ALK Capital or Farnell/Elkashashy takeover

[Bertie2015]

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This is how the amounts due from Calder Vale to BFC will be cleared down

[NewClaret]

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This is how the amounts due from Calder Vale to BFC will be cleared down

Not sure I understand that? It’s basically saying they are owed money by a group company but chances of it ever being repaid are next to none therefore likely to be written off at some point when the dust has settled?

[Bertie2015]

If BFC declare a dividend in the future, rather than it being paid in cash it will reduce the amount owed by CVH.
CVH have already had the cash which is what has created the £70m debtor balance.

A way to think about it is CVH have recived cash in advance of £70m rather than receiving dividends over a number of years

[aggi]

I don't think anyone came up with the scenario regarding the old/new loan did they?..that seems to be the only surprise

I think a fair few, including myself, expected it to be refinanced. Just unclear how much and who with. My thoughts when it was being discussed were:

I still struggle to see why, commercially, all loans would have been repaid. As I said previously, their underlying motivation is profit (obviously things like promotion, developing sellable players, etc fortunately ties in with this) and if you want to maximise profit then you would expect a certain level of debt (and risk) to allow this.

[aggi]

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This is how the amounts due from Calder Vale to BFC will be cleared down

Yes, that was in last year's accounts too. I think the new Articles will also enable this.

[Nori1958]

I think a fair few, including myself, expected it to be refinanced. Just unclear how much and who with. My thoughts when it was being discussed were:

I still struggle to see why, commercially, all loans would have been repaid. As I said previously, their underlying motivation is profit (obviously things like promotion, developing sellable players, etc fortunately ties in with this) and if you want to maximise profit then you would expect a certain level of debt (and risk) to allow this.

So, not how much...and not with a private lender?..which is the scenario I was referring to......many thought it had been paid back in full somehow

[arise_sir_charge]

My guess on the loan would be it’s Garlick or less likely John B.

[Bertie2015]

I don't think it would as that would need to be disclosed as an related party transaction as they are both still directors.
Also very much doubt ALK would want to give previous owners any (more) leverage over them

[Chester Perry]

So, not how much...and not with a private lender?..which is the scenario I was referring to......many thought it had been paid back in full somehow

aggi is right there were a few - it is the only solution that made sense

...The final debt clearance (32.8m) paid off in November was facilitated by a new loan at a substantially lower rate of interest than the MSD one - possibly at a fixed rate (bonkers given no new Charges I know but there you go) - The cost of that November clearance will be close to £40m when penalties have been added - it still makes things cheaper overall ...

strangely there is no mention about the August voluntary debt reduction of circa £12.2m - though we must assume penalties were applied to that too

Something still seems odd with repaying the loan, as the maths with the new loan don’t seem to stack up for it to be a benefit, if there are 6-7mm of penalties. (Assuming no big increase in rates).

I’m sure CP is right there are penalties (and he seems to have some inside info), but there’s something else going on I think for a reasoning. Whether that’s internal returns, attracting investors with stable debt, or something else I don’t know. I get the feeling CP does know!

The cost of the new loan is now a known entity as a direct result of the fixed rate.

Tellingly there is no declared end-date, that removes the shadow of December 2025 that existed under the MSD loan - if earnings are to increase as anticipated - this will be relatively cheap money for a club like ours - it appears an very good deal

I don't think it would as that would need to be disclosed as an related party transaction as they are both still directors.
Also very much doubt ALK would want to give previous owners any (more) leverage over them

That is what stopped me going down the Garlick line of thought - though intriguingly Clarets go Large has not posted accounts yet - normally they go to Companies House in mid March with the rest of his interests

[Colburn_Claret]

Given that everyone else here appears to assume you are talking about me - I wouldn't have been so presumptuous



I have been using my spare time today to wade through and try and get to grips with more of the documents related to the Jersey based entities within the the group that contains our club

What is clearly evident in these documents is that ALK Capital LLC has taken every legal course to protect its position as managing partner. Paul Waine has reminded us on a few occasions that both ALK Capital LLC and Velocity Sports Partners LLC are Partnerships, that means shares are not issued within these entities. When we look at the Jersey based entities we see clearly that there are shares issued,

