ALK Capital or Farnell/Elkashashy takeover

[NewClaret]

So that's good news then?

Depends on your perspective.

If it’s our only debt, it’s £25m down on the original £65m. I’m pretty sure most on here would’ve predicted it to be much much higher than that, so if your expectations were for it to be higher it’s very good news.

Another positive is that it’s presumably at a lower rate of interest, else what would be the point refinancing.

Negative is that I think it has been lower before (£37m rings a bell) so it’s not gone down.

Fortunately we have assets in Esteve and Traff that should at least cover this in the worst case scenario.

[123EasyasBFC]

Nobody can surely think it’s good news to be taking more loans out

[NewClaret]

Nobody can surely think it’s good news to be taking more loans out

We already had loans. This is a refinancing of existing loans, but with £100m spent last summer I think most people probably feared our debts were now much higher than £40m.

Ultimately they’ve not grown and are about 40% lower than they were when ALK bought the club.

[RVclaret]

Nobody can surely think it’s good news to be taking more loans out

If, by assumption, it’s refinancing (not adding to) our total third party loans then £40m seems about expected.

My view is that if we didn’t go up, we’d see (as we all would expect anyway) the sales of at least Trafford and Esteve for circa £50m, and probably some more (if Amdouni gets his option taken up, for example, that’s another £16.5m). This income would go towards reducing that amount by at least half, if not 75%.

I think, but can’t be certain, a large portion of the wage bill gets cut again in line with the % drop in parachute payments. Doesn’t really concern me.

[Spike]

So it’s either refinancing or an additional £40m no one knows.

[NewClaret]

If, by assumption, it’s refinancing (not adding to) our total third party loans then £40m seems about expected.

My view is that if we didn’t go up, we’d see (as we all would expect anyway) the sales of at least Trafford and Esteve for circa £50m, and probably some more (if Amdouni gets his option taken up, for example, that’s another £16.5m). This income would go towards reducing that amount by at least half, if not 75%.

I think, but can’t be certain, a large portion of the wage bill gets cut again in line with the % drop in parachute payments. Doesn’t really concern me.

I think we can be fairly certain it’s a refinancing, in which case it’s neither good or bad news in the same way changing a mortgage provider is neither here nor there.

It really them just depends on where your expectations were on the level of outstanding debt. I am pleasantly surprised it’s £40m.

Ultimately our assets outweigh our liabilities so it should be fine.

[NewClaret]

So it’s either refinancing or an additional £40m no one knows.

Unlikely to be additional as the previous lenders stipulated they must be the only lender.

[FeedTheArf]

So it’s either refinancing or an additional £40m no one knows.

That’s the key question isn’t it. If it’s £40m it’s less than I thought. My suspicion is this is a facility for us to draw on in addition to our existing borrowings.

If it’s to replace existing borrowing shouldn’t we see charges from the previous lender being removed?

[NewClaret]

That’s the key question isn’t it. If it’s £40m it’s less than I thought. My suspicion is this is a facility for us to draw on in addition to our existing borrowings.

If it’s to replace existing borrowing shouldn’t we see charges from the previous lender being removed?

Per above, according to CP our current lenders insist on being sole lenders so you would expect it’s a replacement.

I’m not sure the previous lenders issued charges, will have a look. If they did, they should be removed but it’s taken some time to be updated previously (I.e. it’s not instantaneous).

[NewClaret]

That’s the key question isn’t it. If it’s £40m it’s less than I thought. My suspicion is this is a facility for us to draw on in addition to our existing borrowings.

If it’s to replace existing borrowing shouldn’t we see charges from the previous lender being removed?

MGG did register charges, no value that I can see on them though, so yes you would expect to see those removed.

[dsr]

That’s the key question isn’t it. If it’s £40m it’s less than I thought. My suspicion is this is a facility for us to draw on in addition to our existing borrowings.

If it’s to replace existing borrowing shouldn’t we see charges from the previous lender being removed?

Some Companies House paperwork carries criminal penalties if not submitted, and the directors have shown themselves willing to miss submission. The absence of submission of an end of charge doesn't mean anything.

[ClaretPete001]

I think we can be fairly certain it’s a refinancing, in which case it’s neither good or bad news in the same way changing a mortgage provider is neither here nor there.

