Buying the Higgs Share (4 Viewers)

[dongonzalos]

Couple of questions.

When you agree a Heads of Terms.

Although you have not finalised the deal. It is saying yes that is a price I am happy to buy at. The other party saying yes I am happy to sell at that price. All the terms and conditions are ok let's go away and get it signed.

If so SISU were not phased by ACL's asking price.

ACL want to sell. The deal is sitting there waiting to be signed.

If SISU do this deal

Do they cut that 400k rent by half as they own half of where the rent is paid?

Do they get greater access to the revenue schemes by doing this deal?

Excuse me if I have it wrong but I don't fully understand it anymore if I am going to be honest.

If the above is the case should we the fans not be pushing SISU to do this deal. So things get sorted quickly.

 

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[chiefdave]

It's not ACL selling. ACL is a company owned 50% by Higgs and 50% by the council. SISU could, and possibly did, agree terms but the council can block any sale.

Higgs have stated they want to get out of ACL and use the money elsewhere. As there seems to be zero chance of the council allowing a sale to SISU the only real option is for the council to buy Higgs 50%, not sure how this impacts CCFC option on buy back but I think that runs out soon anyway. If, as is stated, ACL is in good health and would be with or without CCFC I can't see any reason for the council not to do that, unless there is some rule preventing a council 100% owning a private business.

 

[Jack Griffin]

If its viable then is anything preventing a 4th party (ie not Coventry Council, CCFC or SISU) coming along and negotiating a price to buy the share?

 

[chiefdave]

If its viable then is anything preventing a 4th party (ie not Coventry Council, CCFC or SISU) coming along and negotiating a price to buy the share?

At a guess it can't be sold to a 3rd party until the option CCFC have expires but I'm sure that's not far off so in theory it could be sold to anyone, subject to the council approving the new partner.

 

[dongonzalos]

It's not ACL selling. ACL is a company owned 50% by Higgs and 50% by the council. SISU could, and possibly did, agree terms but the council can block any sale.

Higgs have stated they want to get out of ACL and use the money elsewhere. As there seems to be zero chance of the council allowing a sale to SISU the only real option is for the council to buy Higgs 50%, not sure how this impacts CCFC option on buy back but I think that runs out soon anyway. If, as is stated, ACL is in good health and would be with or without CCFC I can't see any reason for the council not to do that, unless there is some rule preventing a council 100% owning a private business.

Why is there zero chance of the council agreeing with Higgs selling their share to SISU.

It would mean the rent would start to get paid and it would bring an end to this sorry mess.

Why did SISU not sign the deal after they agreed the deal.

Then we would really know if the council would block it.

All I have ever seen is the council say they want to see three things from SISU

A business plan for the future including some firm of development in the site.
Investment in the squad ensuring it us competitive.

SISU are meeting the second criteria the first one surely they have a sustainable business plan in place for the future?

 

[dongonzalos]

At a guess it can't be sold to a 3rd party until the option CCFC have expires but I'm sure that's not far off so in theory it could be sold to anyone, subject to the council approving the new partner.

A third party would need assurances that the tenant can be relied upon to pay their bills. Currently I can't imagine anyone touching it.

If all the above is correct why are we not asking SISU why they are buying the shares and getting themselves out of this mess instead of trying to rely on handouts from others?

 

[mark82]

If its viable then is anything preventing a 4th party (ie not Coventry Council, CCFC or SISU) coming along and negotiating a price to buy the share?

SISU are CCFC in this case. People need to stop separating them.

 

[Jack Griffin]

SISU are CCFC in this case. People need to stop separating them.

SISU could set up an entity entirely seperate to CCFC with money not necessarially coming from the same investors as participated in the CCFC deal. I believe SISU run a number of hedge funds it is not all one single financial vehicle. SISU's money comes from a number of very wealthy individuals, don't know how many though my gut feeling is less than 50 people, but access to the funds is more of an invitation only basis, I don't think you can go out and buy them on the open market.

At a guess it can't be sold to a 3rd party until the option CCFC have expires but I'm sure that's not far off so in theory it could be sold to anyone, subject to the council approving the new partner.

Yeah, I meant to say that, thx for pointing out.

 

[SkyblueBazza]

Of course all this could be posturing by BOTH parties in advance of agreement. Are they are simply trying to show who is boss for when the future development of surrounding land takes place?

 

[rupert_bear]

If its viable then is anything preventing a 4th party (ie not Coventry Council, CCFC or SISU) coming along and negotiating a price to buy the share?

