Back to being the biggest club in Coventry? (43 Viewers)

[chiefdave]

My memory was that money had to be paid out but also historical debt had to be written off as well.

Written off or converted to shares? They are two very different things.

If the debt has been written off then it no longer exists. If it has been converted to shares then it will be down to what price SISU will sell the shares at. So if they've converted £60m of debt into shares but will only sell those shares for £60m then how much better off are we?

 

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[chiefdave]

So there's no advantage to accumulate interest to the debt pile in that case. So why are they?

Yes there is because the bigger the pile the bigger return.

Lets say you lend me £1K and I can't repay it. What is the best option for you:

1) write off the £1K, you receive nothing now and nothing in the future
2) keep the debt but don't demand immediate payment, you don't get the money now but you might in the future
3) keep the debt, don't demand immediate payment but add interest, you don't get the money now but you might in the future get more back than you put in

In scenario 2 or 3 if I go bankrupt and you get a p in the £ offer of say 50p then under 2 you would get £500, under 3 if you'd added £1K interest to the initial £1K loaned you would get your original £1K back.

Its in SISU's interest to keep the debt on the books even if they think there is no chance it will ever get paid.

 

[Nick]

Not yet.

There we go.

Somebody make italia a coffee to smell then..

The 2 facts he stated are both wrong.

Also no proof they expected it for £0.

Sounds good though.

 

[Sick Boy]

I could be wrong

Why doubt the habit of a lifetime?

 

[skybluetony176]

Yes there is because the bigger the pile the bigger return.

Lets say you lend me £1K and I can't repay it. What is the best option for you:

1) write off the £1K, you receive nothing now and nothing in the future
2) keep the debt but don't demand immediate payment, you don't get the money now but you might in the future
3) keep the debt, don't demand immediate payment but add interest, you don't get the money now but you might in the future get more back than you put in

In scenario 2 or 3 if I go bankrupt and you get a p in the £ offer of say 50p then under 2 you would get £500, under 3 if you'd added £1K interest to the initial £1K loaned you would get your original £1K back.

Its in SISU's interest to keep the debt on the books even if they think there is no chance it will ever get paid.

Rubbish. If they don't accumulate the interest they just agree more pennies in the pound for the lower amount of debt that hasn't had interest accumulated to it so they get the same net result they wanted all along. It's exactly the same net result as increasing the debt pile by accumulating interest and taking less pennies to the pound.

There is clearly another reason for the accumulation of interest. I don't pretend to know the reason why, I can only assume that it's because at some point we're going to start paying it but there may well be another reason but it definitely ain't to push up the final selling price.

 

[skybluetony176]

Or written off. Most likely if and when the club is sold a pence in the pound offer will be made on the debt, as when SISU took over. Having the debt still on the books is to their advantage when the other option is just to write it off any not receive a penny.

http://www.coventrytelegraph.net/news/coventry-news/coventry-city-owners-sisu-wipe-8777372

Here you go Dave. Debt was converted into shares as part of the agreement to receive the Golden share.

The amount is larger than I remember (so Stu may have been right) but I remembered correctly that it was part of the agreement that meant otium could receive the golden share.

 

[chiefdave]

There is clearly another reason for the accumulation of interest. I don't pretend to know the reason why, I can only assume that it's because at some point we're going to start paying it but there may well be another reason but it definitely ain't to push up the final selling price.

Off the top of my head:

In the event of administration a great debt gives you more control
In the unlikely event that we have a lot of money at some point the whole amount can be taken out
It's not being loaned out of charity, those making the investment are expecting a return

The implication seems to be getting made that adding interest somehow shows SISU are up to no good. Not sure you can make that leap, how many clubs are being given multi million interest free loans?

 

[skybluetony176]

Off the top of my head:

In the event of administration a great debt gives you more control
In the unlikely event that we have a lot of money at some point the whole amount can be taken out
It's not being loaned out of charity, those making the investment are expecting a return

The implication seems to be getting made that adding interest somehow shows SISU are up to no good. Not sure you can make that leap, how many clubs are being given multi million interest free loans?