It really them just depends on where your expectations were on the level of outstanding debt. I am pleasantly surprised it’s £40m.

Ultimately our assets outweigh our liabilities so it should be fine.

The 23 accounts suggest our assets do not outweigh our liabilities. Nowhere near....

[123EasyasBFC]

If we do end up going back up, I would rather go down having saved half of the premier league money rather than risking all the money trying survive, so we didn’t have to keep taking more loans out

[RVclaret]

The 23 accounts suggest our assets do not outweigh our liabilities. Nowhere near....

Does this take into account valuations of players as assets? If so, how do they accurately forecast how much say, Esteve, is worth?

[Tall Paul]

The 23 accounts suggest our assets do not outweigh our liabilities. Nowhere near....

What? They show net current assets of £54m, total net assets of £78m.

[aggi]

Unlikely to be additional as the previous lenders stipulated they must be the only lender.

From what I remember, if it is what I'm thinking of this was in a general interview with them about how they like to conduct their business. Not specific to Burnley and not legally binding. (Although it would be unusual to have two substantial loans based on guaranteed on the same assets.)

[Vegas Claret]

just want to say thanks again to all you lads that are trying to figure all this out for us. I for one would be completely in the dark without your input. Your efforts don't go unnoticed.

[NewClaret]

From what I remember, if it is what I'm thinking of this was in a general interview with them about how they like to conduct their business. Not specific to Burnley and not legally binding. (Although it would be unusual to have two substantial loans based on guaranteed on the same assets.)

I actually scanned through the charge and it actually reads to me that additional lending can be obtained so not sure on that point. As you say, unlikely two major loans would be secured against the same assets.

[Paul Waine]

I recommend we wait until BFCHL accounts are published. If there's new financing early Feb, the accounts may have been signed off by directors and auditor a few weeks ago - based on 31-July-2023 accounts being signed off in December and MGG financing (based on filing of charges) being put in place early Jan 2024.

[Paul Waine]

Quite a statement in fact it does come across as a little condescending.

Especially when your "blurb" doesn't explain anything in relation to a football corporation strategically refinancing and restructuring debt.

It doesn't explain whether the refinancing is secured on perceived future income, squad value or the assets of the club.

In fact it doesn't explain anything apart from the fact that its "unclear" and you don't understand / know the full picture.

Not exactly a point of fact, and unless you have a much, much stronger argument it definitely doesn't doesn't dissuade me from my assumption that there is nothing unusual in fact it actually strengthens it, especially if that is all you've got.

If you can post when you obviously don't understand the situation, I'm assuming I am too?

I'm with you on club's financing activities. Any business that is as volatile as a football club, championship one season, premier league the next, championship again the following season - plus, all the while needing to trade players, must inevitably need to arrange and re-arrange financing.

Yes, it all comes at a price - but, not financing comes at a much bigger and less desirable price. No one should be moaning about the key being lost to the dry powder store under Alan Pace/ALK ownership.

UTC

[ClaretPete001]

What? They show net current assets of £54m, total net assets of £78m.

£124 million of the current assets are inter company loans.

[ClaretPete001]

Does this take into account valuations of players as assets? If so, how do they accurately forecast how much say, Esteve, is worth?

Well they don't but equally they don't forecast how much Tresor or Amdouni is worth.

[Tall Paul]

£124 million of the current assets are inter company loans.

OK. Still assets though aren't they?

[ClaretPete001]

I'm with you on club's financing activities. Any business that is as volatile as a football club, championship one season, premier league the next, championship again the following season - plus, all the while needing to trade players, must inevitably need to arrange and re-arrange financing.

Yes, it all comes at a price - but, not financing comes at a much bigger and less desirable price. No one should be moaning about the key being lost to the dry powder store under Alan Pace/ALK ownership.

UTC

As you well know Paul we spent the previous 8 or 9 years in the PL without debt.

[ClaretPete001]

OK. Still assets though aren't they?

In accounting terms they are classed as such but they aren't realisable assets in the event the groups collapses and are unlikely to ever be repaid.

[Tall Paul]

In accounting terms they are classed as such but they aren't realisable assets in the event the groups collapses and are unlikely to ever be repaid.

