So you want to buy CCFC......

Discussion in 'Coventry City General Chat' started by oldskyblue58, Apr 21, 2017 at 9:34 AM.

  1. oldskyblue58

    oldskyblue58 CCFC Finance Director

    Joined:
    Apr 16, 2010
    Messages:
    7,706
    Likes Received:
    10,909
    Lot of differing information floating about but here are some of the nuts and bolts of it

    1) Decide what it is that you are buying. This falls in to a couple of sections

    - Do you buy the SBS&L Group by buying the ordinary shares of that company. It is not necessary to do so, surely a purchasers worst option but this would be SISU's best option. Buy those shares and you take on all the assets of the group together with all the liabilities. Because SBS&L owns otium then this option means you take on the SISU loans £28m, The ARVO loans 13m inc interest, the preference shares. It is SISU's best option because £28m of loans has become disassociated with the football club due to the restructuring over the years. The only thing it negates for the deal is the preference shares held by SBS&L in Otium (not the ARVO ones) are taken out of play. What it means is that the original SISU investor loans £28m remain payable by the new owners unless the deal discounts them. I doubt this is the option being considered, which immediately puts SISU on the defensive because of the £28m potential loss. Value of the Group is very little, the deal is in how the loans are settled

    - Do you buy Otium by acquiring the ordinary shares of that company - ie removing that company alone from the SBS&L group? Well Otium is effectively CCFC, it holds the golden share and therefore the right to trade/play in the EFL. The only loans that Otium have are the ARVO ones £13m but there are £65m of preference shares (pseudo loans created from historic debt and how group accounts are put together). The preference shares are a barrier against new owners and were created from historical losses not money actually put in, it is also a way of trying to re-associate the £28m of debt sitting in SBS&L that became disconnected in the administration process. Sale of Otium alone would be SISU's second best option, but a purchaser would seek to negotiate down the loan settlement and to acquire the preference shares for nothing (remember these cover the SISU £28m so not so straight forward). In any case the value of acquiring Otium is very little, the deal is in the settlement of the ARVO loans primarily.

    Acquiring SBS&L Group or simply Otium probably means acquiring debt that burdens the club going forward even before the payment of performance payments. Performance payments can create more debt if the club is not profitable with a cash flow surplus at least equivalent to the performance payment

    Do you acquire the football assets. This would be a purchasers preferred option I would have thought, certainly the one I would advise. It is however SISU's least preferred option for the reasons above. You would do this by forming a new company say CCFC 2017 Ltd, the new proposed owners put their money in to it, no doubt as loans (really think the FA & FL should insist on it being ordinary share capital in these situations). The new company then purchases the football assets from Otium and takes on the golden share (likely to create a value to goodwill that will need to be paid for). In addition to taking on assets like Ryton, playing squad including past & present contract income rights, the trademark etc the purchaser takes on the football debts ie player contract rights, ground & academy contracts, monies due to HMRC etc. What they do not take on are the loans or shares that are outstanding in Otium. What you pay for is likely to be more than in the previous two options.

    2) All this before deciding on what the value to bid is.

    If the latest bid of £500k is for Otium then it could be seen as fair value depending on how much of the loans or preference shares are taken on. If they are bidding for Otium (let alone SBS&L Group) then to be honest I think that is repeating the mistakes of the past and burdening the future of the club. But that's just my opinion without having seen the details.

    If they are bidding for the football assets less the football liabilities then I would think that £500k is 2m or 3m short of the value. Players are viewed as stock and a value placed on them. If club has turned down bids for certain players then that gives an indication of value, plus the FA rules provide a method to value younger player compensation. Against those values you would deduct the football liabilities.

    Be it £500k or £3.5m then to be honest I think that is still below the SISU need or valuation. Could the sale of Ryton come in to play, only if it hasn't been sold, if disposed of funds probably already extracted by ARVO, or it has planning consent. Otherwise its value is at current use

    In addition to the purchase the new owners are going to need to provide working capital. A key area and a dangerous one because it is creating more debt burden. The temptation is so often in football clubs to match it to fan expectation not sensible business practice

    There is no quick or easy solution to this. Any bid must (a) tempt SISU, (b) not burden the club future (c) not be do a deal at any cost (d) not be a repeat of past mistakes (e) only be in the best interests of the club......... going to be very hard to balance all that, especially if SISU playing hard ball and doesn't need to sell

    Anyway that's just my thoughts
     
    Last edited: Apr 21, 2017 at 10:11 AM
  2. Voice_of_Reason

    Voice_of_Reason Well-Known Member

    Joined:
    Jul 20, 2010
    Messages:
    1,039
    Likes Received:
    169
    Thank you. Yes, it is a complicated scenario indeed, but one in which I feel negotiations might possibly be ongoing for some time. Depends on how determined the likely buyers are to purchase a b or c !
     