In the case of Velocity Sports Feeder Ltd there are 3 classes of shares - Management, Class A and Class B - all have the same nominal value of £1. As of April 4 2023 only 1 share in VSFL had been issued (to ALK Capital LLC) and on that date it was made into a Management Share. Management Shares have votes per share the others 1 vote for each share

In the case of Velocity Sports limited there are 4 classes of shares - Management, Class A, Class B and Incentive again all have the same nominal value of £1. As of December 24 2020 there were just 3 shares issued out of an allotment of 1m

- ALK Capital LLC had 1 Management Share
- Velocity Sports Partners LLC had 1 Class A Share
- Velocity Sports Feeder Ltd had 1 Class B Share

It seems from my as yet admittedly vague understanding that is these shares that will be allotted to investors as they come on board, given some of the details laid out in the articles. It is noticeable that in general it is assumed that Management Shares will have 100 votes per share and for the most part the other shares will hold no voting rights unless specifically detailed in the articles and then only 1 vote per share.

Other things to note about VSL shares is that Management Shares must always make up at least 25% of the issued shares and that all other shareholders must agree to the anticipated likelihood that their shareholding will be diluted at some future point as others join the group. What is not yet clear to me is, if issues of Management shares to maintain the total issued proportion have to be paid for by the holders.

On the basis of this I have once again had another tweak of the group structure chart as I currently understand it


Assumed ALK Structure May 4 2023.png

Not trying to be obtuse, who'd be an accountant, but is the Velocity holdings then, just a tool, that allows investors such as JJ Watts, to put their money into the club, but gives them no control of the club at all. They just benefit from the share dividend.

[NewClaret]

My guess on the loan would be it’s Garlick or less likely John B.

That’s a very good point and more likely than my guess.

[NewClaret]

If BFC declare a dividend in the future, rather than it being paid in cash it will reduce the amount owed by CVH.
CVH have already had the cash which is what has created the £70m debtor balance.

A way to think about it is CVH have recived cash in advance of £70m rather than receiving dividends over a number of years

With you. It’s an odd one but understand now. Thanks for explaining.

[Bertie2015]

With you. It’s an odd one but understand now. Thanks for explaining.

No worries. Thing to remember is cash has gone out of BFC and almost certain to not be coming back!

[Chester Perry]

Not trying to be obtuse, who'd be an accountant, but is the Velocity holdings then, just a tool, that allows investors such as JJ Watts, to put their money into the club, but gives them no control of the club at all. They just benefit from the share dividend.

As of yet we have little idea why Velocity Sports Holdings Ltd has been created - it appears to replace Velocity Sports Partners Limited which was directly owned by Velocity Sports Partners LLC but is now in the process of being voluntarily dissolved. We could ask similar questions about ALK Capital Limited which is wholly owned by ALK Capital LLC.

My guess - and it is only that - that Velocity Sports Holdings Ltd will be used as a vehicle for other investments related to the ownership groups interests. The club may help finance those investments but they will not owned and controlled by the club

[Chester Perry]

Also, confirmation that ALK haven't taken any more money out of the club beyond the £10m that was noted in PBSE in last year's accounts.

Are we sure about that given the opening sentence in the image that Bertie 2015 has posted at the top of this page

[aggi]

So, not how much...and not with a private lender?..which is the scenario I was referring to......many thought it had been paid back in full somehow

Why do you think it is with a private lender?

[aggi]

Are we sure about that given the opening sentence in the image that Bertie 2015 has posted at the top of this page

Isn't that just a shifting about between Burnley FC Holdings and Burnley Football & Athletic Company? The Burnley FC Holdings figure drops by £20m. The overall group figure just shows the £10m(ish) increase.

Screenshot 2023-05-05 134421.jpg (58.72 KiB) Viewed 3613 times

[Chester Perry]

Isn't that just a shifting about between Burnley FC Holdings and Burnley Football & Athletic Company? The Burnley FC Holdings figure drops by £20m. The overall group figure just shows the £10m(ish) increase.

Screenshot 2023-05-05 134421.jpg

I don't know to be honest - I see numbers including the overall debt at CVHL to the BFC Holdings of £114.8m and wonder what happened to the £20m MSD related debt at CVHL- given the stage payments in the period and the acquisition of shares from the small shareholders last year minus the £20m also roughly account for the balance figures

[123EasyasBFC]

Embargone

[Ightenhill_Claret]

The embargo has been lifted. Just the Reading embargo on there now... https://www.efl.com/-more/governance/embargoes/

[Nori1958]

Why do you think it is with a private lender?

