Good news—bad news??

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Paul Waine
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Re: Good news—bad news??

Post by Paul Waine » Sun Jan 16, 2022 5:19 pm

texasbrit wrote:
Sun Jan 16, 2022 4:24 pm
Pace may even take the 15m out of the sale of wood and let the shares default back to Garlick, how much did Pace and Co invest in the club, not including the share purchases from Garlick and others during the acquisition of the club
How's ALK going to do that. texas? The money from sale of Chris Wood belongs to BFC. The only way ALK can take money out as owners is via dividends. The only way a company can pay dividends is by having profits, including reserves that exceed those dividends.

However, we also need to consider MSD's £60m loan and MSD's charges over BFC assets - plus, of course, MSD made the loan to ALK, not BFC. We can safely come to the conclusion that MSD have covenants in place that safeguards MSD's £60 million and would not allow ALK to take any money out of the club as dividends or, without MSD's agreement, as a loan by BFC to ALK for any purposes other than as agreed with MSD.

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Re: Good news—bad news??

Post by Paul Waine » Sun Jan 16, 2022 5:46 pm

dsr wrote:
Sun Jan 16, 2022 4:54 pm
Yes, of course MSD have all the facts. Talk about stating the bleeding obvious!

Organisations do lend money on speculation that the assets are going to be worthwhile. Remember this lot make their living out of lending money to football clubs at high rates of interest. (9% I believe has been suggested.) With 9% interest, first call on all the club assets including Gawthorpe and Turf Moor as well as all the player values, the risk of losing out is presumably a risk they are willing to take compared with the risk of winning big.

Remember that to receive 9% on lending money, you have to take a risk. Try lending some of yours at 9% return. Not easy. So they lend it to football clubs safe in the knowledge that they can order the sale of all Burnley players if need be, to get their money back, and if there still isn't enough after the players have all gone and the TV money spent and the ground built over, then that's the business risk. This is how speculative lenders like that, do business.
dsr wrote:
Sun Jan 16, 2022 4:47 pm
Apart from the "exciting times" nonsense at the end, that makes sense. If your understanding of the deal is correct, then ALK could only get £100m out of Burnley FC at purchase date (£50m cash and £50m guarantee of loan, say) and would need to wait for later years' TV money to come in before they can take that from the club. Doing it this way perhaps meant they didn't have to put in any of their own money at all?
Hi dsr, thanks for your acknowledgement that what I say "makes sense." However, I've got to reply to your comments that "organisations do lend money on the speculation that the assets are going to be worthwhile..." I sincerely hope that you've never worked for a bank or any finance firm (MSD being one of the latter) and never been involved in any sizable lending decisions. (I know, btw, that lots and lots of banks got their sub-prime mortgage lending decisions very wrong, but that was just very, very, dumb and reckless lending. Yes, I have my experience in this area - but, we can save that for another time). The first rule of lending is that you know how the borrower is going to re-pay your loan. The interest rate that you lend at is determined by the riskiness of the loan, which includes factors such as the business risk the borrower faces. Yes, to take security to mitigate some of that risk. Quite often you will assume that, if there is a default on the loan and the lender needs to seek recovery through their security charges, that the assets as security will be very significantly lower in value than at the time the loan was made. No lender, in normal business situations, advances funds and speculates that the assets they take security over will increase in value. When a borrower is in distress and can't meet their loan obligations their assets will have fallen in value. Assets increasing in value is irrelevant to lenders, it will only happen if the borrower's business is successful - and, if the borrower's business is successful the loan from the lender will be repaid and all the lender gets is the interest at the agreed rate plus the principal. The only party that benefits from the assets increasing in value is the equity holder. That's ALK in the case of BFC.

MSD, btw, will have a number of business lines. Lending some of their money to football clubs will only be a small part of their portfolio.

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Re: Good news—bad news??

Post by ewanrob » Sun Jan 16, 2022 5:52 pm

Paul Waine wrote:
Sun Jan 16, 2022 5:19 pm
How's ALK going to do that. texas? The money from sale of Chris Wood belongs to BFC. The only way ALK can take money out as owners is via dividends. The only way a company can pay dividends is by having profits, including reserves that exceed those dividends.