  3. Terry Gibson's perm

    Terry Gibson's perm Well-Known Member

    Joined:
    Mar 17, 2014
    Messages:
    7,164
    Likes Received:
    1,761
    Will it help if the fans don't buy season tickets? The potential owners know the potential and don't need to see proof.

    My view (worth little) is that we need to get behind this group and try to rid ourselves of these awful faceless people.
     
    Iancro likes this.
  4. oldskyblue58

    oldskyblue58 CCFC Finance Director

    Joined:
    Apr 16, 2010
    Messages:
    7,706
    Likes Received:
    10,909
    who is this group, what substance do they have, how are they doing the deal, do they have means not only to buy now but to fund it later, whats the plan etc. Need more information before I get behind anyone blindly no matter how much I want SISU gone. Club is too important to me to let the same mistakes just keep getting repeated whoever the owners are
     
  5. stupot07

    stupot07 Well-Known Member

    Joined:
    Mar 20, 2011
    Messages:
    22,234
    Likes Received:
    6,697
    Sisu lover ;)

    Sent from my SM-G930F using Tapatalk
     
  6. Nick

    Nick Administrator

    Joined:
    Feb 25, 2008
    Messages:
    60,670
    Likes Received:
    17,217
    Exactly.

    One thing I don't get is why it's OK for them to be hidden but not SISU. Personally I'd rather they were the opposite to SISU.

    Hoffman would get much more backing by letting his offer and plans do the talking surely instead of expecting people to just back it blindly like people are trying to push? The "credibility" would be gained with the content of the offer and his plans for the club going forward.
     
  7. sky blue john

    sky blue john Well-Known Member

    Joined:
    Mar 17, 2011
    Messages:
    3,950
    Likes Received:
    187
    Osb please correct me if i'm wrong.
    If the existing debt is taken on by new owners and hypothetically in a few years everything goes pear shaped. We could find ourselves in administration with Sisu back at the helm as they would be the biggest creditor.
     
  8. robbiekeane

    robbiekeane Well-Known Member

    Joined:
    May 13, 2016
    Messages:
    1,091
    Likes Received:
    746
    ZOMG YOU BIG SISU LOVER HOW CAN YOU DEFEND THEM *FROTH FROTH*
     
  9. ccfc92

    ccfc92 Well-Known Member

    Joined:
    Jul 7, 2012
    Messages:
    10,136
    Likes Received:
    1,039
    Maybe they're hidden for the time being until negotiations start/are completed?
     
  10. RegTheDonk

    RegTheDonk Well-Known Member

    Joined:
    Aug 17, 2011
    Messages:
    1,742
    Likes Received:
    239
    Its high stakes poker, literally. Hoffs put in a bet on the flop. Fisher's raised. We're waiting for Hoff .... or has he already folded.
     
  11. Colin Steins Smile

    Colin Steins Smile Active Member

    Joined:
    Nov 5, 2015
    Messages:
    275
    Likes Received:
    219
    Excellent analysis OSB!
    Whilst I would like to see new ownership with a progressive business plan and strategy put in place. I cannot see SISU selling, as the point they relinquish control will be the day the loses will be realised on their balance sheet. We all appreciate that the preference shares are essentially worthless........but do SISU's investors understand this?
    Simply put - SISU look hamstrung. They have no strategy to improve CCFC's financial position, but won't want to show such a large loss.
    However, I would be happy to be corrected on my post by more knowledgable members.
     
  12. oldskyblue58

    oldskyblue58 CCFC Finance Director

    Joined:
    Apr 16, 2010
    Messages:
    7,706
    Likes Received:
    10,909
    I think you are correct. That said I do not think that is a deal which would be done
     
  13. Nick

    Nick Administrator

    Joined:
    Feb 25, 2008
    Messages:
    60,670
    Likes Received:
    17,217
    Would it be more realistic they would want a % of the "debt" paid?
     
