletic Company Limited is wholly-owned by Burnley FC Holdings Limited, of which 83.97% of its entire issued share capital is owned by Calder Vale Holdings Limited, a company incorporated in England and Wales (“Calder Vale”). Calder Vale is owned, through a wholly-owned subsidiary, by Velocity Sports Limited, a company incorporated in Jersey. ALK Capital LLC and Velocity Sports Partners LLC are the only persons or entities owning 25% or greater of Velocity Sports Limited. ALK Capital LLC holds and controls the voting rights of Velocity Sports Limited, and Alan Pace and Michael Smith are each directors. The persons having a significant interest in Velocity Sports Limited, and therefore Burnley Football & Athletic Company Limited, are Alan Pace (50.382%), Michael Smith (16.794%) and Stuart Hunt (16.794%).

[ClaretTony]

This is interesting, https://www.burnleyfootballclub.com/company-details

I have never come across it before - it does tie-up with this Athletic article from October

https://theathletic.com/2891212/2021/10 ... ball-club/

What is not explicit in my reading is whether the shareholding described for the ALK Three is in Burnley FC Holdings Limited or Velocity Sports Limited in Jersey (even though it adds up to 83.97%). If it is the former then they would be no other ALK/Velocity Sports investors holding shares in the club. If it is the latter then Dave Checketts and Antonio Parra may be investors in Velocity Sports Limited. There could be others too such as John Dewey and Morgan Edwards. Anyone care to give me their take?

The second paragraph is the one that is confusing me

Significant Interest: The Club is a member of the English Premier League (EPL) and English Football League (EFL) and is subject to the EPL and EFL’s rules and regulations. As required by those regulations, the Club can confirm the following person(s) have a ‘significant interest’ (as that term is defined within the EPL and EFL regulations) in the Club:

Burnley Football & Athletic Company Limited is wholly-owned by Burnley FC Holdings Limited, of which 83.97% of its entire issued share capital is owned by Calder Vale Holdings Limited, a company incorporated in England and Wales (“Calder Vale”). Calder Vale is owned, through a wholly-owned subsidiary, by Velocity Sports Limited, a company incorporated in Jersey. ALK Capital LLC and Velocity Sports Partners LLC are the only persons or entities owning 25% or greater of Velocity Sports Limited. ALK Capital LLC holds and controls the voting rights of Velocity Sports Limited, and Alan Pace and Michael Smith are each directors. The persons having a significant interest in Velocity Sports Limited, and therefore Burnley Football & Athletic Company Limited, are Alan Pace (50.382%), Michael Smith (16.794%) and Stuart Hunt (16.794%).

It’s all beyond me really but I read somewhere recently that Pace himself now owned half of the club and that suggests it’s the case.

If Calder Vale owns Burnley FC Holdings (83.97% of it) and Calder Vale is wholly owned by Velocity then doesn’t that mean Velocity own 83.96% of Burnley FC Holdings?

The three mentioned there are all ALK Directors but then, as you say, both Checketts & Dávila are too. I don’t know where Dewey & Edwards fit in. They both seem to be active at the club but don’t seem to be listed as directors or staff.

[Chester Perry]

It’s all beyond me really but I read somewhere recently that Pace himself now owned half of the club and that suggests it’s the case.

If Calder Vale owns Burnley FC Holdings (83.97% of it) and Calder Vale is wholly owned by Velocity then doesn’t that mean Velocity own 83.96% of Burnley FC Holdings?

The three mentioned there are all ALK Directors but then, as you say, both Checketts & Dávila are too. I don’t know where Dewey & Edwards fit in. They both seem to be active at the club but don’t seem to be listed as directors or staff.

The Burnley Express named Dewy and Edwards as Partners at the time of the takeover

According to Linked-In Dewey is the Chief Operating Officer of ALK Capital LLC based at their New York Offices

Edwards is in finance but not for ALK, sourcing finance Leveraged takeovers is his speciality - his linked-in Profile has an endorsement from Alan Pace

I would be interested to hear what you have heard/seen of their activities at the club - email me if you prefer

All my questioning is based on trying to establish where Checketts and Parra have found the right to sit on the board (4000 shares and all that) though we know John B no longer has that qualifying shareholding but is there even though the rule is still in pace within the articles.

I am erring towards the ALK Three owning 83.97% of Velocity Sports Limited, because that leaves room for sufficient investment for Parra and Checketts and allows them to participate in the transaction payment schedule. This would also allow Velocity to sell a share holding in itself to other investors and allow them to benefit in the transactions mechanisms - They would have an equal status, and their investment could be either used for paying outstanding instalments or better, pumped into the club to fund the developments they want to make.