So the accounts do show that assets outweigh the liabilities.

[ClaretPete001]

So the accounts do show that assets outweigh the liabilities.

You know as well as I do in the context of the original point the accounts do not show we have more assets than liabilities.

They show that our assets are artificially inflated to the tune of £124 million and no doubt somewhere else in the group accounts filed away in the US there is a company with a huge £124 million liability.

So, the fact that the accounts do show have a positive balance sheet shouldn't be viewed as a source of much comfort.

[NewClaret]

You know as well as I do in the context of the original point the accounts do not show we have more assets than liabilities.

They show that our assets are artificially inflated to the tune of £124 million and no doubt somewhere else in the group accounts filed away in the US there is a company with a huge £124 million liability.

So, the fact that the accounts do show have a positive balance sheet shouldn't be viewed as a source of much comfort.

You said our 23 accounts show assets don’t outweigh our liabilities though. Thats not what they show, unless you start to redefine accounting standards and what classes as assets and liabilities.

Putting all that paper accounting to one side though, because it’s wildly out of date anyway, if £40m is all we owe to third parties we are perfectly fine because we definitely have playing assets worth a lot more. Maybe even one player could repay that for us.

[ClaretPete001]

You said our 23 accounts show assets don’t outweigh our liabilities though. Thats not what they show, unless you start to redefine accounting standards and what classes as assets and liabilities.

Putting all that paper accounting to one side though, because it’s wildly out of date anyway, if £40m is all we owe to third parties we are perfectly fine because we definitely have playing assets worth a lot more. Maybe even one player could repay that for us.

It's a disingenuous argument New. The accounts show that the current assets of the club largely consisted of an enormous inter company loan at that point.

And we don't owe £40 million to third party creditors it was much higher. The creditors are here on Page 36.

https://find-and-update.company-informa ... ng-history

Who knows what it looks like now - it could be better - but we cannot say with any certainty that we have more assets than liabilities.

Of course we could make £40 million on Esteve but we don't know what the current financial situation is....! The last time we were in the Championship we made a loss of £26 million.

No one know the reality of the current financial situation.....!

[Goliath]

It's a disingenuous argument New. The accounts show that the current assets of the club largely consisted of an enormous inter company loan at that point.

And we don't owe £40 million to third party creditors it was much higher. The creditors are here on Page 36.

https://find-and-update.company-informa ... ng-history

Who knows what it looks like now - it could be better - but we cannot say with any certainty that we have more assets than liabilities.

Of course we could make £40 million on Esteve but we don't know what the current financial situation is....! The last time we were in the Championship we made a loss of £26 million.

No one know the reality of the current financial situation.....!

We probably sell Trafford and Esteve in the summer for a minimum 60 million which should at least prevent us being from in any serious trouble (yet)

[Darnhill Claret]

I think that Trafford may want to leave but we have to try and persuade him, CJ and Steve to stay. If they do and Edwards is happy to stay here, they will be the best recruitment team, to encourage 1 or 2 quality players to join. I do acknowledge that it is Premier League dependent, but I'm a glass half full supporter, so there is no issue there. Maybe we need to build connections with Forest, Bournemouth, Fulham and Brentford to see who was on their list of possible signings, that for one reason or another weren't signed by them.

[Big Vinny K]

Quite a statement in fact it does come across as a little condescending.

Especially when your "blurb" doesn't explain anything in relation to a football corporation strategically refinancing and restructuring debt.

It doesn't explain whether the refinancing is secured on perceived future income, squad value or the assets of the club.

In fact it doesn't explain anything apart from the fact that its "unclear" and you don't understand / know the full picture.

Not exactly a point of fact, and unless you have a much, much stronger argument it definitely doesn't doesn't dissuade me from my assumption that there is nothing unusual in fact it actually strengthens it, especially if that is all you've got.

If you can post when you obviously don't understand the situation, I'm assuming I am too?

That’s not what I was saying at all - and apologies if I came across as condescending.

My point was partly about how there is a tendency for people to go on threads in this board and post things like they don’t why the thread exists or is so long etc which personally I think is a bit insulting to the main contributors (of which I am not one) who in the case of this thread have taken an interest in the topic and tried to help others in posting information and yes sometimes opinions. If some are not interested in the thread that’s fine as it is to debate and disagree with any opinions. I thought you were just dismissing the whole thread which wasn’t particularly fair.