However, we also need to consider MSD's £60m loan and MSD's charges over BFC assets - plus, of course, MSD made the loan to ALK, not BFC. We can safely come to the conclusion that MSD have covenants in place that safeguards MSD's £60 million and would not allow ALK to take any money out of the club as dividends or, without MSD's agreement, as a loan by BFC to ALK for any purposes other than as agreed with MSD.

No expert at all on the takeover, but can you please explain exactly what debt is on the club and what is on Mr Pace and his team if they walked away in the Summer. Would the club lose just the reserves it had in the bank.

You say MSD charges over our Assets, but loan made to ALK...confused !!

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Re: Good news—bad news??

Post by dsr » Sun Jan 16, 2022 6:10 pm

Paul Waine wrote:
Sun Jan 16, 2022 5:46 pm
When a borrower is in distress and can't meet their loan obligations their assets will have fallen in value. Assets increasing in value is irrelevant to lenders, it will only happen if the borrower's business is successful - and, if the borrower's business is successful the loan from the lender will be repaid and all the lender gets is the interest at the agreed rate plus the principal. The only party that benefits from the assets increasing in value is the equity holder. That's ALK in the case of BFC.
That's nonsense. You say you know how these things work? Look at a mortgage. Banks lend money to businesses and to individuals all the time, and secure it on the property. Are you really saying that if Joe Soap Ltd. goes bust, or if Joe Soap as an individual loses his job and his income, then his property is worth less than it was? The whole point of lending money on a mortgage is that the lender can get his funds from the sale of the underlying assets. The idea that a property must by definition fall if the business is unsuccessful, is ridiculous. If Harrods went bust tomorrow, their shop in Oxford Street would still be worth a bob or two. If Burnley get relegated this season, Cornet's value won't drop by half.

MLB believe that if ALK go bust, then they can get their money back from the sale of BFC players. Would the whole squad be worth £60m? I suspect they would. It's a higher risk than normal bank lending which is why it's a higher rate of interest. If they charge three times the rate of interest over several years but occasionally lose some capital, they can still get better resutls than blue chip lending at lower rates.

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Re: Good news—bad news??

Post by dsr » Sun Jan 16, 2022 6:14 pm

Paul Waine wrote:
Sun Jan 16, 2022 5:19 pm
How's ALK going to do that. texas? The money from sale of Chris Wood belongs to BFC. The only way ALK can take money out as owners is via dividends. The only way a company can pay dividends is by having profits, including reserves that exceed those dividends.

However, we also need to consider MSD's £60m loan and MSD's charges over BFC assets - plus, of course, MSD made the loan to ALK, not BFC. We can safely come to the conclusion that MSD have covenants in place that safeguards MSD's £60 million and would not allow ALK to take any money out of the club as dividends or, without MSD's agreement, as a loan by BFC to ALK for any purposes other than as agreed with MSD.
So are you saying that the large cash balance that BFC had as at June 2020 is still in the club, or are you saying that removing it from the account and passing it to Garlick does not count as "taking money out"?

ALK, by all accounts, took a large amount of money out as a loan. And the only asset they have to repay that loan is the value of the club itself, which means that in the circumstances where that loan must be repaid (ie. relegation), ALK will have no assets available to repay it.

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Re: Good news—bad news??

Post by dsr » Sun Jan 16, 2022 6:17 pm

ewanrob wrote:
Sun Jan 16, 2022 5:52 pm
No expert at all on the takeover, but can you please explain exactly what debt is on the club and what is on Mr Pace and his team if they walked away in the Summer. Would the club lose just the reserves it had in the bank.

You say MSD charges over our Assets, but loan made to ALK...confused !!
The point of a charge on assets is that if the borrower (ALK) cannot repay the lender (MSD) then the guarantor (BFC) has to pay the loan instead. ALK has no assets other than Burnley Football Club, so if BFC get relegated their asset becomes worth very little and they can't pay the loan. So BFC would have to pay it.