Probably breaking my own rules......but because I read it on here this morning

[pompeyclaret]

What's with the value of the new loan?

I'm an accountant, and oddly like to keep things simple. Did Mr Pace (or someone) go searching the institutions (or Ms Coates) and ask for £39,748,458? Not £37,750,000. Or even just a round £40m!?

[Bertie2015]

Could be a discounted value or converted from non-GBP currency

[NewClaret]

Probably breaking my own rules......but because I read it on here this morning

I read a post saying it was, so I assumed it was confirmed in the accounts, but I had speculated previously that it was a private lender, so may have started the speculation

[aggi]

Probably breaking my own rules......but because I read it on here this morning

There's your problem. As NewClaret says, he was just speculating.

[Vegas Claret]

so does Mr Pace know what he's doing then ?

[aggi]

I don't know to be honest - I see numbers including the overall debt at CVHL to the BFC Holdings of £114.8m and wonder what happened to the £20m MSD related debt at CVHL- given the stage payments in the period and the acquisition of shares from the small shareholders last year minus the £20m also roughly account for the balance figures

Looking at the group accounts I can't see how it has increased beyond the £10m. The group cash flow only shows £10m going up as well.

[Nori1958]

There's your problem. As NewClaret says, he was just speculating.

It was someone else....but I guess if we didn't speculate this thread would have died ages ago, thought I'd try it for once

[Chester Perry]

Looking at the group accounts I can't see how it has increased beyond the £10m. The group cash flow only shows £10m going up as well.

Don't get me wrong - It can only be good news if the ownership group has been using it's own monies to meet the share buying commitments, but to date we haven't seen that kind of funding being made available from within them

there are some oddities in these accounts - all well and good mentioning the clearance of the MSD balance as at November 2022 but why not mention the £12.2m MSD balance reduction in August 2022

Could you also explain the relative merits of switch £37m of financing within the group to investing within the group and how that is represented in the numbers.

[aggi]

Don't get me wrong - It can only be good news if the ownership group has been using it's own monies to meet the share buying commitments, but to date we haven't seen that kind of funding being made available from within them

there are some oddities in these accounts - all well and good mentioning the clearance of the MSD balance as at November 2022 but why not mention the £12.2m MSD balance reduction in August 2022

Could you also explain the relative merits of switch £37m of financing within the group to investing within the group and how that is represented in the numbers.

Maybe additional investors have come in which have covered that tranche, maybe Garlick, etc have agreed to delay it, who knows.

What does and doesn't hit PBSE doesn't have great guidance. You could take the view that stating the final amount repaid and refinanced gives sufficient information and detailing the additional repayment is unnecessary.

No idea about why that was restated. Different tax treatment maybe, just clarification and to make things clearer going forward? You can see it in the cash flow statement but it really just means things fall under a different heading.

[Socrates]

If it is a private individual who has lent the club the money could be a Burnley supporter who has just come into a large sum of money who is prepared to lend it at a beneficial rate?

Like Mike Garlick?

[Bertie2015]

If it is a private individual who has lent the club the money could be a Burnley supporter who has just come into a large sum of money who is prepared to lend it at a beneficial rate?

Like Mike Garlick?

I don't think it would as that would need to be disclosed as an related party transaction as they are both still directors.
Also very much doubt ALK would want to give previous owners any (more) leverage over them

[Down_Rover]

I posted this in May last year when we got last years accounts.
I was told I had it all wrong

Down_Rover wrote: ↑
It is very hard to draw conclusions about accounts that are over 12 months in the past.

Another season has gone by and it is reasonable to assume the Balance Sheet has improved since then. This is because the P&L Account is likely to be better, attendances at the ground and a further years trading. Even in 2021 the loss of £3m was after charging £20m+ on amortisation of player contracts. Further, a note to the 2021 accounts suggests that net transfer spend in this season was £1.3m ie minimal.

The likelihood is that cash at bank is now much higher than £50m

So what happens if we are relegated. MSD will want their loan back. The Club says we cant pay and needs a compromise. We agree, say, to pay half and then two quarters in 2024 and 2025.

We will have cash in the Bank, sale of players on expensive contracts who will leave anyway and the parachute payments. We will still be better funded than most Championship clubs until the parachute payments stop, by which time our cost base will reduce. The worst scenario I can see is that we will have to compete against Championship clubs with no financial edge. It is where we started.