[ClaretTony]

The Burnley Express named Dewy and Edwards as Partners at the time of the takeover

According to Linked-In Dewey is the Chief Operating Officer of ALK Capital LLC based at their New York Offices

Edwards is in finance but not for ALK, sourcing finance Leveraged takeovers is his speciality - his linked-in Profile has an endorsement from Alan Pace

I would be interested to hear what you have heard/seen of their activities at the club - email me if you prefer

All my questioning is based on trying to establish where Checketts and Parra have found the right to sit on the board (4000 shares and all that) though we know John B no longer has that qualifying shareholding but is there even though the rule is still in pace within the articles.

I am erring towards the ALK Three owning 83.97% of Velocity Sports Limited, because that leaves room for sufficient investment for Parra and Checketts and allows them to participate in the transaction payment schedule. This would also allow Velocity to sell a share holding in itself to other investors and allow them to benefit in the transactions mechanisms - They would have an equal status, and their investment could be either used for paying outstanding instalments or better, pumped into the club to fund the developments they want to make.

I haven't heard anything about what they do at the club, but have just heard their names mentioned by people and then saw that you had referred to them.

The five members of the old board - Terry Crabb, Brendan Flood, Clive Holt, Barry Kilby and Brian Nelson held around 16% if I'm remembering correctly and they all had very close to the 4,000 shares which would have meant around 3.2% of the company each. John B owned over 28% prior to the sale. Does he now own less than 3.2%?

[Chester Perry]

I haven't heard anything about what they do at the club, but have just heard their names mentioned by people and then saw that you had referred to them.

The five members of the old board - Terry Crabb, Brendan Flood, Clive Holt, Barry Kilby and Brian Nelson held around 16% if I'm remembering correctly and they all had very close to the 4,000 shares which would have meant around 3.2% of the company each. John B owned over 28% prior to the sale. Does he now own less than 3.2%?

Yes John B now down to 3615 shares

If I am right with the above then it is a smart plan from Pace and go - you have to give them that- it also makes them more of an attractive partner, than if they were to directly sell shares in the club

I am assuming that it is Velocity Sports Limited that is buying the fans shares - If they then flip those then there is a tidy gain to be made without diluting the shareholdings of existing "investors" - certainly enough to meet an outstanding instalment payment

[ClaretTony]

Yes John B now down to 3615 shares

If I am right with the above then it is a smart plan from Pace and go - you have to give them that- it also makes them more of an attractive partner, than if they were to directly sell shares in the club

I am assuming that it is Velocity Sports Limited that is buying the fans shares - If they then flip those then there is a tidy gain to be made without diluting the shareholdings of existing "investors" - certainly enough to meet an outstanding instalment payment

I can't say for certain, but I think your assumption that Velocity Sports Limited are buying the shares is correct.

[Papabendi]

Absolutely sensational piece of analysis by Chester Perry on ALK in the latest edition of the London Clarets magazine.

He is missed on this forum, but thankfully still very much out there.

[Claretforever]

I read that and it was very good.

[aggi]

Cheers aggi

more questions I am afraid:
- is it likely that ALK paid £10m into Kettering Capital and £10m into Calder Vale Holdings or could they have paid into Kettering and then passed it through to Calder Vale with the share purchase - basically is it more likely they invested £10m + £10m or just £10m to buy shares in both companies

- re the owner share permutations, I had come up with the same answer based on the same knowledge, they are the ones that make the most sense

- if the nomination is not allowed you then have to question how Checketts and Parra are on the board (they have not been declared as non-exec), though it is possible/probable that they are investors in one of ALK's Delaware entities, there has never been an indication from the ALK Three that they are.

- the real question of the shares being held back is why is the percentage so even across the board at 10.1% or so, it is just puzzling

ALK won't have paid £10m into Calder Vale. All those shares are owned by Kettering so the money would have come via Kettering. As such, it's likely that it's just £10m. However, it's possible that it was £10m to buy the shares of Kettering and then ALK loaned another £10m to buy the Calder Vale shares. We don't know at this point.