Pace and his team are individuals, and ALK is a limited company. Pace can't be made liable for ALK's debts, so he could walk away owing nothing. ALK could disappear into oblivion leaving all its debts (ie. what they owe to BFC) unpaid. BFC would probably be left with administration, or a fire sale, to repay ALK's secured debts.

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Re: Good news—bad news??

Post by KRBFC » Sun Jan 16, 2022 6:18 pm

Paul Waine wrote:
Sat Jan 15, 2022 11:20 am
We can assume that MSD have all the facts about the club and the structure of the deal between ALK and MG. Yes, the MSD loan of £60 million is secured by club assets. That's all in the public domain - Companies House filings.

But, you don't lend someone £60 million and take the chance that a few footballers can be sold for £25m and more to repay it. Tarks running down his contract is one very good reason why not.
Then why did they lend money to Sunderland and Derby?

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Re: Good news—bad news??

Post by KRBFC » Sun Jan 16, 2022 6:21 pm

Quickenthetempo wrote:
Sat Jan 15, 2022 10:09 am
I'm far from a financial expert but the debt the club has is for Pace and Co to have the club from Garlick.

If they give the club back because they haven't paid up then Garlick won't be owed anything in cash. He just gets the club (asset).
Unless they have loans out or debts to outsiders then we should have a clean slate.

Or am I completely wrong?
and the £60m taken out by ALK to pay Garlick, lent from MSD.

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Re: Good news—bad news??

Post by ClaretAndJew » Sun Jan 16, 2022 6:22 pm

KRBFC wrote:
Sun Jan 16, 2022 6:21 pm
and the £60m taken out by ALK to pay Garlick, lent from MSD.
What about the 50 million from the club that Garlick had? Is that something else?

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Re: Good news—bad news??

Post by KRBFC » Sun Jan 16, 2022 6:32 pm

ClaretAndJew wrote:
Sun Jan 16, 2022 6:22 pm
What about the 50 million from the club that Garlick had? Is that something else?
I don't think it was £50m, at the time it was reported ALK paid £15m for it's shares in BFC, with the rest made up of loans from MSD and cash reserves taken from the club balance. Apparently there was further payments to be made to Garlick in 3 separate instalments, apparently ALK have missed the first payment deadline, so was rumoured.
Last edited by KRBFC on Sun Jan 16, 2022 6:33 pm, edited 1 time in total.

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Re: Good news—bad news??

Post by ewanrob » Sun Jan 16, 2022 6:33 pm

dsr wrote:
Sun Jan 16, 2022 6:17 pm
The point of a charge on assets is that if the borrower (ALK) cannot repay the lender (MSD) then the guarantor (BFC) has to pay the loan instead. ALK has no assets other than Burnley Football Club, so if BFC get relegated their asset becomes worth very little and they can't pay the loan. So BFC would have to pay it.

Pace and his team are individuals, and ALK is a limited company. Pace can't be made liable for ALK's debts, so he could walk away owing nothing. ALK could disappear into oblivion leaving all its debts (ie. what they owe to BFC) unpaid. BFC would probably be left with administration, or a fire sale, to repay ALK's secured debts.

Many thanks....where was the DD on this...sounds unbelievable.

Paul Waine
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Re: Good news—bad news??

Post by Paul Waine » Sun Jan 16, 2022 7:20 pm

ewanrob wrote:
Sun Jan 16, 2022 5:52 pm
No expert at all on the takeover, but can you please explain exactly what debt is on the club and what is on Mr Pace and his team if they walked away in the Summer. Would the club lose just the reserves it had in the bank.

You say MSD charges over our Assets, but loan made to ALK...confused !!
Hi ewanrob, I've just spent time typing a detailed response to your 2 questions. The second one is the easiest to answer because all the information is in the public domain - Companies House records.

Unfortunately, when I came to submit post I found I'd been "timed out" and all my response was lost. I'll find time later to go through it again..

BTW: dsr is not giving you accurate information.

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Re: Good news—bad news??

Post by dsr » Sun Jan 16, 2022 9:52 pm

Paul Waine wrote:
Sun Jan 16, 2022 7:20 pm
BTW: dsr is not giving you accurate information.
This from a man who thinks that ALK haven't taken money out of the club, and that when a business is in financial trouble its assets are worth less? I look forward to hearing more.

