Burnley's MSD loan reduction essentially confirmed

[RVclaret]

It is not possible to just pay down the capital on the MSD loan whenever it takes your fancy. Early repayment of the loan capital requires a specific triggers the payment of penalties as Southampton's new owners are finding. It is also the clear intention of VSL to replay the capital by way of dividend to themselves which will then be paid to (as a loan repayment) to Burnley FC Holdings Limited and then forward to MSD at the end of December 2025 - this requires the necessary accumulated profit and cash holding. By that date VSL are scheduled to hold (and just as importantly paid for) around 99% of the total shareholding in the club.

If the terms of the loan were for a ‘significant chunk’ of the loan to be paid back, this was a known ‘early repayable’ fee clearly agreed between the parties. The accounts also state in season 2, there would be another chunk payable. I see what you are saying but at the same time these payments were agreed, so I don’t understand how they can then penalise for making those payments.

[Colburn_Claret]

There has been a reduction on the related The International Stock Exchange in Guernsey for the loan related to Burnley

It suggests that the club has had to pay £15m (and likely the additional penalty of the lost interest over the original loan period) so less that £20m overall by my estimation

it seems like Pace and VSL have pulled this out of the bag to my eyes

https://tisegroup.com/market/companies/8061

I confess that's over my head, but if I takes you happy I'm sure it will make me happy

[Chester Perry]

Not sure about that, can certainly read accounts better than us mere mortals, and seems surprised by this find today, yet many have been saying for a while things were not as bad as suggested on here by so called experts

If I was surprised by it I would not have looked for it - I have been checking daily since the beginning of the month. I said in the accounts thread that this is where we would find out about it and also in the article I have written for the London clarets that is due to be posted out this week

[Chester Perry]

If the terms of the loan were for a ‘significant chunk’ of the loan to be paid back, this was a known ‘early repayable’ fee clearly agreed between the parties. The accounts also state in season 2, there would be another chunk payable. I see what you are saying but at the same time these payments were agreed, so I don’t understand how they can then penalise for making those payments.

I have posted my reasoning up the thread which fully embraces MSD's Mission Statement

“… to make investments that consistently generate superior absolute risk-adjusted returns over the long-term.”

[arise_sir_charge]

Are we sure we still owe Mike Garlick that much?

I’d be surprised if the value of what he was entitled to had not reduced with relegation. That’s fairly standard practice in business purchases.

[Chester Perry]

I confess that's over my head, but if I takes you happy I'm sure it will make me happy

I wouldn't say I was happy, though there where plenty of much worse scenarios that could have occurred - there is still a lot of pressure on the coming season - promotion is probably essential

[jedi_master]

So will this bump up the total loan from them (in interest, I mean) or is it a simple deferrment agreement with no downside for Burnley? It would be nice to think the loan is now already down to just (just!) £50m from paying off £15m.

What a positive day after the last few months today is, fantastic.

[Chester Perry]

Are we sure we still owe Mike Garlick that much?

I’d be surprised if the value of what he was entitled to had not reduced with relegation. That’s fairly standard practice in business purchases.

I agree that would be a fairly standard agreement

yet there was no indication of that in the Offer Letter to the small Shareholders which you received

and I don't know if such an agreement would change the payment due this month - when the accounting/footballing year was in the Premier League

[RVclaret]

I wouldn't say I was happy, though there where plenty of much worse scenarios that could have occurred - there is still a lot of pressure on the coming season - promotion is probably essential

I don’t think promotion is ‘essential’ by any means, though clearly very important and of course there will be big challenges ahead if not - the same for most relegated clubs.

[Nori1958]

If I was surprised by it I would not have looked for it - I have been checking daily since the beginning of the month. I said in the accounts thread that this is where we would find out about it and also in the article I have written for the London clarets that is due to be posted out this week

Your opening post suggests its a surprise.....