I thought it was whoever put you in administration appoints the administrator and therefore has control? IIRC ACL's debt was bigger than the debt SISU put us into administration for that they owed themselves so I don't think that theory has any credence either. Otherwise the administration process would have been rerun when ACL wanted it to be when it came to light that he couldn't find either the golden share or players contracts that had been signed to Ltd.


I'm not suggesting that they're up ro no good. Just pointing out that if it isn't "real debt" why is interest being added to it?

 

[chiefdave]

I thought it was whoever put you in administration appoints the administrator and therefore has control?

Thought 75% of creditors had to agree to a CVA? Therefore if you have more than 25% of the debt the more power you have when it comes to negotiating a CVA.

 

[skybluetony176]

Thought 75% of creditors had to agree to a CVA? Therefore if you have more than 25% of the debt the more power you have when it comes to negotiating a CVA.

So how much more interest do SISU need to add to the debt pile before it becomes 75% of all debt? Are we actually in debt to anyone else other than SISU/ARVO?

Clearly the reason that they're accumulating interest onto the debt pile isn't for that reason. They had that angle covered long ago. If that is indeed an angle for the interest in the first place.

 

[chiefdave]

What point are you trying to make here Tony? Most businesses don't loan money to others without charging interest. If nothing is being repaid then the interest is adding to the debt. They won't just write it off unless there is a situation that forces them to do so.

 

[skybluetony176]

What point are you trying to make here Tony? Most businesses don't loan money to others without charging interest. If nothing is being repaid then the interest is adding to the debt. They won't just write it off unless there is a situation that forces them to do so.

If they're not going to write it of it clearly needs paying in some way. You've come up with a number of reasons why they're adding interest on and none of which add up.

Italia thinks they're taking money out of the club for which there is no evidence of but the interest may well give an indication that at some point in the future they might unless you can think of a better reason why they're adding even more debt by way of interest to it, which clearly you can't.

The next set of accounts should be interesting given that we're now apparently paying our own way and may actually be in a position to pay some of this not "real debt".

 

[italiahorse]

Given up on the management fee argument then?

See post #1213 as I see to have confused you with my multi tasking !!

 

[chiefdave]

See post #1213 as I see to have confused you with my multi tasking !!

That post is about loan interest not management fees.

Serious question. If we have cleared our debts after administration, what is the £2.1M loan interest payable in the 2014 Otium accounts?

http://www.ccfc.co.uk/documents/otium-signed-accounts144-2316099.pdf

 

[Nick]

It came about because of two incorrect statements and back tracking

 

[italiahorse]

That post is about loan interest not management fees.

£2M loan interest on no debt?
It's needs explaining IMHO as it is more than likely a Management charge by Sisu.
It's along the lines of the management fees from pre administration.

 

[chiefdave]

Seems like there's two different things being discusses.

Management fees - to date there is no evidence that SISU have taken out management fees. Italia appears to be hopeful that there will be some evidence in a future set of accounts.

Loan interest - loans made to CCFC have been accruing interest. This seems normal to me. Not many places you can get a loan from without interest. The question is will it ever be paid back. Impossible to say. The club is, we are led to believe, just about breaking even so that would imply there isn't the money currently to make any payments. So it will either be when the club is sold, and I doubt anyone will buy the club and pay the full debt, or we somehow come into a lot of money.

Don't think either issue is particularly pressing at the moment.

 

[chiefdave]

£2M loan interest on no debt?

The accounts you've linked to show a £9m loan and the club running at a loss.

 

[skybluetony176]

Seems like there's two different things being discusses.

Management fees - to date there is no evidence that SISU have taken out management fees. Italia appears to be hopeful that there will be some evidence in a future set of accounts.

Loan interest - loans made to CCFC have been accruing interest. This seems normal to me. Not many places you can get a loan from without interest. The question is will it ever be paid back. Impossible to say. The club is, we are led to believe, just about breaking even so that would imply there isn't the money currently to make any payments. So it will either be when the club is sold, and I doubt anyone will buy the club and pay the full debt, or we somehow come into a lot of money.

Don't think either issue is particularly pressing at the moment.

Interest free loans from owners are not that uncommon in football. I remember reading that Mohammed Alfied (how ever you spell it) never took a penny in interest from Fulham or indeed a payment. He only got his money back when he sold them.

 

[Sick Boy]

What rate of interest was 'uncle ray' charging us? Must have been nothing as he loved the club.