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Re: Good news—bad news??

Post by ClaretPete001 » Sun Jan 16, 2022 11:01 pm

dsr wrote:
Sun Jan 16, 2022 9:52 pm
This from a man who thinks that ALK haven't taken money out of the club, and that when a business is in financial trouble its assets are worth less? I look forward to hearing more.
The playing assets will diminish if we are losing or do not invest in the squad.

If you pick any one web sites that value players the Burnley squad was worth well over 68 million (it's less now) a couple of seasons ago and I don't see why any creditor would not factor it into any loan.

But you can see the issue facing ALK a lack of investment has left squad with a pre-ponderance of 30 somethings whose value will fall as will their playing performances.

The real issue is the business model. Burnley does not have the population, global reach or socio economic wealth to naturally host a Premiership club over an extended period of time. If ALK think they can adopt a model finding young players and selling them on then good luck it works for virtually no one over an extended period of time. The vast majority of Premiership clubs are from urban areas with large populations.

And you are right this deal has turned the club from a well run provincial club with few debts to one that is anything but...! And the lack of investment in the squad has put at real risk its immediate Premiership status. I would argue that a couple of seasons spending as we have done this season would have seen the squad considerably improved and much more competitive this year.

Nick Pope Apr 19 1992 (28) £13.50m  

Bailey Peacock-Farrell Oct 29, 1996 (23) £900Th.  
Goalkeeper
Will Norris Aug 12, 1993 (26) £360Th.  
Goalkeeper
James Tarkowski Nov 19, 1992 (27) £22.50m  
Centre-Back
Ben Gibson Jan 15, 1993 (27) £6.30m  

Centre-Back
Ben Mee Sep 21, 1989 (30) £5.40m  
Centre-Back
Kevin Long Aug 18, 1990 (29) £900Th.  
Centre-Back
Jimmy Dunne Oct 19, 1997 (22) £540Th.  
Centre-Back
Richard Nartey Sep 6, 1998 (21) £180Th.  
Centre-Back
Bobby Thomas Jan 30, 2001 (19) £180Th.  
Centre-Back
Charlie Taylor Sep 18, 1993 (26) £3.60m  
Left-Back
Erik Pieters Aug 7, 1988 (31) £1.35m  
Left-Back
Anthony Driscoll-Glennon Nov 26, 1999 (20) £225Th.  
Left-Back
Matthew Lowton Jun 9, 1989 (31) £2.25m  
Right-Back
Phil Bardsley Jun 28, 1985 (35) £270Th.  
Right-Back
Jack Cork Jun 25, 1989 (31) £4.50m  
Defensive Midfield
Ashley Westwood Apr 1, 1990 (30) £4.50m  
Defensive Midfield
Josh Brownhill Dec 19, 1995 (24) £6.30m  
Central Midfield
Dale Stephens Jun 12, 1989 (31) £2.25m  
Central Midfield
Josh Benson Dec 5, 1999 (20) £360Th.  

Central Midfield
Anthony Gomez Mancini Apr 6, 2001 (19) £225Th.  
Central Midfield
Mace Goodridge Sep 13, 1999 (20) £180Th.  
Central Midfield
Robbie Brady Jan 14, 1992 (28) £2.70m  
Left Midfield
Lewis Richardson Feb 7, 2003 (17) £180Th.  
Attacking Midfield
Dwight McNeil Nov 22, 1999 (20) £19.80m  
Left Winger
Jóhann Berg Gudmundsson Oct 27, 1990 (29) £2.70m  
Right Winger
Max Thompson Feb 9, 2002 (18) - 
Right Winger
Chris Wood Dec 7, 1991 (28) £7.20m  
Centre-Forward
Jay Rodríguez Jul 29, 1989 (30) £3.60m  
Centre-Forward
Ashley Barnes Oct 30, 1989 (30) £3.15m  
Centre-Forward
Matej Vydra May 1, 1992 (28) £2.70m  
Centre-Forward
Joel Mumbongo Jan 9, 1999 (21) £270Th. 
Centre-Forward

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Re: Good news—bad news??