In the background we have ALK who will not want the £102m debt to crystallise and MSD who will agree to a compromise rather than see the club fall over and they lose their dosh. Both ALK and MSD are in too deep to allow the club to fall over.

On the other hand if we avoid relegation ALK and MSD will invest to attempt to ensure a longer term survival plan

[RVclaret]

Andy Jones and Matt Slater article in the Athletic about the accounts:

https://theathletic.com/4493166/2023/05 ... alan-pace/

Interestingly they are suggesting the new loan is from the British arm of Macquarie.

[claretandy]

Andy Jones and Matt Slater article in the Athletic about the accounts:

https://theathletic.com/4493166/2023/05 ... alan-pace/

Interestingly they are suggesting the new loan is from the British arm of Macquarie.

Halving the interest payments.

[RVclaret]

A number of things I don’t fully agree with in their article.

- suggesting 22/23 accounts will have a large loss, I just don’t see it, significantly lower wage bill (30-35m) and 17.5m sale of Cornet, I reckon it will be an overall profit again
- suggesting relegation wage cuts are usually 25%, not sure where this is from but all the evidence points towards 45-50%
- suggesting TV money total will be £46m, it will actually be closer to £55m (see Fulham’s recent accounts from the Champ)

[Paul Waine]

Andy Jones and Matt Slater article in the Athletic about the accounts:

https://theathletic.com/4493166/2023/05 ... alan-pace/

Interestingly they are suggesting the new loan is from the British arm of Macquarie.

Not able to read, I'm not a subscriber.

The curious thing with the new loan is no charge(s) has been registered at Companies House. On the other hand the original MSD charge has not been shown to be "satisfied in full" on every corporate entity.

Any lawyers on here who know if a charge can be assigned from one party to another, especially in the circumstances when the original loan has been repaid and replaced by a new loan from a different entity?

I'm not sure why Macquarie, for example, would content themselves with someone else's charge docs. Much more likely that Macquarie lawyers insist on their own change documentation.

Also, if Macquarie, or any other financial institution why not name them in the accounts and why not permit any financial institution lender to publicise their business capabilities and seek opportunities for further football loans.

[Paul Waine]

A number of things I don’t fully agree with in their article.

- suggesting 22/23 accounts will have a large loss, I just don’t see it, significantly lower wage bill (30-35m) and 17.5m sale of Cornet, I reckon it will be an overall profit again
- suggesting relegation wage cuts are usually 25%, not sure where this is from but all the evidence points towards 45-50%
- suggesting TV money total will be £46m, it will actually be closer to £55m (see Fulham’s recent accounts from the Champ)

Peter Crouch said 45-50% was standard and showed his contract (didn't identity which club) it was in.

I'd expect Burnley - simple economics - to be more in Crouch range.

[Nori1958]

Not able to read, I'm not a subscriber.

The curious thing with the new loan is no charge(s) has been registered at Companies House. On the other hand the original MSD charge has not been shown to be "satisfied in full" on every corporate entity.

Any lawyers on here who know if a charge can be assigned from one party to another, especially in the circumstances when the original loan has been repaid and replaced by a new loan from a different entity?

I'm not sure why Macquarie, for example, would content themselves with someone else's charge docs. Much more likely that Macquarie lawyers insist on their own change documentation.

Also, if Macquarie, or any other financial institution why not name them in the accounts and why not permit any financial institution lender to publicise their business capabilities and seek opportunities for further football loans.

It was a question I was going to ask, but thought maybe I was wrong, but great play was made on here about no charge appearing, yet this is the first time I've seen it questioned since publication of the accounts, perhaps those who thought it significant a week ago could perhaps give us their opinion now?

[RVclaret]

Peter Crouch said 45-50% was standard and showed his contract (didn't identity which club) it was in.

I'd expect Burnley - simple economics - to be more in Crouch range.

Yes we can also see recent-ish accounts from other relegated clubs of similarish size like West Brom, Norwich and to an extent, Bournemouth - all showed between 45-50% reduction in the wage bill.

[ClaretPete001]

A number of things I don’t fully agree with in their article.