 

[Grendel]

What rate of interest was 'uncle ray' charging us? Must have been nothing as he loved the club.

About 16% wasn't it?

 

[Grendel]

Interest free loans from owners are not that uncommon in football. I remember reading that Mohammed Alfied (how ever you spell it) never took a penny in interest from Fulham or indeed a payment. He only got his money back when he sold them.

So when you say not uncommon there is one uncommon answer?

What do you think of Ransons companies loan to the club which was at a significantly higher rate than sisu?

http://www.skybluestalk.co.uk/threads/31925-2-further-bids-are-strong-and-from-experienced-football-people/page5?highlight=Prozone

 

[italiahorse]

The accounts you've linked to show a £9m loan and the club running at a loss.

£2M interest on a £9M loan.
Do you think we should ask questions ?

 

[stupot07]

£2M interest on a £9M loan.
Do you think we should ask questions ?

I have only had a quick look but I think I must be seeing something other to the CT

For starters Otium is not the parent company at all it is still the subsidiary of SBS&L. Otium is the trading company not SBS&L

Next thing - if you are looking at the debt to ARVO and SISU then you have to look at the group debt of SBS&L not Otium. The Debt to SISU investors is still 28.5m and there is 656K in accrued interest on top of that in relation to a number of years.

On top of that ARVO are owed 8.2m plus accrued interest of 1.39m

The actual external share capital of the group remains at £13698

It looks on a very brief glance that the old loans included in the CCFCH accounts dating back to pre 2008 have been converted to shares in Otium. These loans should in my opinion have been written off in 2008.

Net debt of the Group remains at £41m

Now you could look at Otium as a seperate company. Otium bought the assets of CCFc Ltd and owned CCFC H Ltd. Prior to CCFC H being wound up then its assets and liabilities were shifted to Otium. That included the old loan liability which would appear to have been converted to shares in Otium. those shares being Class B shares now owned by SBS&L B shares have no voting rights. What the conversion does is to move liability to equity and to permit the owners to portray a write off of loans that had no value anyway.

Its playing with figures. Think about it Otium only started to trade in 2013 how would it have £61m in debt to convert in to shares. Keep in mind be it SBS&L or London Wasps it is the external liabilities that count. SBS&L Group has a balance sheet of MINUS 39m

Will take a more detailed look and come back with some analysis, but this really isnt writing off the debts

Also the CT article I read appears to be inaccurate in a number of places

Part 2

-there have been 64m shares issued so far in Otium but only 1000 are voting and they are the ones that denote ownership ie 90.1% to SBS&L 9.9% to ARVO (901:99)

-According to the notes the budgets prepared include the assumption/intention of player sales
- there are land leases total paid 296k in year - SIxfields and Higgs Centre plus other small hires
- there is 2.098m interest payable for the year - now it might all not have been paid out yet but it is contractually due - note in account says that 1.39m remains accrued at the year end so something must have been paid out
Wages were 4.6m on 102 players 28 admin staff and 287 part time stewards. These figures are for total number employed in year it doesnt mean they were all still employed at year end
- Directors were paid £120k - who to it doesnt say but you might assume most to SW ?
- There was 158k paid out on new players - not sure who on? Barton?
- the player profit on sales original cost was 162k and profit was 373k working it back proceeds were 450K
- Goodwill was on the "acquisition" of CCFC Ltd and CCFCH ltd assets and chosen liabilities - no surprise this paper figure was written off as there was no real value to it. But it does inflate the losses
- Ryton is included on the otium accounts at a book value of 352K
- In the year 109k of equipment was purchased
- Total loans to Otium from ARVO/SBS&L total 8.2m with 1.39m still otstanding = 9.6m up from 5.2m in 2013
- £2m of the ARVO loans are convertible loan notes to become shares in certain circumstances
- all assets are charged to ARVO
- ARVO in year has put in 3.29m loans or put in/had converted in to shares 3.3m
- Ultimate parent company is SBS&L but wasnt the ultimate owner disclosed as Sconset previously?
- there is a potential future liability to pay out on players 50k - it might not happen
- there is a potential income re player sales in the future of 420k - it might not happen
- there were land lease commitments in 2015 of 360k and 2016 onwards of £160k - that will be a mix of sixfields, ricoh and Alan Higgs Centre
- there have been transfers since the balance sheet date that gave the club 2.1m net proceeds - I assume this is Wilson but what about Christy?