Post by Bosscat » Sun Jan 16, 2022 11:11 pm

ClaretPete001 wrote:
Sun Jan 16, 2022 11:01 pm
The playing assets will diminish if we are losing or do not invest in the squad.

If you pick any one web sites that value players the Burnley squad was worth well over 68 million (it's less now) a couple of seasons ago and I don't see why any creditor would not factor it into any loan.

But you can see the issue facing ALK a lack of investment has left squad with a pre-ponderance of 30 somethings whose value will fall as will their playing performances.

The real issue is the business model. Burnley does not have the population, global reach or socio economic wealth to naturally host a Premiership club over an extended period of time. If ALK think they can adopt a model finding young players and selling them on then good luck it works for virtually no one over an extended period of time. The vast majority of Premiership clubs are from urban areas with large populations.

And you are right this deal has turned the club from a well run provincial club with few debts to one that is anything but...! And the lack of investment in the squad has put at real risk its immediate Premiership status. I would argue that a couple of seasons spending as we have done this season would have seen the squad considerably improved and much more competitive this year.

Nick Pope Apr 19 1992 (28) £13.50m  

Bailey Peacock-Farrell Oct 29, 1996 (23) £900Th.  
Goalkeeper
Will Norris Aug 12, 1993 (26) £360Th.  
*Goalkeeper
James Tarkowski Nov 19, 1992 (27) £22.50m  
Centre-Back
Ben Gibson Jan 15, 1993 (27) £6.30m  


Centre-Back
Ben Mee Sep 21, 1989 (30) £5.40m  
Centre-Back
Kevin Long Aug 18, 1990 (29) £900Th.  
Centre-Back
Jimmy Dunne Oct 19, 1997 (22) £540Th.  
Centre-Back
Richard Nartey Sep 6, 1998 (21) £180Th.  
Centre-Back
Bobby Thomas Jan 30, 2001 (19) £180Th.  
Centre-Back
Charlie Taylor Sep 18, 1993 (26) £3.60m  
Left-Back
Erik Pieters Aug 7, 1988 (31) £1.35m  
Left-Back
Anthony Driscoll-Glennon Nov 26, 1999 (20) £225Th.  
Left-Back
Matthew Lowton Jun 9, 1989 (31) £2.25m  
Right-Back
Phil Bardsley Jun 28, 1985 (35) £270Th.  
Right-Back
Jack Cork Jun 25, 1989 (31) £4.50m  
Defensive Midfield
Ashley Westwood Apr 1, 1990 (30) £4.50m  
Defensive Midfield
Josh Brownhill Dec 19, 1995 (24) £6.30m  
Central Midfield
Dale Stephens Jun 12, 1989 (31) £2.25m  
Central Midfield
Josh Benson Dec 5, 1999 (20) £360Th.  

Central Midfield
Anthony Gomez Mancini Apr 6, 2001 (19) £225Th.  
Central Midfield
Mace Goodridge Sep 13, 1999 (20) £180Th.  
Central Midfield
Robbie Brady Jan 14, 1992 (28) £2.70m  
Left Midfield
Lewis Richardson Feb 7, 2003 (17) £180Th.  
Attacking Midfield
Dwight McNeil Nov 22, 1999 (20) £19.80m  
Left Winger
Jóhann Berg Gudmundsson Oct 27, 1990 (29) £2.70m  
Right Winger
Max Thompson Feb 9, 2002 (18) - 
Right Winger
Chris Wood Dec 7, 1991 (28) £7.20m  
Centre-Forward
Jay Rodríguez Jul 29, 1989 (30) £3.60m  
Centre-Forward
Ashley Barnes Oct 30, 1989 (30) £3.15m  
Centre-Forward
Matej Vydra May 1, 1992 (28) £2.70m  
Centre-Forward
Joel Mumbongo Jan 9, 1999 (21) £270Th. 
Centre-Forward
* Didn't realise Tarks and Gibson were goalkeepers🤔

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Re: Good news—bad news??