[RVclaret]

If I was surprised by it I would not have looked for it - I have been checking daily since the beginning of the month. I said in the accounts thread that this is where we would find out about it and also in the article I have written for the London clarets that is due to be posted out this week

Pace and ALK ‘pulling one out of the bag’ suggests you were surprised

[Chester Perry]

Your opening post suggests its a surprise.....

only by the amount that MSD required, I also gave credit to Pace/VSL for the negotiation they must have put in

[arise_sir_charge]

I agree that would be a fairly standard agreement

yet there was no indication of that in the Offer Letter to the small Shareholders which you received

and I don't know if such an agreement would change the payment due this month - when the accounting/footballing year was in the Premier League

I suppose the difference is that the offer to small shareholders wasn’t interested incumbent on future performance and was a one off payment/transaction. As an example I doubt MG has received payment in club credit.

I’d be surprised if the payments to the major shareholders weren’t related to future performance.

[Nori1958]

only by the amount that MSD required, I also gave credit to Pace/VSL for the negotiation they must have put in

I thought there hadn't been any negotiations....

[Chester Perry]

I suppose the difference is that the offer to small shareholders wasn’t interested incumbent on future performance and was a one off payment/transaction. As an example I doubt MG has received payment in club credit.

I’d be surprised if the payments to the major shareholders weren’t related to future performance.

All of which is fairly normal, as you know from your professional life much better than I do

That letter did give an overview of the takeover agreements and I would expect given that it refers to:
- the 'minimum' price per share and that there performance related bonuses on that price
- what happens in a default scenario

that it would also mention what would happen in a negative performance scenario

[Chester Perry]

I thought there hadn't been any negotiations....

19 Financial commitments, guarantees, contingent assets and contingent liabilities
Group borrowings

The capital element of the loan is due for repayment by Burnley FC Holdings Limited in December 2025 with interest only payments being required up to that point, providing the club remains in the Premier League. In the event of the club’s relegation from the Premier League, the repayments schedule for the capital element of the loan is brought forward, with a significant proportion falling due for repayment shortly after the end of the football season in which the relegation event takes place. This repayment would, therefore, be expected to fall due within less than one year from the balance sheet date in there circumstances. In a continuing relegation scenario, a further significant reduction of the loan balance would also take place in the following season. These amounts are subject to agreement between the parties.

That is a negotiation bounded by the loan agreement

- you are trying too hard

[Nori1958]

19 Financial commitments, guarantees, contingent assets and contingent liabilities
Group borrowings

The capital element of the loan is due for repayment by Burnley FC Holdings Limited in December 2025 with interest only payments being required up to that point, providing the club remains in the Premier League. In the event of the club’s relegation from the Premier League, the repayments schedule for the capital element of the loan is brought forward, with a significant proportion falling due for repayment shortly after the end of the football season in which the relegation event takes place. This repayment would, therefore, be expected to fall due within less than one year from the balance sheet date in there circumstances. In a continuing relegation scenario, a further significant reduction of the loan balance would also take place in the following season. These amounts are subject to agreement between the parties.

That is a negotiation bounded by the loan agreement

- you are trying too hard

My last post on this matter, because today is a good day

You repeatedly said there had been no negotiations on any loan

Today you praise Pace and Co for their negotiations

[Chester Perry]

My last post on this matter, because today is a good day

You repeatedly said there had been no negotiations on any loan

Today you praise Pace and Co for their negotiations

Er that would be a ? No and No

not praise for Pace and Co just an acknowledgement that it could be much worse - this mess is not worthy of Praise for anyone (including Garlick).

there is a sane way out of this, that would help the club now, but it seems that VSL in particular are not wanting to take this route (at least not yet) and the fans would for the most part be unhappy with it

[Nori1958]

only by the amount that MSD required, I also gave credit to Pace/VSL for the negotiation they must have put in

[Chester Perry]

we have different definitions to praise as well it seems

[Quickenthetempo]

My last post on this matter, because today is a good day

You repeatedly said there had been no negotiations on any loan

Today you praise Pace and Co for their negotiations

Nori1958, why are you attacking ChesterP? He posts everything he finds on our finances for posters to make their own mind up. I would call that pretty neutral.

I presume this would be the first chance anyone could see the renegotiation out in public?

[claretandy]

these amounts are subject to agreement between the parties.

I said this at the time that everyone was getting their knickers in a twist.

[Nori1958]

we have different definitions to praise as well it seems

You do, however the official definition....of to credit someone.... First link off google

To give someone praise, admiration, or acknowledgement for some task, achievement, or accomplishment.

[Nori1958]

Nori1958, why are you attacking ChesterP? He posts everything he finds on our finances for posters to make their own mind up. I would call that pretty neutral.