- suggesting 22/23 accounts will have a large loss, I just don’t see it, significantly lower wage bill (30-35m) and 17.5m sale of Cornet, I reckon it will be an overall profit again
- suggesting relegation wage cuts are usually 25%, not sure where this is from but all the evidence points towards 45-50%
- suggesting TV money total will be £46m, it will actually be closer to £55m (see Fulham’s recent accounts from the Champ)

How are you doing the math to correlate the first two bullet points?

[RVclaret]

How are you doing the math to correlate the first two bullet points?

Total revenue before player trading will be somewhere around 70m.

Wage bill around 30-35m after 45-50% wage cuts of existing PL players, ones that left and new younger players on lower wages signed (there were comments in these accounts of the massively reduced wage bill too).

Player amortisation could stay roughly the same around 25m. With other operating costs perhaps it will be break even or even a slight profit.

Add the Cornet sale back in and you’d have a nice profit. Of course we won’t learn this for another year.

[Paul Waine]

It was a question I was going to ask, but thought maybe I was wrong, but great play was made on here about no charge appearing, yet this is the first time I've seen it questioned since publication of the accounts, perhaps those who thought it significant a week ago could perhaps give us their opinion now?

I'm one who placed a lot of confidence in "no charge = no new loan."

Yes, there was inconsistency in some of charges being recorded as "satisfied in full" and 2 others not shown as any change.

We now know there is a new loan - but the lender isn't named.

Interesting trying to speculate about how everything financial works.

[ClaretPete001]

Total revenue before player trading will be somewhere around 70m.

Wage bill around 30-35m after 45-50% wage cuts of existing PL players, ones that left and new younger players on lower wages signed (there were comments in these accounts of the massively reduced wage bill too).

Player amortisation could stay roughly the same around 25m. With other operating costs perhaps it will be break even or even a slight profit.

Add the Cornet sale back in and you’d have a nice profit. Of course we won’t learn this for another year.

I think a lot of those contracts that ended tended to be for players likely at the end of their careers so I'm not sure they would tantamount to 60 - 70 per cent reductions with regard to the new players coming in to get from £90 to £30 million.

Also there would be significant agents fees involved in signing so many new players, which may not be wages but would add to the expenses.

I think when I (we - the forum) has looked at clubs the 50 per cent reduction was achieved by some and not others but I've not seen too many achieve a reduction from £90 million to £30 million so I think £35 million to £40 million would be a more conservative estimate with agents fees etc on top.

Likely turnover will be around £70 million, so at worst it's hard to see where a substantive loss would come from albeit I can't read the article.

[ClaretPete001]

Takes time to read accounts but these are a shoddy piece of work including clearly cut and paste comments from management team at the club and subjective assertions about interest rates.

[Chester Perry]

Don't get me wrong - It can only be good news if the ownership group has been using it's own monies to meet the share buying commitments, but to date we haven't seen that kind of funding being made available from within them

Maybe additional investors have come in which have covered that tranche, maybe Garlick, etc have agreed to delay it, who knows.

for those who haven't picked up on the significance of this - it would appear from the accounts and the prior knowledge of share purchase commitments that were made across 2022 that ALK/VSL used at least £27m of their own funds to pay for shares in the Calendar year of 2022 by my estimates

This is a very positive step, which suggests that the postulated original plan of meeting outstanding share purchase via funds from new investors has now begun to materialise, I hope it can continue following the much improved perceptions of the club that are now generally held.

[ClaretPete001]

for those who haven't picked up on the significance of this - it would appear from the accounts and the prior knowledge of share purchase commitments that were made across 2022 that ALK/VSL used at least £27m of their own funds to pay for shares in the Calendar year of 2022 by my estimates

This is a very positive step, which suggests that the postulated original plan of meeting outstanding share purchase via funds from new investors has now begun to materialise, I hope it can continue following the much improved perceptions of the club that are now generally held.

It would appear - based upon what CP....?

[Chester Perry]

The Athletic article for those who can't see it - at a current offer of £1 a month it is excellent value

Burnley accounts show Alan Pace’s masterplan is very much back on track
https://archive.is/TUXSA

[Chester Perry]

It would appear - based upon what CP....?

The declared balance of loans held by CVHL, no declaration of monies being borrowed post date and understanding that £37m of stage payments were paid last year along with £2.7m of cash paid to small shareholders for transferring their shares to the ownership group

[bodge]

Thanks for posting the article CP, interesting stuff.