[aggi]

This is interesting, https://www.burnleyfootballclub.com/company-details

I have never come across it before - it does tie-up with this Athletic article from October

https://theathletic.com/2891212/2021/10 ... ball-club/

What is not explicit in my reading is whether the shareholding described for the ALK Three is in Burnley FC Holdings Limited or Velocity Sports Limited in Jersey (even though it adds up to 83.97%). If it is the former then they would be no other ALK/Velocity Sports investors holding shares in the club. If it is the latter then Dave Checketts and Antonio Parra may be investors in Velocity Sports Limited. There could be others too such as John Dewey and Morgan Edwards. Anyone care to give me their take?

The second paragraph is the one that is confusing me

Significant Interest: The Club is a member of the English Premier League (EPL) and English Football League (EFL) and is subject to the EPL and EFL’s rules and regulations. As required by those regulations, the Club can confirm the following person(s) have a ‘significant interest’ (as that term is defined within the EPL and EFL regulations) in the Club:

Burnley Football & Athletic Company Limited is wholly-owned by Burnley FC Holdings Limited, of which 83.97% of its entire issued share capital is owned by Calder Vale Holdings Limited, a company incorporated in England and Wales (“Calder Vale”). Calder Vale is owned, through a wholly-owned subsidiary, by Velocity Sports Limited, a company incorporated in Jersey. ALK Capital LLC and Velocity Sports Partners LLC are the only persons or entities owning 25% or greater of Velocity Sports Limited. ALK Capital LLC holds and controls the voting rights of Velocity Sports Limited, and Alan Pace and Michael Smith are each directors. The persons having a significant interest in Velocity Sports Limited, and therefore Burnley Football & Athletic Company Limited, are Alan Pace (50.382%), Michael Smith (16.794%) and Stuart Hunt (16.794%).

Interesting, I hadn't noticed that before.

That works out at a 60:20:20 share in Velocity Sports.

EPL define significant interest as:
Significant Interest” means the holding and/or possession of the legal or beneficial interest in, and/or the ability to exercise the voting rights applicable to, Shares in the Club which confer in aggregate on the holder(s) thereof 10 per cent or more of the total voting rights exercisable in respect of any class of Shares of the Club. All or part of any such interest may be held directly or indirectly or by contract including, but not limited to, by way of membership of any Concert Party, and any rights or powers held by an Associate, Nominee or Connected Person shall be included for the purposes of determining whether an interest or interests amounts to a “Significant Interest”

which is a bit looser in that you don't actually have to own the shares.

The likelihood is that they own the shares in ALK but that isn't where the financing is coming from, they're managing a fund of money (probably their own and other people's) and are answerable to those people.

[aggi]

It's discussed in this thread from about here onwards viewtopic.php?f=2&t=59712&start=200#p1733366

It's a good article but be aware that there are a few errors, one of which in particular changes quite a bit of the article.

[Papabendi]

Snail mail obviously much slower than online - thanks for the link aggi!!

[Chester Perry]

Interesting, I hadn't noticed that before.

That works out at a 60:20:20 share in Velocity Sports.

EPL define significant interest as:
Significant Interest” means the holding and/or possession of the legal or beneficial interest in, and/or the ability to exercise the voting rights applicable to, Shares in the Club which confer in aggregate on the holder(s) thereof 10 per cent or more of the total voting rights exercisable in respect of any class of Shares of the Club. All or part of any such interest may be held directly or indirectly or by contract including, but not limited to, by way of membership of any Concert Party, and any rights or powers held by an Associate, Nominee or Connected Person shall be included for the purposes of determining whether an interest or interests amounts to a “Significant Interest”

which is a bit looser in that you don't actually have to own the shares.

The likelihood is that they own the shares in ALK but that isn't where the financing is coming from, they're managing a fund of money (probably their own and other people's) and are answerable to those people.

I think the key is that they are in charge at Velocity Sports, I am working on the principal that this is where other investors have entered - principally Checketts and Parra (hence their place on the board) but also Edwards and Dewey and possibly others. What is even more unclear is what has Malcolm Jenkins invested in, it is starting to look like Velocity Sports Limited. Velocity Sports Limited becomes what the other investors the ALK Three are seeking invest in is my way of thinking, particularly given the tax perks when the club is ultimately flipped.

The thing I read from the club statement is that ALK Capital LLC and Velocity Sports Partners LLC are wholly owned by Pace, Smith and Hunt on a 60%. 20% and 20% basis.

I was hoping to find more from the company documents in Jersey - the JFSC have these documents for Velocity Sports Limited (no 132376)
- Certificate of Incorporation dated 28/09/2020
- Registration dated 28/09/2020
- Special Resolution dated 14/01/2021

is it worth the £2.00 to look at each of these documents or are they heavily redacted?