I presume this would be the first chance anyone could see the renegotiation out in public?

I openly stated he's good with accounts, but he's not always right with his assumptions

[AwayClaret]

The plssing contest has started again.

[Chester Perry]

I openly stated he's good with accounts, but he's not always right with his assumptions

I wouldn't agree with the former but do agree with the latter, but that is the nature of assumptions - I do however, seek to give the reasoning for my assumptions where possible and often that means a set of conditions have to apply - if they don't then the assumption falls down as a matter of course

[Chester Perry]

You do, however the official definition....of to credit someone.... First link off google

To give someone praise, admiration, or acknowledgement for some task, achievement, or accomplishment.

or acknowledgement - which is what I did

[Quickenthetempo]

I openly stated he's good with accounts, but he's not always right with his assumptions

Nobody is always right with assumptions, but he's a fair poster as he posts evidence, even if goes against his previous thoughts.

[Guller Bull]

Fight in the Grammar School Quadrangle!

Let it go lads - it's summer and a good news day. Hug and make it up you are on the same team.

[deanothedino]

A lot more than £15m needed to be paid on relegation

How so? The accounts said the amount was to be determined upon the event occurring.

[Chester Perry]

that's me done for a while I think - unless something else on the finances crops up

have a great summer everyone

[Swizzlestick]

You do, however the official definition....of to credit someone.... First link off google

To give someone praise, admiration, or acknowledgement for some task, achievement, or accomplishment.

What a bizarrely antagonistic attitude against one of the most knowledgable posters on the forum.

[Nori1958]

What a bizarrely antagonistic attitude against one of the most knowledgable posters on the forum.

It's not antagonist.... Just pointing out something to him, he's a big boy and can give out as much as he receives which I admire...

[Nori1958]

Nobody is always right with assumptions, but he's a fair poster as he posts evidence, even if goes against his previous thoughts.

Exactly

[Steve-Harpers-perm]

Have Talksport and Daily Mail not reported on this news yet?

[Vegas Claret]

that's me done for a while I think - unless something else on the finances crops up

have a great summer everyone

top stuff CP, thanks for your contributions !

[Paul Waine]

I have posted my reasoning up the thread which fully embraces MSD's Mission Statement

“… to make investments that consistently generate superior absolute risk-adjusted returns over the long-term.”

Hi CP, I'm 100% certain you are reading too much into MAC's mission statement. There is no entity in the world that is aimed at attracting investments, as MSD is, that would have a mission statement that says "we aim to achieved so so returns, and never better than the market average."

[NewClaret]

Have Talksport and Daily Mail not reported on this news yet?

I’m sure they would find a negative slant on it if they did.

[Paul Waine]

There has been a reduction on the related The International Stock Exchange in Guernsey for the loan related to Burnley

It suggests that the club has had to pay £15m (and likely the additional penalty of the lost interest over the original loan period) so less that £20m overall by my estimation

it seems like Pace and VSL have pulled this out of the bag to my eyes

https://tisegroup.com/market/companies/8061

Hi CP, I get the assumption that £65 million loan notes listed for trading on TISE are the flip side of the £65 million loan by MSD to BFC. But, these notes mature 2031, a full 6 years after BFC's loan is due for repayment. Is there anything else that reinforces the link between the two?

I'm happy to go with the assumption that £15 million is a "significant amount" agreed between ALK / Alan Pace and MSD. My "worst case" would have been £25 million. £15 million is the other end of my guesstimate. Of course, all this based on the limited insights we have to BFC's and ALK's respective finances.

I wonder if we will get more info in the next few weeks?

[Hipper]

Er that would be a ? No and No

not praise for Pace and Co just an acknowledgement that it could be much worse - this mess is not worthy of Praise for anyone (including Garlick).

there is a sane way out of this, that would help the club now, but it seems that VSL in particular are not wanting to take this route (at least not yet) and the fans would for the most part be unhappy with it

What in your view is the 'sane way out'?

[NewClaret]

Hi CP, I get the assumption that £65 million loan notes listed for trading on TISE are the flip side of the £65 million loan by MSD to BFC. But, these notes mature 2031, a full 6 years after BFC's loan is due for repayment. Is there anything else that reinforces the link between the two?