Lot of tidying up going on and some making it look better

What they have not done is write off any of the "investment" they have actually put in to the group. But the way a group structure works and some clever but entirely legal shifting of amounts does make it look that way if you take otium in isolation - which of course you should not

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[Grendel]

£2M interest on a £9M loan.
Do you think we should ask questions ?

It's accrued interest - what questions need to be asked?

 

[Jack Griffin]

So when you say not uncommon there is one uncommon answer?

What do you think of Ransons companies loan to the club which was at a significantly higher rate than sisu?

http://www.skybluestalk.co.uk/threa...enced-football-people/page5?highlight=Prozone

It was SISU's decision to enter into that collaboration, no one forced them.

Anyway that loan is now repaid in full the current owners are not SISU but ARVO (90 odd %).

The last accounts show that Sky Blue Sports and leisure made a loss of £8,535,959 and had creditor debts falling within one year of £40,781,164, obviously there has been no demand for repayment, that isn't possible.

It is more important to look forward to the next accounts and see if progress is being made, they must be filed by 28 Feb 2016 to avoid a transfer embargo. What Ranson or Richardson et al did or did not do in the past can't be changed now.

 

[Nick]

So have sisu taken millions out and did they expect the ricoh for free?

Why do people make statements like that?

 

[italiahorse]

All smoke and mirrors to me.
Can't get over the feeling that the £2M is coming out the club and straight into Sisu investors pockets.
Admittedly they lost money in the liquidated company but those debt seems to have transferred through to the new company and they are getting a return.

After the debacle with the players being transferred into the other company and the loss of the golden share during administration I wouldn't trust these spivs as far as I could throw them.

 

[Nick]

All smoke and mirrors to me.
Can't get over the feeling that the £2M is coming out the club and straight into Sisu investors pockets.
Admittedly they lost money in the liquidated company but those debt seems to have transferred through to the new company and they are getting a return.

After the debacle with the players being transferred into the other company and the loss of the golden share during administration I wouldn't trust these spivs as far as I could throw them.

So you can't prove 2m has gone into any pocket but keep saying it? I thought you only dealt with facts and evidence?

 

[italiahorse]

So have sisu taken millions out and did they expect the ricoh for free?

Why do people make statements like that?

.... because no one can be certain they haven't and until they prove me wrong I won't accept them as fit and proper club owners.

We shouldn't let them pull the wool over our eyes just because the team is doing well.

 

[italiahorse]

So you can't prove 2m has gone into any pocket but keep saying it? I thought you only dealt with facts and evidence?

I can't prove it because they have not provided enough detail (bit like the golden share location) but no one can tell me realistically what the £2M going out the club is for.

Those that hazard an educated guess can't tell me if that amount is acceptable or not.

 

[Nick]

I can't prove it because they have not provided enough detail (bit like the golden share location) but no one can tell me realistically what the £2M going out the club is for.

Those that hazard an educated guess can't tell me if that amount is acceptable or not.

I thought you could prove it and said the evidence is there if you look for it when you were trying to be patronising?

The same as the jr proves sisu wanted the ricoh for free.

 

[stupot07]

I can't prove it because they have not provided enough detail (bit like the golden share location) but no one can tell me realistically what the £2M going out the club is for.

Those that hazard an educated guess can't tell me if that amount is acceptable or not.

Are you still going on about management fees? For the umpteen time it's the movement of money between on company and another in the group of companies. Otium isn't the only company in the football club, SBS&L is still the parent company, Otium is just a subsidiary.

I wish OSB was here....


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[SkyBlue_Bear83]

Are you still going on about management fees? For the umpteen time it's the movement of money between on company and another in the group of companies. Otium isn't the only company in the football club, SBS&L is still the parent company, Otium is just a subsidiary.

I wish OSB was here....


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Why do you wish that he was here? He would just ignore him and continue spouting his shit. There is no reasoning with him.

 

[stupot07]

Why do you wish that he was here? He would just ignore him and continue spouting his shit. There is no reasoning with him.

True.

Oh well. Wasps lost yesterday!!!


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