Brighton and Hove Albion Holdings Ltd

[Wardy]

Not being simple at all, it's a complex thing, which as a qualified accountant I may still have missed one of the ways that we are planning to use them, but my understanding is .....

that it's a formal way of creating a directors loan. Rather than just having a loan account on the Balance Sheet with terms of the loan either agreed or left completely open-ended (which does sometimes happen, but banks HATE that) we could take £60m worth of loans (probably from Directors, but doesn't have to be) and we would issue them with this loan note.

Say, for example, Richard Branson wanted to pump £50m in, we would issue him with £50m worth of these loan notes. For the bank, this is all nice and clear, that he has no security behind this loan (security that teh bank want first charge over) and everyone also knows there will be no need to repay them before 2023 at the very earliest.

Was Richard Branson used to show the point? Or do you know someting we don't and the Virgin at Falmer Stadium is currently being built.

 

[Herr Tubthumper]

Someone has or will lend the club £40m and get interest on the loan until it is time to repay it. The loan is unsecured which means that if the club go belly up those holding the loan notes do not get first dabsies on any of the remaining assets.

So I presume it will not be a bank using these notes/providing 40 million then? As surely they would want the loan or notes or whatver secured against something even if it is future revenue?

I also presume this thread could just be nonsense.

 

[Dandyman]

Dunno about a bank, I would want it secured against something also. Tony Bloom is obviously much more of an optimist than me.

What is the situation if someone who is a director of company A which uses the facilities of company B, loans money to company B and company B fails to pay the interest or fully redeem the loan ?

 

[Brovion]

Appologies if I'm being a bit "simple" here but in layman's terms what does this mean.

I'm sure one of the financial types can put it better but basically it means the club is losing money hand over fist season after season. The only reason the club doesn't go bust is because people (Bloom etc) have put their hands in their pockets time and time again to bail us out. This is despite the cup final money, the Zamora money, the play-off final money, the West Ham money, the Spurs money etc etc etc. This most recent batch of loans have now been formalised as bits of paper with a nominal value of 40million. They're unsecured becuase we've got no assets, so in effect they're worthless 'thank you' notes.

No I don't know how the stadium affects it and I await correction from more knowledgable people - but that's roughly it.

 

[Wilka]

Maybe this is why the club have been so confident all along about the Falmer funding.

 

[Gritt23]

Seems like its not a bank, as they would want some kind of security, esp in this climate. So the question is who has a) £20m and b) £40m. Same person? A new investor

To complete the comspiracy maybe this has something to do with Dick Knights rumoured departure?

It'll all come out in the wash

Well, presumably the person the £20m was created for a year ago, hasn't yet put that money in. So, don't hold your breath, it could just be a case of us covering our bases should someone come forward. If a benefactor comes forward prepared to put money in, we can now issue loan notes to the full value of teh Falmer project.

It could just be a case of having the ducks in a row should the possibility arise.

 

[Gritt23]

Was Richard Branson used to show the point? Or do you know someting we don't and the Virgin at Falmer Stadium is currently being built.

just a name plucked out of the air. Sorry.

 

[Couldn't Be Hyypia]

It doesn't necessarily mean that £40m has been put in though does it.

 

[Lokki 7]

What is the situation if someone who is a director of company A which uses the facilities of company B, loans money to company B and company B fails to pay the interest or fully redeem the loan ?

Well in this most simple case, the Director loses his money. Which is why I think that any deal of this nature in reality will be accompanied with a huge amount of additional legal documentation. I'm sorry but no one is that generous with £60m. Still likely to be the best deal BHA will be offered by anyone.

 

[Buzzer]

So I presume it will not be a bank using these notes/providing 40 million then? As surely they would want the loan or notes or whatver secured against something even if it is future revenue?

I also presume this thread could just be nonsense.

you're right. A bank would want secured assets and would dictate the interest rate. This is usually done to raise funds from directors, other corporate investors.

For it to be unsecured the loanor would either have a great deal of trust in the issuing company ( hence a director) or it's at a huge rate of return as with venture capitalists ( think Dragon's den).

My money is on existing investors....

 

[Gritt23]

I also presume this thread could just be nonsense.

No, it's happened, alright. I'm looking at the form now, that we issued to Companies House, signed by RF Comer, to formally create these loan notes. Dated 10th March 2009.

 

[Alex Alex Dawson oo! oo!]

Someone has or will lend the club £40m and get interest on the loan until it is time to repay it in 2023. The loan is unsecured which means that if the club go belly up those holding the loan notes do not get first dabsies on any of the remaining assets.

Those holding the loan notes do not need to be made public. They are simply another long term creditor

Thanks Buzzer, put much more succinctly than I would have managed.

The loans do not necessarily have to be repaid in cash, they may also be repaid in shares/stock in the company.

 

[Lokki 7]

you're right. A bank would want secured assets and would dictate the interest rate. This is usually done to raise funds from directors, other corporate investors.

For it to be unsecured the loanor would either have a great deal of trust in the issuing company ( hence a director) or it's at a huge rate of return as with venture capitalists ( think Dragon's den).

My money is on existing investors....

Or 'all of the above'.

 

[Gritt23]

It doesn't necessarily mean that £40m has been put in though does it.

Correct. We've just created the mechanism should someone wish to do so.

 

[Buzzer]

What is the situation if someone who is a director of company A which uses the facilities of company B, loans money to company B and company B fails to pay the interest or fully redeem the loan ?

Loan notes are contractual obligations. The company could be wound up by the petitioning creditor if they don't pay.

 

[DIFFBROOK]

It doesn't necessarily mean that £40m has been put in though does it.

No, but maybe Buckingham Group wanted assurances that they would be paid, so an investor says "I'll pay for it" and gets the club to prepare £60m in unsecured loans to be repiad by 2023. The money only to be paid as and when the ground gets as per contract.

Only a thought like.

 

[Dandyman]

Well in this most simple case, the Director loses his money. Which is why I think that any deal of this nature in reality will be accompanied with a huge amount of additional legal documentation. I'm sorry but no one is that generous with £60m. Still likely to be the best deal BHA will be offered by anyone.

Which makes sense - the question being is Tony Bloom very generous or is there something he gets in return for the dosh other than just interest over a long period with a final redemption? Be interesting to know what the value of a betting concession for the stadium would be.

 

[Buzzer]

Oh, and convertible means that the loanor has the option of cashing them in at the end or could convert them into shares at an agreed rate.

The loan notes can be traded as with shares. The loanor COULD sell them to someone else.

 

[Dandyman]

Loan notes are contractual obligations. The company could be wound up by the petitioning creditor if they don't pay.

So if the stadium company failed to pay back a Director of the football company then the stadium compnay would fold in it's existing form ? (although presumably a Leeds type scenario might happen?)

EDIT (Just seen the post above) - so effectively in 2023 the loaner would either be paid back or would probably become the majority shareholder of the stadium company?

 

[Gritt23]

So if the stadium company failed to pay back a Director of the football company then the stadium compnay would fold in it's existing form ? (although presumably a Leeds type scenario might happen?)

That could happen, but in all reality if someone is prepared to pump that much in, they will not foreclose. They will instead convert it into new loan notes with a date further in advance.