I'm happy to go with the assumption that £15 million is a "significant amount" agreed between ALK / Alan Pace and MSD. My "worst case" would have been £25 million. £15 million is the other end of my guesstimate. Of course, all this based on the limited insights we have to BFC's and ALK's respective finances.

I wonder if we will get more info in the next few weeks?

I noticed that. Has the maturity date also been extended?

[Taffy on the wing]

19 Financial commitments, guarantees, contingent assets and contingent liabilities
Group borrowings

The capital element of the loan is due for repayment by Burnley FC Holdings Limited in December 2025 with interest only payments being required up to that point, providing the club remains in the Premier League. In the event of the club’s relegation from the Premier League, the repayments schedule for the capital element of the loan is brought forward, with a significant proportion falling due for repayment shortly after the end of the football season in which the relegation event takes place. This repayment would, therefore, be expected to fall due within less than one year from the balance sheet date in there circumstances. In a continuing relegation scenario, a further significant reduction of the loan balance would also take place in the following season. These amounts are subject to agreement between the parties.

That is a negotiation bounded by the loan agreement

- you are trying too hard

You are a very patient man Chester Perry.......

[Chester Perry]

Hi CP, I get the assumption that £65 million loan notes listed for trading on TISE are the flip side of the £65 million loan by MSD to BFC. But, these notes mature 2031, a full 6 years after BFC's loan is due for repayment. Is there anything else that reinforces the link between the two?

This has caused confusion before

it appears standard practice for MSD to offset loans for 10 years - remember the one related to ours was first posted in Feb 2021

it also seems standard practice for MSD to agree loan terms of 5 years in football - that is what we have learned from their agreements so far where this detail has been made public

as we have seen it is a simple matter for MSD to revise/end a TISE listing - the excess allows for a huge range of scenarios including rolling the loan over for another term - forward thinking on their part I would say

I know I differ from your thinking Paul about who has taken these loan notes -I think it is a tax efficient exercise to move monies back to the parent in the Cayman Islands you have suggested previously that they would be on the open market

at the end of the day we probably need to take aggi's advice and not overthink what is there and just go off everything we know to be factual from legal documents on public record - so I will say we now have £50m to pay on December 30 2025

[Paul Waine]

I noticed that. Has the maturity date also been extended?

MSD's loan to ALK / BFC is separate from MSD's loan notes listed on TISE. We'd need to look at the date MSD first listed £65 million loan notes on TISE and their original maturity.

[Paul Waine]

This has caused confusion before

it appears standard practice for MSD to offset loans for 10 years - remember the one related to ours was first posted in Feb 2021

it also seems standard practice for MSD to agree loan terms of 5 years in football - that is what we have learned from their agreements so far where this detail has been made public

as we have seen it is a simple matter for MSD to revise/end a TISE listing - the excess allows for a huge range of scenarios including rolling the loan over for another term - forward thinking on their part I would say

I know I differ from your thinking Paul about who has taken these loan notes -I think it is a tax efficient exercise to move monies back to the parent in the Cayman Islands you have suggested previously that they would be on the open market

at the end of the day we probably need to take aggi's advice and not overthink what is there and just go off everything we know to be factual from legal documents on public record - so I will say we now have £50m to pay on December 30 2025

Feb 2021 makes the link for me. Yes, looks like MSD hold the right to withdraw early. Interest rates, respectively, of 8% and Libor +8% are also good links.

Agree, we should expect BFC's next set of accounts to say £15 million repaid and o/s balance £50 million. (Always assuming no further developments).

UTC

[Tricky Trevor]

No proof but I read earlier today that they took out fresh loans to pay off this amount.
The debt will be the same, the interest will be higher.

[RVclaret]

No proof but I read earlier today that they took out fresh loans to pay off this amount.
The debt will be the same, the interest will be higher.

Where did you read this?

[NewClaret]

No proof but I read earlier today that they took out fresh loans to pay off this amount.
The debt will be the same, the interest will be higher.

Where did you read this?

[Tricky Trevor]

Where did you read this?

Apologies I can't remember but possibly in the sky article on VK and our future.

[RVclaret]

Apologies I can't remember but possibly in the sky article on VK and our future.

Can’t find anything on that anywhere to be fair. If you can find it then link it in here.