[Chester Perry]

Chaps.

Are these Freight investor accounts (https://find-and-update.company-informa ... ng-history) suggesting that the total value of the transaction for their 19660 shares in Burnley FC Holdings Limited is £30.022m (Notes the financial statements 17. Debtors, Due within one year on the Company for 2020; Prepayments and accrued Income page 33) with a profit to Freight Investor of £29.497m (Consolidated Statement : Total Operating (loss)/profit; Profit on disposal of Investments page 10)

If so that suggests share value of £1,527.06 in the transaction;, which extrapolated would mean:
- ALK are paying £157,061,177.21 for their 102,852 shares;
- The club was valued at £187,031,257.17 in the takeover transaction,
- the offer of £1699 per share to the small shareholders (valuing the club at £208,090,122) is a hefty value jump after 10 months and given the state of play on the field even with half being club credit. Though less than the 30% flip uplift that @TariqPanja was suggesting they were rumoured to be looking for last February.

I am avoiding the distraction of all debt falling within 1 year which could be as previously suggested and the £45k payment which could equally have come from other investments the company holds - there is certainly indication it has a number of them.

So the offer letter to the small Shareholders dated October 4 2021 had this interesting detail

"Based on the terms of the Acquisition, the Sellers were to receive £XXXX.XX (my edit) per BHL share, and more potentially subject to the Club achieving certain performance conditions in due course."

The thing is that The accounts for Freight Investor understate the total value of their 19660 shares by over 7%, is there something we have missed? could some of the shares have been held in the group rather than the company and stated there((Notes the financial statements 17. Debtors, Due within one year on the Group for 2020)?

[Chester Perry]

Aggi is right - there are a number of errors (some I am very very embarrassed about) and I am working on a much corrected article. I would strongly suggest anyone who has not read it to wait for the corrected version, otherwise you may get some seriously wrong ideas into your heads

thanks for your kind words Papa

[Aclaret]

Dear Chester Perry and others who understand all the finances.
I havn't read this thread because I don't have a clue what it's about ! I don't even understand my own finances !
Without being too technical could you answer this simple question please..." Is our club in safe hands ?" Thanks.

[Vegas Claret]

CP, I think most of us will want your updated take on are we screwed if we drop like initially feared ?

[Chester Perry]

CP, I think most of us will want your updated take on are we screwed if we drop like initially feared ?

If we were to bounce back up straight away there is virtually no concern, if we are down there for an extended period of time who really knows, though I would like Paul Waine to take a look at my response to your posting of the second Daily Mail article last week which is below

I saw this and thought he had been reading MSD's accounts, particularly where they outline about how they manage their financial controls see page 22 Section 2.e.i. of the accounts posted October 5 2021

https://find-and-update.company-informa ... ng-history

If that says what I think it does then MSD will start calling back the loan principal at some point and they have mechanisms in place to ensure it happens both in the loan security documents and the updated articles of Association for Burnley FC Holdings Limited from the date of the takeover.

there are obviously challenges with cash flow hence all shareholders (large and small) are experiencing delays in payments - it is just that the large shareholders actually get asked. The large shareholders have been willing to go along with it though, mainly because it is in their interests to do so, though I am not entirely convinced it is because of that Bloomberg claim from last year that they could take the club back (or even if that is actually a thing - no one as ever provided evidence or even support for the claim - it is part of the takeover folklore repeated everywhere though - and you cannot find the article using Bloomberg's own search facility - I had to do it via Google the other day).

The thing that most annoys me about the ALK Three was epitomised in Paces year 1 review with Radio Lancashire

Interviewer - what plans do you have to take the club forward on and off the pitch

Pace - we have a few ideas

Me - a few ideas!!! you have been in place for a year, been looking to buy a club for 18 months before that and have spent at least 6 months on talks and due diligence at our club - why are you not saying we have roadmap of projects/programmes across the club, a number of which are being developed with implementations here here and here in the Calendar. One example would be the club's website, it is appalling, as we regualrly hear, yet if anything it is getting worse not better, that is not over reliant on a supply chain now is it,

two things occurred to me yesterday - first on the Weghorst arrival video I thought his roar sounded more like the Steam whistle in the the JAMMs 'Grim up north" (https://www.youtube.com/watch?v=20XLWEjN9eI) than a dinosaur and following the close of the window this both the panja quote and the video he is commenting on https://twitter.com/tariqpanja/status/1 ... 7203400705 which just made the first thought even more appropriate