In terms of the specifics no I do not know the whole picture - but nobody on this board does. That’s what we are debating. My point was a response to you saying that effectively there’s nothing to see here or anything out of the ordinary. I disagree with that for a long list of reasons which I am not going to repeat other than to say that this thread and the length of it is evidence that for our club these are a number of things since the takeover that have happened which at the very least are unusual for Burnley and the way the club has been managed financially. We have a pretty complex company structure without a doubt and we are also using a number of financial instruments and strategies the club have not used previously.

Compare this to the debate or lack of it on the previous ownership model which when there was any discussion was primarily more about the owner spending more money on transfers than anything else to do with our structure, accounts, financing etc

[aggi]

...

No one know the reality of the current financial situation.....!

A line worth repeating.

[Big Vinny K]

A line worth repeating.

Maybe with putting an s on the end of know though !

[gawthorpe_view]

£124 million of the current assets are inter company loans.

Genuine question as I'm struggling to keep up with all this, where did the £124 million come from that the club loaned to the buyers?

[Chester Perry]

Genuine question as I'm struggling to keep up with all this, where did the £124 million come from that the club loaned to the buyers?

£65m from the original MSD loan that was passed straight to them and the rest from the club's cash holdings

It is worth noting that in late August 2022 the outstanding balance the club owed MSD was less than £33m the multiple refinances since have seen the club's capital loan balance vary up to a confirmed £39.7m in November 2022 and a confirmed £70m in June 2023 and possibly less/possibly more in January 2024. The latter two refinances included funds that the club appears to have used for its own purposes

[BleedingClaret]

£65m from the original MSD loan that was passed straight to them and the rest from the club's cash holdings

It is worth noting that in late August 2022 the outstanding balance the club owed MSD was less than £33m the multiple refinances since have seen the club's capital loan balance vary up to a confirmed £39.7m in November 2022 and a confirmed £70m in June 2023 and possibly less/possibly more in January 2024. The latter two refinances included funds that the club appears to have used for its own purposes

Your last line, and I'm not being purposely obtuse, can you tell me, without risking perjuring yourself or being accused of at least, what or who you mean by the club, do you mean certain individuals, and by own purposes, do you mean not directly related to the football side of affairs?
Or am I just over reading your words.

[NewClaret]

£65m from the original MSD loan that was passed straight to them and the rest from the club's cash holdings

It is worth noting that in late August 2022 the outstanding balance the club owed MSD was less than £33m the multiple refinances since have seen the club's capital loan balance vary up to a confirmed £39.7m in November 2022 and a confirmed £70m in June 2023 and possibly less/possibly more in January 2024. The latter two refinances included funds that the club appears to have used for its own purposes

Where was the £70m confirmed in June 23 confirmed, CP? Must’ve missed that.

Great summary though. Technically it has gone up a bit from the £33m I last remember being the confirmed amount, but down from £70m by a not inconsiderable £30m!

So £65m > £33m > £70m > £40m is my understanding of the various refinances.

What is reassuring is that ALK have proven both willingness and means to reduce it the debt. I hope to god we go up and they reduce it further.

[Chester Perry]

Your last line, and I'm not being purposely obtuse, can you tell me, without risking perjuring yourself or being accused of at least, what or who you mean by the club, do you mean certain individuals, and by own purposes, do you mean not directly related to the football side of affairs?
Or am I just over reading your words.

Over reading, I am not saying the additional monies have been used for non club purposes - though in the financial year of the first two refinances circa £9.1m was used to bring the group loan total to £124.07m

Equally the funds could have been used for:
player purchases
promotion bonuses
infrastructure investment
wages
general expenditures

the June/July of 2023 saw a lot of financial obligations triggered by that promotion.

[Chester Perry]

Where was the £70m confirmed in June 23 confirmed, CP? Must’ve missed that.

Great summary though. Technically it has gone up a bit from the £33m I last remember being the confirmed amount, but down from £70m by a not inconsiderable £30m!

So £65m > £33m > £70m > £40m is my understanding of the various refinances.