Post by ClaretPete001 » Sun Jan 16, 2022 11:21 pm

Bosscat wrote:
Sun Jan 16, 2022 11:11 pm
* Didn't realise Tarks and Gibson were goalkeepers🤔
Unless Nick Pope is a Bailey Peacock Farrell it doesn't say they are.

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Re: Good news—bad news??

Post by Paul Waine » Sun Jan 16, 2022 11:26 pm

ewanrob wrote:
Sun Jan 16, 2022 5:52 pm
No expert at all on the takeover, but can you please explain exactly what debt is on the club and what is on Mr Pace and his team if they walked away in the Summer. Would the club lose just the reserves it had in the bank.

You say MSD charges over our Assets, but loan made to ALK...confused !!
Hi ewanrob, I’ve marked your 2 questions, (1) and (2). I can answer (2) with confidence, because all the relevant documents are filed with Companies House. (Anyone who is interested can access the Companies House records – there’s no charge to do it).

Let’s start with Burnley FC Holdings Limited, Registered No. 08335231. On 30th December 2020, BFCHL entered into a Securities Accession Deed, as one of 3 New Chargors – the other two were Burnley Football and Athletic Company Limited (The), Reg.No. 00054222 and Longside Properties Limited, Reg.No. 05202619 – and MSD UK Holdings Limited, as Security Agent.

The Security Accession Deed starts by stating that “This Deed is supplemental to a debenture dated 23rd December 2020 between Calder Vale Holdings Limited as the Chargor and the Security Agent.

Looking at Calder Vale Holdings Limited, Reg.No.12919689 Companies House filings we can see the Debenture. Included among the Definitions of this Debenture we read: “Term Loan Agreement” means the term loan agreement dated on or around the date of this Debenture between, among others, the Security Agent and the Chargor.

The Debenture document is much longer than the Security Accession Deed (Companies House filings show 51 pages v 15 pages, respectively). I’ve done no more than a cursory glance through the Debenture – maybe I’ll find time to read and review it another time.

These clause appear relevant for our discussion:

Clause 24.2 Changes to Parties

Each Chargor authorises and agrees to changes to parties under clause 19 (Changes to Parties) of the Term Loan Agreement and authorises the Security Agent to execute on its behalf any document required to effect the necessary transfer of rights or obligations contemplated b those provisions.

Clause 24.3 New Subsidiaries

Each of the Chargors will procure that any new Subsidiary of it which is required to do so by the terms of the Term Loan Agreement executes a Security Accession Deed.

The Term Loan Agreement is not on public file – so we can’t see any of the details of the loan.

Calder Vale Holdings has recorded on Companies House that Kettering Capital Limited, Reg.No.12975630 is the Relevant Legal Entity Person with Significant Control – holds, directly or indirectly, 75% or more of the shares/voting rights/appoint or remove a majority of the board of directors in the company.

Looking at KCL’s Companies House filings we see KCL (as Chargor) entered into a Share Charge and Receivables Assignment Agreement on 23rd December 2020 with MSD UK Holdings Limited (as Security Agent). The Definitions of this SC and RA Agreement also references the “Term Loan Agreement” means the term loan agreement dated on or around the date of this Debenture between, among others, the Security Agent and the Chargor.

This suggests that both Calder Vale and Kettering Capital are parties under the Term Loan Agreement.

So, that’s how it works, Calder Vale is, of course, the ALK entity that directly owns BFCHL and Kettering Capital is the ALK entity that owns Calder Vale.

Without sight of the Term Loan Agreement (which I wouldn’t expect would ever be in the public domain) all we can tell is that Calder Vale and Kettering Capital are parties to the TLA and that both provide significant security to MSD for the term loan. The Security Accession Agreement extends that security to BFCHL, including property at Turf Moor and Barnfield.

All of this is pretty standard and legal in corporate lending.

It is more difficult to answer (1) – because we don’t have all the relevant information.

BFCHL’s accounts for the period ended 31-July-2021 will only be filed in April this year. I’d expect the accounts to say something about the ALK loan from MSD and that MSD hold security charges. Of course, you are asking about the accounting period ending summer 2022, so that’s a further 12 months beyond the accounts that we should be able to see in about 3 months time.