  14. oldskyblue58

    oldskyblue58 CCFC Finance Director

    Joined:
    Apr 16, 2010
    Messages:
    7,706
    Likes Received:
    10,909
    as for going over to the dark side ;) :D ........... I am not against anyone making a bid to rid us of SISU, my support comes with them convincing me they are the right people with the right plan and the means to see it through
     
    Paxman II, Hobo, stupot07 and 5 others like this.
  15. skybluetony176

    skybluetony176 Well-Known Member

    Joined:
    Aug 2, 2013
    Messages:
    14,633
    Likes Received:
    7,494
    So is the gist of what the clubs worth at best is that the SISU loans and preference shares are worthless in real terms meaning that they will have to be written off/down leaving you the value of the squad, Ryton, good will (haha) and any other tangible assets along with an agreed value on the arvo debt?

    Also OSB you probably understand the figures better than everyone else what was the money paid in real terms originally by SISU? Do you know what debt they actually settled in cash so to speak, what was written off / down? What did they actually pay for the squad, Ryton, goodwill and any other tangible assets?
     
    Voice_of_Reason likes this.
  16. oldskyblue58

    oldskyblue58 CCFC Finance Director

    Joined:
    Apr 16, 2010
    Messages:
    7,706
    Likes Received:
    10,909
    they might write some of the debt or even all of it off depends on the need to sell or not. Due to the level of debt even a 50% write off would still leave them as the biggest creditor. Which is why my preferred option would be buy the football assets and take on the football debts
     
  17. Nick

    Nick Administrator

    Joined:
    Feb 25, 2008
    Messages:
    60,670
    Likes Received:
    17,217
    Could they not offer say 20p for every pound of debt for it to be written off so SISU aren't creditors?
     
  18. oldskyblue58

    oldskyblue58 CCFC Finance Director

    Joined:
    Apr 16, 2010
    Messages:
    7,706
    Likes Received:
    10,909
    They have put in around 32m cash (SISU 18m ARVO 13M) as far as I can see but some of that might be selling services in and calling it a loan. The original loan was really taking responsibility for the net creditors, introducing that in to SBS&L and letting the group pay for it - end of the day only trading was CCFC Ltd & CCFC H Ltd, - all created a loan by clever accounting. Of that "purchse price" loan then I think £6m related to settling some on performance (ie promotion to Premiership) 271k related to costs of acquisition. Actual cash put in day 1 = 832563 less 271501 = 561062. These loans and "investment" have a big chunk of clever accounting about them not actual cash. The actual cash sums should be evident from the cash flow statements each year. It certainly is not 70m or even 101m

    upload_2017-4-21_11-20-5.png
     
    skybluetony176 likes this.
  19. oldskyblue58

    oldskyblue58 CCFC Finance Director

    Joined:
    Apr 16, 2010
    Messages:
    7,706
    Likes Received:
    10,909
    yes they could but for the ARVO loan itself that's a settlement of 2.6m
     
  20. Suffolk sky blues

    Suffolk sky blues Active Member

    Joined:
    Oct 24, 2016
    Messages:
    186
    Likes Received:
    77
    I feel sisu statement on the offer shows a shift from them,before not for sale now what a joke not enough others my make a move now. Imagine trying to do a deal with sisu.
     
  21. Nick

    Nick Administrator

    Joined:
    Feb 25, 2008
    Messages:
    60,670
    Likes Received:
    17,217
    That was just a random number, but they could also use that approach couldn't they? (obviously, with better numbers).
     
  22. oldskyblue58

    oldskyblue58 CCFC Finance Director

    Joined:
    Apr 16, 2010
    Messages:
    7,706
    Likes Received:
    10,909
    Also all of a sudden it is being quoted that they only paid £1 for the company ...... it is not the consideration day 1 shown in the 2008 accounts?
     
    NorthernWisdom likes this.
  23. oldskyblue58

    oldskyblue58 CCFC Finance Director

    Joined:
    Apr 16, 2010
    Messages:
    7,706
    Likes Received:
    10,909
    yes they could. 500k equates to less than 4% for the ARVO debt. I would think that ARVO might prefer a sale of assets to a new company considering ARVO has a charge over all the assets and therefore get paid the proceeds before they are applied to other creditors
     
  24. Nick

    Nick Administrator

    Joined:
    Feb 25, 2008
    Messages:
    60,670
    Likes Received:
    17,217
    If SISU suddenly said "bollocks to this" and decided to wind everything up, what figure do you think they could get?
     