I have a feeling this is the next option the Council/ACl will explore i seem to remember there being a period of time allotted for CCFC to buy back the Higgs share 2015 rings a bell, now if this goes to court again and the court rules against SISU/CCFC again that might allow Higgs to sell to another party, that would really put a spanner in the sisu works i suspect..

 

[oldskyblue58]

Couple of questions.

When you agree a Heads of Terms.

Although you have not finalised the deal. It is saying yes that is a price I am happy to buy at. The other party saying yes I am happy to sell at that price. All the terms and conditions are ok let's go away and get it signed. no its is saying this is the general frame work of a deal and subject to detailed discussions, certain proof being received, and agreement of conditions we will draw up a contract to sign

If so SISU were not phased by ACL's asking price. it was the charity to sell not ACL

ACL want to sell. The deal is sitting there waiting to be signed. it isnt ACL selling and no it isnt

If SISU do this deal

Do they cut that 400k rent by half as they own half of where the rent is paid?no because it belongs to acl..... shareholders get dividends

Do they get greater access to the revenue schemes by doing this deal? no but involved in decision making

Excuse me if I have it wrong but I don't fully understand it anymore if I am going to be honest.

If the above is the case should we the fans not be pushing SISU to do this deal. So things get sorted quickly.

the option gives first chance of buying the shares ... at a price acceptable to the Charity (there is a mechanism to calculate but Charity could set that aside). Right now I wouldnt bet that the Charity want to sell to SISU let alone the Council veto it

 

[torchomatic]

Ah, like Gary Hoffman, do you mean? Bless.

If its viable then is anything preventing a 4th party (ie not Coventry Council, CCFC or SISU) coming along and negotiating a price to buy the share?

 

[SkyBlueWomble]

Why would anyone want to buy a loss making company such as ACL? As far as I can tell, it has no great assets apart from a leasehold over a stadium which its main tenant can't/won't pay a rent at a level to ACL to keep it afloat without support from the council.

You would have thought that hosting a few Olympic events and a Coldplay concert would show how ACL could survive independently as a commercial entity without CCFC yet within a few months these events and CCFC not paying it's rent it needs to bailed out by the Council because it can't meet its debt repayments.

 

[rupert_bear]

Why would anyone want to buy a loss making company such as ACL? As far as I can tell, it has no great assets apart from a leasehold over a stadium which its main tenant can't/won't pay a rent at a level to ACL to keep it afloat without support from the council.

You would have thought that hosting a few Olympic events and a Coldplay concert would show how ACL could survive independently as a commercial entity without CCFC yet within a few months these events and CCFC not paying it's rent it needs to bailed out by the Council because it can't meet its debt repayments.

I have a feeling it's whatever ACL made from just dozen games at the Olympics and i suspect it was a right few bob is what has pissed sisu off especially Seppella, money for old rope really and few little improvements for free to the Arena to boot.

 

[SkyBlueWomble]

I would have thought that the Olympics and Coldplay would have made a relatively small sum for ACL which is why they didn't generate enough cash to pay a few instalments of the Yorkshire Bank loan. LOCOG would have hired the Ricoh at a set rate and kept the ticket sales and any sponsorship to themselves/IOC. Similar thing goes for Coldplay. There are plenty of stadia to hire in the region and I don't see why the Ricoh would demand a premium.

 

[dongonzalos]

the option gives first chance of buying the shares ... at a price acceptable to the Charity (there is a mechanism to calculate but Charity could set that aside). Right now I wouldnt bet that the Charity want to sell to SISU let alone the Council veto it

Thanks for the clarification

 

[oldskyblue58]

strangely the last time ACL made a loss on their accounts was 2006............... been in profit ever since. Last accounts 31/05/11 showed net assets £1.5m. Fixed assets showed 25m of which 19.6m was the leasehold interest

Their accounts are due to be filed this month so will be interesting to see what the may 2012 accounts show. I understand they will be filed on time.............. the significance of which is that the auditors will have signed off as being a going concern for at least the next 12 months.

 

[dongonzalos]

the option gives first chance of buying the shares ... at a price acceptable to the Charity (there is a mechanism to calculate but Charity could set that aside). Right now I wouldnt bet that the Charity want to sell to SISU let alone the Council veto it

So they would get a share of any dividends and have a casting vote on how the income streams are allocated.