[Vegas Claret]

The thing that most annoys me about the ALK Three was epitomised in Paces year 1 review with Radio Lancashire

Interviewer - what plans do you have to take the club forward on and off the pitch

Pace - we have a few ideas

I have to agree, it was a very noncommittal stereotypical dodge of an answer. Should have been a simple answer as you indicated. Glad to know you aren't finding anything particularly worrying should we drop this season (unless MSD suddenly want money - but as we don't know the exact t&c's it might be a long way down the line ?). Thanks for the reply and the work you do on this, I understand portions of it but some just goes straight over my head so the explanations are helpful

[Oshkoshclaret]

is it worth the £2.00 to look at each of these documents or are they heavily redacted?

Chester I would be more than happy to contribute to the costs of getting to the middle of this labyrinth. You are doing important work here.

[Chester Perry]

Chester I would be more than happy to contribute to the costs of getting to the middle of this labyrinth. You are doing important work here.

It is not the money mate. it is what am I actually going to see - if it is the equivalents of what we see at Companies house then I am good with that, though I have a horrible feeling it is £2 a view rather than permanent access to the doc - there are also terms of use I need to check, no point looking and not being able to report on the content I find

[Paul Waine]

If we were to bounce back up straight away there is virtually no concern, if we are down there for an extended period of time who really knows, though I would like Paul Waine to take a look at my response to your posting of the second Daily Mail article last week which is below.

Chester Perry wrote: ↑Fri Jan 28, 2022 7:14 pm
I saw this and thought he had been reading MSD's accounts, particularly where they outline about how they manage their financial controls see page 22 Section 2.e.i. of the accounts posted October 5 2021

https://find-and-update.company-informa ... ng-history


If that says what I think it does then MSD will start calling back the loan principal at some point and they have mechanisms in place to ensure it happens both in the loan security documents and the updated articles of Association for Burnley FC Holdings Limited from the date of the takeover.

there are obviously challenges with cash flow hence all shareholders (large and small) are experiencing delays in payments - it is just that the large shareholders actually get asked. The large shareholders have been willing to go along with it though, mainly because it is in their interests to do so, though I am not entirely convinced it is because of that Bloomberg claim from last year that they could take the club back (or even if that is actually a thing - no one as ever provided evidence or even support for the claim - it is part of the takeover folklore repeated everywhere though - and you cannot find the article using Bloomberg's own search facility - I had to do it via Google the other day).

two things occurred to me yesterday - first on the Weghorst arrival video I thought his roar sounded more like the Steam whistle in the the JAMMs 'Grim up north" (https://www.youtube.com/watch?v=20XLWEjN9eI) than a dinosaur and following the close of the window this both the panja quote and the video he is commenting on https://twitter.com/tariqpanja/status/1 ... 7203400705 which just made the first thought even more appropriate

Hi CP, all that Note 2, in MSD's accounts (pages 18 thru 26) is doing is describing MSD's "SIGNIFICANT ACCOUNTING POLICIES."

2(d) on pages 19/20 describes Critical Accounting Judgements and Key Sources of Estimation Uncertainty. (d)(ii) at the top of page 20 describes Significant Increase in Credit Risk - and references (e)(i) Financial Instruments.

Loans, of course, for accounting standards purposes are "financial instruments" (other assets/liabilities can also be financial instruments), so you can read in e(i) the details that determine how MSD determine the value of the loans they have provided to football clubs - and the models and accounting judgements etc that MSD make in the value of the loans in MSD's accounts. (IFRS 9 is the International Financial Reporting Standard for Financial Instruments).

A paragraph in Note 11 Subsequent Events (page 33) describes one of the underlying borrowers associated with a £15,000,000 GBP has entered into administration. (This, of course, is Derby - though not named in MSD's accounts). Administration is, of course, a "significant increase in credit risk" - but, MSD have not provided for any "loss given default" on the loan, because in their judgement none is required.

The "credit protections" that MSD have will be recorded in the Term Loan Agreement - which is mentioned in the Debenture between Calder Vale and MSD. It would be standard for the TLA to include a number of "credit protection" rights for MSD. Of course, the TLA is not in the public domain - we can't read what is in it.

Early repayment could be a right MSD has, however, I would expect this to be triggered by default by ALK. Given that relegation from the Premier League to the Championship is a risk for any club in the Premier League, and, based on Burnley being amongst the favourites for relegation in many seasons, I'd expect it to be extremely unlikely that relegation could be itself a trigger for an early repayment clause. If MSD felt such a clause was necessary to protect their loan it would be much more likely that they'd never offer the loan in the first place.