What is reassuring is that ALK have proven both willingness and means to reduce it the debt. I hope to god we go up and they reduce it further.

The last published accounts said the Macquarie refinance was £70m

the path is

December 2020 MSD £65m

August 2022 - MSD £32.3m

November 2022 - Unknown £39.7m

June 2023 - Macquarie £70m + factoring of 3 years Premier League/Parachute income

January 2024 - £??? MGG refinance of Macquarie loan and a 2nd loan to buy out the year 2 and 3 of the Macquarie factoring - both sums undeclared my guess totals somewhere between £66m and £95m.

January 2025 - Fasanara Capital £40m
(tbc if the MGG deals have ended - note both MGG loan related entities in Luxembourg remain active and have had no updated filings since March 2024)

[gawthorpe_view]

Thank's Chester, so the club are paying interest on a sum of money borrowed, and then loaned to the buyers at 0%?

[ClaretPete001]

Where was the £70m confirmed in June 23 confirmed, CP? Must’ve missed that.

Great summary though. Technically it has gone up a bit from the £33m I last remember being the confirmed amount, but down from £70m by a not inconsiderable £30m!

So £65m > £33m > £70m > £40m is my understanding of the various refinances.

What is reassuring is that ALK have proven both willingness and means to reduce it the debt. I hope to god we go up and they reduce it further.

New you complain about the re-iteration of points on here and then force others to do it.

They haven't reduced the debt. Once in the PL they can find other ways of generating debt like forwarding PL Broadcast revenue. The total liabilities of the club in 23 was over £230 million.

Another £40 million was pending in the post events note to the accounts.

Talking about the £33 million owed to banks as though it is the only debt is a bit like telling your mate you can't afford to buy him a point because you only have a couple of quid in your pocket knowing full well you have a brand spanking new £20 note in your sock.

We can't say with any certainty that the assets cover the liabilities and we certainly cannot say the debt has gone down at any point.

Unfortunately, we can't say a lot because what we know is increasingly out of date.

[Chester Perry]

Thank's Chester, so the club are paying interest on a sum of money borrowed, and then loaned to the buyers at 0%?

yes, since December 30 2020, not forgetting:

- over £20m paid in directly attributable interest

- over £32m in Capital repayments (that we know of)

- probable £m's in early redemption penalty costs

- possible £m's in refinancing costs

[Goliath]

New you complain about the re-iteration of points on here and then force others to do it.

They haven't reduced the debt. Once in the PL they can find other ways of generating debt like forwarding PL Broadcast revenue. The total liabilities of the club in 23 was over £230 million.

Another £40 million was pending in the post events note to the accounts.

Talking about the £33 million owed to banks as though it is the only debt is a bit like telling your mate you can't afford to buy him a point because you only have a couple of quid in your pocket knowing full well you have a brand spanking new £20 note in your sock.

We can't say with any certainty that the assets cover the liabilities and we certainly cannot say the debt has gone down at any point.

Unfortunately, we can't say a lot because what we know is increasingly out of date.

So am I right in thinking if we don't go up we will have to sell and and then borrow more to finance new signings who will almost certainly be of a lesser quality than the players leaving?

[gawthorpe_view]

yes, since December 30 2020, not forgetting:

- over £20m paid in directly attributable interest

- over £32m in Capital repayments (that we know of)

- probable £m's in early redemption penalty costs

- possible £m's in refinancing costs

Thank you for explaining, I really appreciate the effort you put into this thread, as do many others I'm sure.

[Chester Perry]

Thank you for explaining, I really appreciate the effort you put into this thread, as do many others I'm sure.

I should say that that the redemption penalties may have been rolled up into the refinanced loan balances (certainly appears that way in November 2022) which means the club is paying interest on sums borrowed to cover penalty payments as well as the original outstanding loan balance. This may extend to the refinancing costs though there is no way of telling this from the data presented publicly.

[NewClaret]

So am I right in thinking if we don't go up we will have to sell and and then borrow more to finance new signings who will almost certainly be of a lesser quality than the players leaving?