As half the owner if ACL. How would that affect us with regards to the FFP

 

[oldskyblue58]

So they would get a share of any dividends and have a casting vote on how the income streams are allocated.

As half the owner if ACL. How would that affect us with regards to the FFP

A dividend if distributed is payable to all shareholders..... however in ACL's case one cant be voted because the profits since 2006 do not exceed the losses prior to 2006 - a dividend would be illegal. But in any case no dividends will be paid until loans are paid off.

50% does not give you control and therefore decisions at shareholders meetings must be carried 100%

I think CCFC would be allowed to bring in any dividend as it could argue it is football related but it is academic ...... it isnt going to happen any time soon

 

[Mary_Mungo_Midge]

strangely the last time ACL made a loss on their accounts was 2006............... been in profit ever since. Last accounts 31/05/11 showed net assets £1.5m. Fixed assets showed 25m of which 19.6m was the leasehold interest

Their accounts are due to be filed this month so will be interesting to see what the may 2012 accounts show. I understand they will be filed on time.............. the significance of which is that the auditors will have signed of as being a going concern for at least the next 12 months.

And people wonder why there's ill-feeling at the table when SISU's figurehead - bearing in mind the 2012-released figures showed a club pre-tax loss of £6.7loss - states of ACL in The Telegrapg: 'We’re not here to subsidise a failing council-owned business.” :facepalm:

 

[oldskyblue58]

CCFC's accounts are due to be filed this month too .............. wonder what the chances of that are

 

[Danceswithhorses]

CCFC's accounts are due to be filed this month too .............. wonder what the chances of that are

Absolutely zero percent...they dont have a good track record

 

[chiefdave]

CCFC's accounts are due to be filed this month too .............. wonder what the chances of that are

is it possible for them to file accounts with the rent situation ongoing? Presumably ACL can just show what is owed in their accounts and get that signed off but would anyone sign off on CCFC accounts without a resolution on the rent?

 

[Danceswithhorses]

is it possible for them to file accounts with the rent situation ongoing? Presumably ACL can just show what is owed in their accounts and get that signed off but would anyone sign off on CCFC accounts without a resolution on the rent?

Easy answer...no

 

[SkyBlueWomble]

If you strip out CCFC rent at the existing uncommercial rate ACL is loss making and I can't see the leasehold fixed asset now being worth anywhere near £20m. Who would pay that for it - apart from a related party transaction between ACL and one of its shareholders perhaps??? Would have thought time for a revaluation.

The actions of ACL in needing a bail out from the council so soon after what should have been a very good year for them tell us more about ACL's financial position than any set of accounts do.

 

[oldskyblue58]

is it possible for them to file accounts with the rent situation ongoing? Presumably ACL can just show what is owed in their accounts and get that signed off but would anyone sign off on CCFC accounts without a resolution on the rent?

Lets put it this way I wouldnt want to be the auditor that did.......... they would be taking a huge risk. The bottomline is if something happened to CCFC and it went bust but suppliers had relied on the auditors report that CCFC was a going concern for at least the next 12 months( from now) then could the auditor prove that he was right to sign off on that basis. No lease agreement, landlord saying talks collapsed, Statutory Demands, 3rd Party Debtor orders, TF saying lots of worried creditors, recurring losses, huge debts, few assets, long term player liabilities, falling income, prospect of further financial stress in the budgets ....... the only thing backing it up is an undertaking (not guarantee) to support the company from the owners who in the past have been cautious in giving such an undertaking.............

I wouldnt sign those accounts off in a month of Sundays!

 

[Mary_Mungo_Midge]

If you strip out CCFC rent at the existing uncommercial rate ACL is loss making and I can't see the leasehold fixed asset now being worth anywhere near £20m. Who would pay that for it - apart from a related party transaction between ACL and one of its shareholders perhaps??? Would have thought time for a revaluation.

The actions of ACL in needing a bail out from the council so soon after what should have been a very good year for them tell us more about ACL's financial position than any set of accounts do.

The loan arrangement, which is a good deal for both ACL and the council; was as much to do with protecting a distress position of SISU's making as it is related to normal trading conditions.

Fisher's role in that process has been particularly unsavoury in my opinion

 

[Danceswithhorses]

If you strip out CCFC rent at the existing uncommercial rate ACL is loss making and I can't see the leasehold fixed asset now being worth anywhere near £20m. Who would pay that for it - apart from a related party transaction between ACL and one of its shareholders perhaps??? Would have thought time for a revaluation.