Much more likely is that MSD would expect ALK to reduce BFC outgoings in the event of relegation - and the biggest ones of these are the players' wages, which we understand all include relegation clauses. It may be expressed as a "debt to net cash flow ratio" so that it takes into account both player wages, parachute payments and other championship income. Failure to cut wages - which could require player sales to achieve - would lead to a breach of the "debt to cash flow" ratio and, if not cured over an agreed period that could be the default that gives MSD rights to call in their loan etc etc. But, I've no knowledge of the Term Loan Agreement. These things are merely by personal speculations.

Hope this helps.

UTC

[Chester Perry]

That is more or less what I thought Paul, it is the trigger events we don't know, though the notes describe some stringent available actions if they believe them necessary/triggered. This is why I thought the financial controls were the source of that 2nd Daily Mail article

[Wile E Coyote]

aye,he knows his stuff.

[Paul Waine]

That is more or less what I thought Paul, it is the trigger events we don't know, though the notes describe some stringent available actions if they believe them necessary/triggered. This is why I thought the financial controls were the source of that 2nd Daily Mail article

Hi CP, I feel you might be reading more into the notes in MSD's accounts than is there. They only describe the processes used to determine the accounting values of the loans. They don't describe any controls over the loans. They don't say anything about the terms of the loans and they don't say anything about any credit protection clauses that may or may not exist in any of the loans they have made to any of the football clubs. They don't say anything about any triggers. They don't say anything about any "stringent available actions."

All these notes do is describe MSD's "SIGNIFICANT ACCOUNTING POLICIES." But, they are very much the same accounting policies you could find described in any financial institution's accounts.

[ecc]

Great to see you back, Chester!

[aggi]

That is more or less what I thought Paul, it is the trigger events we don't know, though the notes describe some stringent available actions if they believe them necessary/triggered. This is why I thought the financial controls were the source of that 2nd Daily Mail article

I'm halfway between your and Paul's views.

As Paul says, these are the accounting policies and in particular the model that is being used to assess the risk on the loans. More reading here if you need something to help you sleep https://www.bdo.co.uk/en-gb/insights/bu ... w-expected

However, the way it's phrased suggests they do have some influence over what happens at the club. At what level this is and whether it can only be exercised after the repayment date isn't clear. It may be as basic as a conversation saying "we're a bit concerned, please consider sales" or it may be "if you don't sell then we have the right to call the loan in". I'd suspect nearer the former than the latter but who knows.

Obviously the real trigger is it looking like we won't be able to repay the loan. If we go down but that isn't a concern then I doubt the rest would be considered. They have loans to EFL clubs, it isn't an alien territory for them.

[Chester Perry]

Balanced as ever aggi, that it is a much better description of what I have come to take it as

[ClaretPete001]

Good work Chester. My only caveat is that it probably took you an awful long time to see what anyone with an ounce of common sense could see in 5 minutes on Google. And I know that sounds dismissive - it isn't intended to be so, rather, it endorses the underlying reality of the detail that you provide.

I'm not going to comment at this point because I think the dangers are self-evident from the article. I also think that by the end of February the issue of relegation will likely be settled and there will be a whole new conversation. In truth, neither survival and incurring more debt nor relegation and the loss of income seems appetising but my guess is that we will know one way or another soon enough.

[Chester Perry]

As you say Pete it was pretty clear all along, I have not changed my thoughts since the deal was announced, this was just the first time I was asked to write about them.

[ClaretTony]

Good work Chester. My only caveat is that it probably took you an awful long time to see what anyone with an ounce of common sense could see in 5 minutes on Google. And I know that sounds dismissive - it isn't intended to be so, rather, it endorses the underlying reality of the detail that you provide.

I'm not going to comment at this point because I think the dangers are self-evident from the article. I also think that by the end of February the issue of relegation will likely be settled and there will be a whole new conversation. In truth, neither survival and incurring more debt nor relegation and the loss of income seems appetising but my guess is that we will know one way or another soon enough.

I’d like to think I have an ounce of common sense but I’m certain I couldn’t have come up with this from 5 mins of google.

There is stuff on this thread that goes way over my head. I’m a mathematician, which means I can add up and subtract a bit, but finance and shares is very definitely not my domain at all.

I am following a lot of this the best I can and it is not easing my nervousness regarding the future of our club.

