NorthernWisdom
Well-Known Member
I find it astonishing that when it comes to a new ground etc. Fisher is (quite rightly!) disbelieved, but when he mentions about the crystallising of losses, this is automatically accepted.As for crystallising the losses - which losses?
The original investment, £28m, made by the 5 private equity funds would have to be valued each year for the annual investment report. So its down grading has to have been known for years, Its just a question of when the loss is physically taken. What we don't know is if the £28m is all or a small part of the whole fund (- in any case I would argue the £28m wasn't all in cash, nearer to £18m in my opinion actually invested) so the loss could have been cushioned by profits elsewhere. The £28m is stuck in SBS&L not Otium which could be a problem for the investors if CCFC sold but is it new losses and unknown? The liability/loss to investors is already gone in reality, their only hope of a return is the legal actions by SBS&L because anything CCFC is charged to ARVO.
There is a possibility to consider that the original investors were repaid a pittance in the £ some time ago and that the actual purchase price is very little for the newer current investors in SBS&L (ie most of this loss already crystallised years ago so is not currently a big problem for SISU now). It could have been as simple as moving investors to more profitable funds. Due to the lack of transparency only SISU know the loss to come from any sale of CCFC that will hit the shareholders in SBS&L. It could be nothing like the £28m that we expect
The ARVO investment in Otium would also be assessed annually, but is secured on any assets in CCFC and on paper at least earning an income (interest accrued but not paid out). It would therefore have a value because of the assets it is secured on. I suspect settling ARVO is the key to any deal, their liability stood at £8m capital plus £4m interest 31-05-2016 accounts. However the group financial statements disclose that the amount put in by ARVO is around £16m in total over the years since 2012. A settlement well above any offer so far is required by ARVO I would think.
Ryton can be used to negotiate in any settlement but if there is already a presale agreement or it can be moved to another company then its value in a 3rd party bid is not a lot as ARVO already control it. Seppala could (but hasn't said anything) simply say we will sell you all the football assets but Ryton not for sale - that would leave the cash required for a sale still the same, more than the 2.2m plus uncertain add ons
It may be that the particular investors involved see these figures as pocket money - we don't know. They took a chance and this didn't turn out well but other "bets" have. In which case crystallising losses is not a problem. That leaves sheer bloody mindedness and stubbornness as the reasons for no sale - far harder to deal with if no financial hurt occurring
If CCFC through managing the cash flows does not require further funding from SISU, requires only a non binding letter annually to auditors that the loans wont be withdrawn and the owners will continue to try to source funding then CCFC has been parked to survive on its own resources and it is no longer hurting the owners. There is no need as yet to sell, and certainly no need to sell at a low value. It is really only promotion to the Championship that would cause the owners problems in terms of having to finance larger expenditure.
The only pressure point looming would seem to be having a home ground in Coventry. BPA if it ever were to be brought to fruition wont happen before the end of the Ricoh term so it is either a rolling deal with Wasps or pointing a finger at Wasps/CCC saying CCFC were forced out (grounds for legal action?) so EFL will back any alternative. Of course if MR makes the team successful then there is an element of comfort there for the owners they can utilise in any negotiations and probably a harder job for the Hoffman consortium or others to buy in and a price increase in Seppala's eyes
I would suggest nothing is going to happen any time soon to change the owners
I see no rational reason why the original SISU investment wouldn't have been written off in terms of an investment by now.