  25. Godiva

    Godiva Well-Known Member

    Joined:
    Mar 23, 2011
    Messages:
    4,268
    Likes Received:
    85
    Well, that leaves out any deal involving Hoffman and Elliott.
    Seriously, they had the best chance to move the club in a positiv direction when they got to spend the fresh new money in the first three years of SISU's reign. They left the club a financial train wreck. What makes anyone believe they will do a better job now - with less money, less revenue?
     
    The Reverend Skyblue likes this.
  26. olderskyblue

    olderskyblue Well-Known Member

    Joined:
    Mar 22, 2011
    Messages:
    1,911
    Likes Received:
    931
    The only issue I have with this is that SISU investors have been "hidden" since they acquired CCFC, so the question should be reversed. Why does SISU expect them to be transparent when they are themselves clearly not.

    Otherwise I agree with the principle, but reservations because of what happened the last time someone wanted to be "hidden". Ken D announced who it was and they walked. As much as I would like to know who they are, and their plans, sometimes you have to accept that people want to remain anonymous until a deal is done.

    That means we won't have the knowledge to give our full backing to it, but, they will also know that the majority of fans won't care.
     
    Captain Dart likes this.
  27. oldskyblue58

    oldskyblue58 CCFC Finance Director

    Joined:
    Apr 16, 2010
    Messages:
    7,706
    Likes Received:
    10,909
    Liquidation you mean?

    Well under league rules I believe the player contracts and rights to income are cancelled by such an event

    Leaving Ryton and equipment to sell in a forced sale ......... well south of £1m I would think, less liquidators costs

    not really an option, other than in spite
     
  28. sky blue john

    sky blue john Well-Known Member

    Joined:
    Mar 17, 2011
    Messages:
    3,950
    Likes Received:
    187
    Carefull Osb you will get yourself in trouble on here saying liquidation is not really an option.
    Plenty on here have used the liquidation card as part of their arguments, along with Sisu are the only show in town and nobody else would want to purchase ccfc.
     
  29. Nick

    Nick Administrator

    Joined:
    Feb 25, 2008
    Messages:
    60,670
    Likes Received:
    17,217
    I don't argue that, my thought is that they are asking that to try and call Hoffman's bluff. The same as the proof of funds stuff to see if it is a serious bid or not.

    Going forward, do we want people to be hidden again and should that be ok "because SISU were too"?
     
  30. sky blue john

    sky blue john Well-Known Member

    Joined:
    Mar 17, 2011
    Messages:
    3,950
    Likes Received:
    187
    Your right we don't want everything hidden going forward. But it is probably necessary at the moment to get a deal done as I can't see Sisu playing it any other way.
     
    Hobo likes this.
  31. Covstu

    Covstu Well-Known Member

    Joined:
    Aug 17, 2008
    Messages:
    8,731
    Likes Received:
    770
    This is where I am concerned, the desperation to get rid of SISU then presents an equally inept owner not matter how they represent themselves. Any bid needs to be sustainable for the club long term and ensure we can look forwards rather than be in the same position in 2-4 years time.
     
    stupot07 and Nick like this.
  32. NorthernWisdom

    NorthernWisdom Well-Known Member

    Joined:
    Apr 23, 2013
    Messages:
    13,627
    Likes Received:
    8,852
    I did wonder about that. The articles from the same paper at the time reported a rather different figure - different by a few £million.

    I appreciate a newspaper isn't there to break down the financial terms, but it seems to be rather loaded as presented...
     
  33. Nick

    Nick Administrator

    Joined:
    Feb 25, 2008
    Messages:
    60,670
    Likes Received:
    17,217
    Coventry City takeover completed as Sisu get shares

    This one?

    The £1 thing was clear to try and counter the actual amount coming out.
     
  34. Nick

    Nick Administrator

    Joined:
    Feb 25, 2008
    Messages:
    60,670
    Likes Received:
    17,217
    Apart from I've said the same thing on the other thread and multiple times?

    It's not my fault if people have selective reading.
     
  35. Sky Blue Kid

    Sky Blue Kid Well-Known Member

    Joined:
    May 3, 2012
    Messages:
    7,847
    Likes Received:
    2,269
    Not selective reading, but misreading, hence my deleting the post!
     

Share This Page