[gandhisflipflop]

We won’t go down, and we will be fine.

[aggi]

CP, I think most of us will want your updated take on are we screwed if we drop like initially feared ?

If we go down and go straight back (maybe in the second season too) up we're probably OK. If we don't we probably won't be.

Realistically though this probably isn't too much different from the previous position, we had a bit more of a safety net but ultimately we still needed to go back up again pretty quickly.

[ClaretPete001]

I’d like to think I have an ounce of common sense but I’m certain I couldn’t have come up with this from 5 mins of google.

There is stuff on this thread that goes way over my head. I’m a mathematician, which means I can add up and subtract a bit, but finance and shares is very definitely not my domain at all.

I am following a lot of this the best I can and it is not easing my nervousness regarding the future of our club.

I was probably being a bit facetious but within 5 minutes you find this https://www.thetradenews.com/citi-glob ... ball-club/

And it pretty much says all you need to know.

[ClaretPete001]

If we go down and go straight back (maybe in the second season too) up we're probably OK. If we don't we probably won't be.

Realistically though this probably isn't too much different from the previous position, we had a bit more of a safety net but ultimately we still needed to go back up again pretty quickly.

I don't think that is true we had tens of millions of quid in the bank until a couple of years ago.

We now have to find £5-6 million quid from turnover that will very quickly reduce from £140 million to £50 million.

Lastly, because of the lack of investment we have a first 11 of whom only Brownhill and Mc Neil will not be 30 or around that age next season.

You cannot say in any way shape or form it is the same as in the past

[ClaretPete001]

Oh and I forget we now have a £60million charge on our assets with an American venture capital company.

Oh yeah and last time we had a team largely comprising of good quality championship players who had achieved promotion a year earlier with some Premiership additions.

I'm not sure how much more different it could be tbh.

[Paul Waine]

I was probably being a bit facetious but within 5 minutes you find this https://www.thetradenews.com/citi-glob ... ball-club/

And it pretty much says all you need to know.

Hi Pete, what do you get from this Trade News article from 2019? I don't see anything that we don't already know. Interesting to see, of course, that Alan Pace spent a number of years based in London. Maybe he learnt a little about English football when he was there, although at that time Burnley were a Championship club.

I wouldn't describe MSD as a venture capital firm. A vc will buy and run businesses.

[ClaretPete001]

CT asked me how I knew within 5 minutes.

And, what you learn in 5 minutes is that Alan Pace was an employee of Citi working as a sales manager prior to that as a client experience manager up until 2019. ALK is a new business. You get a brief sense of Dave Checketts history. You get the sense that there is already a legal case involving Sheffield United etc.

It's not the normal resume of the owner of a Premiership club: Kroenke, Moshiri, Abramovich, Sheik Mansour or John Henry.

I think from that you can infer much of the above.

Not sure living in London qualifies you to run a football club. Or at least, it doesn't appear so judging by those who ring up Talksport

MSD is sometimes referred to as a private equity and venture capital company but happy to accept that it is not a VC company.

Again I'm not that interested in the minutiae - the question I ponder is how does someone, who was until recently a sales manager in an investment bank, manage a small town provincial club with huge debts to compete successfully in competition with billionaires who own big city clubs and are capable of spending 100s of millions.

If you ,CT or CP or anyone else can answer that sensibly then so be it. We can all be re-assured.

[Nonayforever]

We won’t go down, and we will be fine.

At this present time, I think staying up will be far more of a financial burden than being relegated.

Staying up means a huge financial cost in replacing OOC players. Going down will reduce the wage bill by about 50% ? and make the cost of replacing players significantly cheaper whilst still maintaining parachute payments.

[ClaretPete001]

At this present time, I think staying up will be far more of a financial burden than being relegated.

Staying up means a huge financial cost in replacing OOC players. Going down will reduce the wage bill by about 50% ? and make the cost of replacing players significantly cheaper whilst still maintaining parachute payments.

Not to mention the £68 million quid to former Owners.

[Paul Waine]

CT asked me how I knew within 5 minutes.

And, what you learn in 5 minutes is that Alan Pace was an employee of Citi working as a sales manager prior to that as a client experience manager up until 2019. ALK is a new business. You get a brief sense of Dave Checketts history. You get the sense that there is already a legal case involving Sheffield United etc.

It's not the normal resume of the owner of a Premiership club: Kroenke, Moshiri, Abramovich, Sheik Mansour or John Henry.