Could Alan Pace and ALK walk away? I don’t think it will be either easy or painless for them to consider doing this (and I don't expect walking away is any part of Alan Pace's plans). As we can see from Companies House filings, ALK companies have provided security to MSD. It wouldn’t surprise me if this security extended beyond what we can see in UK Companies House records.

BTW: “Reserves” is an accounting term. Reserves are not the same as “cash in the bank.”

I hope this is helpful.

Apologies that it is lengthy.

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Re: Good news—bad news??

Post by Paul Waine » Sun Jan 16, 2022 11:31 pm

dsr wrote:
Sun Jan 16, 2022 9:52 pm
This from a man who thinks that ALK haven't taken money out of the club, and that when a business is in financial trouble its assets are worth less? I look forward to hearing more.
Hi dsr, I'd love you to provide an example of a business that is in financial trouble while the business assets are increasing in value.

I'd also welcome your views on the respective security charges that the various ALK and BFC entities have provided to MSD.

UTC

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Re: Good news—bad news??

Post by aggi » Sun Jan 16, 2022 11:50 pm

It's a fairly uninformative article
https://www.dailymail.co.uk/sport/footb ... gated.html

Personally I'd be surprised by the buy back being as described and it would be surprising if it's exercised unless the price is minimal (in which case it's unlikely ALK would agree to that). The club reverting to Garlick (and John B you'd assume) on default sounds more possible.

Lots of conflating ALK and BFC in the above posts and inconsistencies in complaining about large loans/amounts being taken out of the club and large amounts left to pay.

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Re: Good news—bad news??

Post by ClaretPete001 » Sun Jan 16, 2022 11:57 pm

Paul Waine wrote:
Sun Jan 16, 2022 11:31 pm
Hi dsr, I'd love you to provide an example of a business that is in financial trouble while the business assets are increasing in value.

UTC
A Jeweller who over reaches himself buying stock could see the value of his assets increase but be unable to realise their value quickly enough to meet his debts.

Course if the Jeweller also had a drinking problem and took too much money out of the business to pay his gambling debts it would be even more pronounced.

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Re: Good news—bad news??

Post by dsr » Mon Jan 17, 2022 12:17 am

Paul Waine wrote:
Sun Jan 16, 2022 11:31 pm
Hi dsr, I'd love you to provide an example of a business that is in financial trouble while the business assets are increasing in value.

I'd also welcome your views on the respective security charges that the various ALK and BFC entities have provided to MSD.

UTC
It's fairly obvious that two identical buildings next door to each other, have pretty similar values. If one of them is owned and occupied by a loss making business, it doesn't affect the value of the property.

As for my views on BFC providing security for someone else's loans, I'm against. There's no benefit for the club.

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Re: Good news—bad news??

Post by ClaretPete001 » Mon Jan 17, 2022 9:54 am

dsr wrote:
Mon Jan 17, 2022 12:17 am
It's fairly obvious that two identical buildings next door to each other, have pretty similar values. If one of them is owned and occupied by a loss making business, it doesn't affect the value of the property.

As for my views on BFC providing security for someone else's loans, I'm against. There's no benefit for the club.
It's not unusual for businesses to over reach themselves and find they can't realise the value of their assets quickly enough to meet their obligations resulting in cashflow problems. Usually in such a circumstance a bigger business with deeper pockets would come along and resolve the problem because the underlying assets have a value.

Indeed the underlying assets may have a greater value than the company itself, which was the theme of films like Pretty Women.

The big problem is that in Burnley's case the underlying business would not be appealling because ALKs strategy is not necessarily to grow BFC but to use it to grow other businesses in their portfolio.

If ALK was well established Burnley could exist as a kind of brand loss leader but it's not clear ALK are in that position. If Microsoft had sporting talent products and wanted a football club in their portfolio no one would be bothered about a couple of hundred million quid or chucking twenty million quid at squad investment per annum, which would have equated to a 60 million budget spend over the last 3 years.

In the same way that 25 million is a mad price to pay for Chris Wood if you are not Newcastle United but when Newcastle do it - it makes perfect sense.

The ALK issue is not the minutiae of the deal - it's in the riskiness of the business model for the individuals companies in the portfolio.

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