The actions of ACL in needing a bail out from the council so soon after what should have been a very good year for them tell us more about ACL's financial position than any set of accounts do.

If ACL's value has decreased, do you not think that that was what SISU's plan was, by witholding the rent, to distress ACL's finances and try and pick it up on the cheap ?

 

[torchomatic]

So why do ACL keep saying they don't need the club, that they are very busy, etc?

The loan arrangement, which is a good deal for both ACL and the council; was as much to do with protecting a distress position of SISU's making as it is related to normal trading conditions.

Fisher's role in that process has been particularly unsavoury in my opinion

 

[oldskyblue58]

If you strip out CCFC rent at the existing uncommercial rate ACL is loss making and I can't see the leasehold fixed asset now being worth anywhere near £20m. Who would pay that for it - apart from a related party transaction between ACL and one of its shareholders perhaps??? Would have thought time for a revaluation.

The actions of ACL in needing a bail out from the council so soon after what should have been a very good year for them tell us more about ACL's financial position than any set of accounts do.

ok take away the names .................. the stakeholder creates loans to company to keep it going ............ sound familiar

the difference of course is that for one company the loan is fixed at a value, structured can afford to repay and decreasing ............

the other is unstructured cant afford to repay and increasing...........

It was a change of lender to more favourable terms ............ something any sensible business would do

Leasehold interest isnt for sale so largely irrelevant. Could revalue yes but it isnt going to affect the trading profitability.

Past profits are fixed so taking out CCFC's rent from those is playing with figures. CCFC is a tenant, if it accepts a rent at £400k then that means that ACL have been able to reduce their costs to accommodate it so is profitability really affected?

I would have thought that taking over £1m out of any small or medium sized company is going to affect their cashflow.......... but they are still here and the auditors are still signing off as a going concern - that might tell us something too

 

[TheRoyalScam]

Not sure whether the unpaid rent is a simple 'bad debt' on the ACL accounts.

Remember that CCFC makes up only 17% of ACL's income (when they pay the rent that is). ACL has made consistent profits since 2007 and seems to me to be a well run and transparently successful business.

How TF can describe ACL as a 'failing council-owned business' beggars belief.

And am I the only one who cringes at the phrase 'I've spoken to the owner'? (As if the owner is some mysterious deity presiding over all matters sky blue, handing out decrees through its minions Fishy and Wagtail.)

 

[Pete in Portugal]

So if the CCFC accounts cannot be signed off by their auditor, (for the reason given by OSB), then presumably we can be certain of having a transfer embargo, once the accouts become overdue in a couple of months time? Should be a great start for the new manager. Here we go again.......................

 

[fernandopartridge]

The loan arrangement, which is a good deal for both ACL and the council; was as much to do with protecting a distress position of SISU's making as it is related to normal trading conditions.

Fisher's role in that process has been particularly unsavoury in my opinion

It wasn't dressed as such when the deal was made. It was quite clear it was made to protect ACL in the longer term, there is an implicit nod to the fact that without it they'd be in trouble themselves.

 

[oldskyblue58]

Here is a thought for you (all hindsight and "fantasy" i know but going to say it anyway)

It is late 2007 just bought CCFC ....... need to make it all work. Need to get hands on stadium, ok tell fans it is for the club but dont want to be stuck running a football club. Look at the stadium owners....... rent charged to club is too high and ACL are too highly leveraged. Make approach to ACL saying reckon we can improve the loan position, refinance and lower costs, if we do that then want a matching reduction in the rent to club. Earn a bit of trust and Kudos with ACL stakeholders. Focus on reducing costs and losses at club prove owners of club have proper handle on things. Work on a few small projects together with ACL. Being active positive partner in the site Activate option to buy Charity shares early as possible, if not work a deal that acquires some interest in ACL. Foot in door, finances leveling acquire some of the income sources in ACL either by earn out or cash. Further improve club finances. Gain trust, push to acquire ACL 100% maybe charity shares first to get majority. 100% gained sell on move on............

in another universe maybe but it didnt have to go the way it has. We all make our choices i guess...... too late now

 

[oldskyblue58]

So if the CCFC accounts cannot be signed off by their auditor, (for the reason given by OSB), then presumably we can be certain of having a transfer embargo, once the accouts become overdue in a couple of months time? Should be a great start for the new manager. Here we go again.......................

yep thats correct - except the embargo should start 1st march because they are due to be filed 28/02