I think from that you can infer much of the above.

Not sure living in London qualifies you to run a football club. Or at least, it doesn't appear so judging by those who ring up Talksport

MSD is sometimes referred to as a private equity and venture capital company but happy to accept that it is not a VC company.

Again I'm not that interested in the minutiae - the question I ponder is how does someone, who was until recently a sales manager in an investment bank, manage a small town provincial club with huge debts to compete successfully in competition with billionaires who own big city clubs and are capable of spending 100s of millions.

If you ,CT or CP or anyone else can answer that sensibly then so be it. We can all be re-assured.

Hi Pete, please let me know how I do:

Alan Pace: Head of Global.. at Citi - not just a "sales manager." What's the difference? "Global Head" is a bigger job. More importantly it gives him the chance to meet a lot of Citi's customers, including those with high net worth;

Yes, ALK Capital is a new business, set up by Alan Pace to pursue ownership of a Premier League football club - or one with prospects of getting into the Premier League;

I imagine, as an employee of Citi he isn't "fabulously wealthy." However, the idea of an an investment company is to bring several people together, pooling a proportion of their wealth to pursue the Premier League aims. AP will have seen this done (pooling wealth) many times while he's at Citi;

Agree, agree, agree - I can't say it often enough - Alan Pace is no where near a Kroenke, Moshiri, Abramovich, Sheik Mansour or John Henry (and we could add other billionaires to that list). BFC's previous owners were Mike Garlick, John B, Barry Kilby and others. I'd expect their collective wealth may add to somewhere around £100 million, give or take. They didn't want to take their ownership of BFC any further. They'd realised that the Premier League demanded more than they could provide. So, time for a new owner and an opportunity for ALK to be that new owner.

I guess we can imagine that MG, when seeking buyers for the club, sounded out all the "billionaires" but no one was interested? Maybe that's a reasonable assumption. We know only that ALK and an otherwise unknown Egyptian were the only interested parties in late 2020. We know ALK were the successful bidders. We know ALK achieved Premier League approval as new owners. We know that the deal went ahead.

We know that the deal was reported as £102m on completion and a further £68m in 3 instalments at later dates. We know it was reported that ALK had borrowed £60m from MSD. We know it was reported that cash held by BFC was also borrowed by ALK from BFC and this cash made up part of the reported first instalment.

However, these are all figures reported by the media - and none of these figures have been confirmed.

CP has done some clever research and from John B's company, Freight Investors, annual accounts, which, before the takeover owned 19,000+ shares, that these shares were sold for over £29m. Using these figures, CP has determined that the actual price paid by ALK for their 84% share of BFC is £157m. (Reference CP's post above for more precise figures).

So, we now have a more accurate figure than the ones reported by the media, but we don't yet know if any of the other media figures are accurate or otherwise. Whatever the other figures, we do now know that ALK have acquired BFC for £157 million - which is £13m lower than previously reported figures - and means that ALK's financial commitment to the purchase is £13m less than previously understood - and means that there is £13m less funding to be found than we all previously thought.

BFC's annual report and accounts for the year ending 31st July 2021 are expected to be published in April (9 months after the y/end). I expect we will learn some more details of the takeover at that time. It may be that we learn more about the loan from MSD to ALK when BFC's accounts are published.

So, "how does someone.....manage a small town provincial club" and compete with billionaires who own the large clubs? I guess the answer is being very "clever" with all the resources at their disposal. Thankfully, football is still played between 2 teams of 11 players - and, however, many subs the competition's rules permit. Thankfully, there's a trade off between individual players and 11 footballers in a team. Thankfully, money spent doesn't on its own buy success... But, the "small town provincial club" still needs some money and what it can't get from the owners and investors in the team must be borrowed. Borrowed money can make up for some of the gap between billionaire owners and less wealthy owners. But, borrowed money also comes with it's own obligations. So, the "small town provincial club" must be clever at managing those obligations. Maybe someone with several years working for an investment bank will be clever managing those obligations for the debt taken on. Given that investment banking is the domain of raising capital, someone with that experience may have a better chance of success in that area than anyone else who isn't a billionaire.

That's the ride I believe we are on. We've got two games in play, the first is football, the second is managing the club's finances.

It was ever thus from the days that the maximum wage was abolished in the early 60s. BFC has always been a selling club, surviving by producing/developing players and selling them on to the bigger clubs. The Premier League in the 2020s is just a bigger game and we've now got new owners who see the possibility of competing in that game.

UTC