Pretty much. Going up is vital. Although to your points we will likely need to sell but not necessarily buy. Expect we’ll lose CJ, Browny and Roberts on frees and sell Traff and Steve for big money. We have bought Sonne, Sambo, Hladky already in the squad and have Worrall, Ekdal, Beyer hopefully fit next season and Delcroix for the back line. There will be some reduction of quality but our strong squad is one of our strengths.

We have some obligations to buy loan players but I expect most will be dependent on promotion or terms reduced/restructured if not promoted. And you’d expect we’ve factored these obligations in to this deal since the cash required falls within 12 months of the agreement.

[NewClaret]

New you complain about the re-iteration of points on here and then force others to do it.

They haven't reduced the debt. Once in the PL they can find other ways of generating debt like forwarding PL Broadcast revenue. The total liabilities of the club in 23 was over £230 million.

Another £40 million was pending in the post events note to the accounts.

Talking about the £33 million owed to banks as though it is the only debt is a bit like telling your mate you can't afford to buy him a point because you only have a couple of quid in your pocket knowing full well you have a brand spanking new £20 note in your sock.

We can't say with any certainty that the assets cover the liabilities and we certainly cannot say the debt has gone down at any point.

Unfortunately, we can't say a lot because what we know is increasingly out of date.

You’re right, I should have been specific in my post that I was referring to secured lending. All my points on this are valid though. It’s fluctuated, downwards overall, assuming this is a refinance and not additional borrowing (I doubt it will be).

In simple speak, I’m bothered about the size of the mortgage, not the the fact that we have other bills to pay in the course of normal business (transfers are normal business expenses for a football club). Assuming we’re planning and managing our cash flows professionally, other expenses should be accounted for.

As you know, I still think £ exists within the structure. Like having a mortgage but savings elsewhere. The £88m/£80m capital injections in the holding companies remain unexplained, but the main reason is because I don’t think AP would stand a chance of securing investment without there being liquidity that would allow those guys to cash in their chips if they so choose.

P.S. How did you know about my sock trick?

[Goliath]

Pretty much. Going up is vital. Although to your points we will likely need to sell but not necessarily buy. Expect we’ll lose CJ, Browny and Roberts on frees and sell Traff and Steve for big money. We have bought Sonne, Sambo, Hladky already in the squad and have Worrall, Ekdal, Beyer hopefully fit next season and Delcroix for the back line. There will be some reduction of quality but our strong squad is one of our strengths.

We have some obligations to buy loan players but I expect most will be dependent on promotion or terms reduced/restructured if not promoted. And you’d expect we’ve factored these obligations in to this deal since the cash required falls within 12 months of the agreement.

Sambo won't be in the squad so we'd have to sign a right back.
Beyer is a complete unknown. Presumably we'd have to commit to signing Flemming so about 8m already committed. I doubt there'd be a lot to spend on top of that so let's hope we go up or we will be fighting with a significantly poorer 11 next season which is slightly worrying.

In fact haven't we committed to signing Humphrey as well for 10m? So about 17m already committed on 2 signings?

[NewClaret]

Sambo won't be in the squad so we'd have to sign a right back.
Beyer is a complete unknown. Presumably we'd have to commit to signing Flemming so about 8m already committed. I doubt there'd be a lot to spend on top of that so let's hope we go up or we will be fighting with a significantly poorer 11 next season which is slightly worrying.

Sambo won’t be in the squad? You know something I don’t? I’d expect it’s Sonne’s role with him deputising.

Humphreys to pay for too, but as I say, I assume we’ve negotiated different terms if not promoted. Conversely we’ve Amdouni to sell.

I disagree about it being materially weaker. There’d be no replacing Trafford and Esteve’s quality but Humphreys could slot in at LCB, Pires has played a lot of games this season anyway and will presumably get better, a fit Beyer would’ve been everyone’s choice over CJ at the start of the season, plus we’ve suffered a lot of attacking injuries this year who are now coming back. Midfield last night delivered arguably our best performance without Brownhill.

I agree we be weaker, sort of standard in year two after demotion, but I think it’s an area having a stupidly large squad could start to pay back. Plus a year under Parker’s tutelage would mean we hit the ground running a bit more.

Fingers crossed it’s not something we have to worry about too much.

Let’s not take the squad chat further though as it’s the wrong thread. This is thread is for arguing about finances