[Archived] Barclays Mortgage or Charge

[Paul]

Some three or four weeks back I decided to make no further remarks, for some time, concerning the recent change of ownership and management of Blackburn Rovers. I had grown weary of the discussions and their tone.

After a great deal of thought I have decided to post information which is in the public domain but may not be available to many fans. People will read this information and argue it is normal business practice, and I agree it is. I also agree the club may well have had similar arrangements in the past, I don't know. I think though it is reasonable for fans to be aware of this recent development and to form their own views.

It is my view this mortgage or charge gives the club access to borrowings in the region of £35-40m, which I believe is our annual income from PL broadcasting rights. No doubt someone will know the exact figure.

The detail below is taken from the file copy at Companies House:

Certificate of the Registration of a Mortgage or Charge Pursuant to section 869(5) & (6) of the Companies Act 2006

Company No. 53482

Charge No. 11

The Registrar of Companies for England and Wales hereby certifies that a Deed of Assignment dated 20^th December 2010 and created by Blackburn Rovers Football and Athletic PLC (THE) for securing all monies due or to become due from the company to Barclays Bank PLC on any account whatsoever was registered pursuant to Chapter 1 Part 25 of the Companies Act 2006 on the 29^th December 2010

Given at Companies House, Cardiff the 4^th January 2011

The following is extracted, word for word, from the "Short particulars of the property mortgaged or charged":

1. Assignment

1.1 The Assignor with full title guarantee assigns (by way of security for payment and discharge of the Secured Sums) to the Bank all of its right of title and interest (present or future) in and to all amounts (excluding VAT) due or owing to or which may be due or owing to or purchased or otherwise acquired by the Assignor from the Premier League for the 2010/2011 association football season in relation to or in connection with the Central Funds

Definition Schedule

"Central Funds" means all or any part of any UK Broadcasting Money, Overseas Broadcasting Money, Commercial Contract Money, Radio Contract Money and/or Title Sponsorship Money arising from or relating to the provision by the Premier League Clubs of rights to the Premier League to enable it to fulfill its agreement for the broadcasting and televising and the recording and/or filing of any association football match involving such clubs.

"Charged Property" means all the assets, rights and revenues whatsoever (present and future) of the Assignor as are assigned (or agreed so to be) under the Assignment

There are a number of other items included in the Definition Schedule. As I only have this document as a PDF from Companies House it would take too much space to re-type the entire document…….and probably bore you all to death

[92er]

Not that I altogether understand it, but I do thank you for posting it.

[Glenn]

Paul has kindly provided me with the PDF is needed.

We were going to use this as part of a much bigger story, but you may as well have this as a sneak peak as it were. We'll let you do your own analysis of it for now.

[BPF]

I was wondering how long it would take for this to appear on the board. All will come to light soon enough.

[michaelthomas]

Would anyone be kind enough to dumb this down?! I have no bloody idea what this is about, but it sounds rather daunting. Well I have a vague idea, but I'd rather not say it to save the inevitable embarrassment!

[Bobby G]

Very interesting when I heard about it initially. I'm sure there will be two distinctly opposing viewpoints on this.

I was wondering how long it would take for this to appear on the board. All will come to light soon enough.

A bit ominous...

[den]

So they've borrowed money or have access to money, that's secured against the ground and all other assets, in lieu of income, - rather than use their own personal money.

Don't know the implications of this - if any, though.

[tony gale's mic]

I'm not a financial expert so I can't really comment particularly well on what the exact situation is, but it seems that the money for these transfers isn't coming from the Rao's personal accounts, which is a worry. If they were genuinely billionaires then one would have thought these loans would be unnecessary.

[imy9]

Will be interesting to see what people make of the above, I am no expert so am reliant on others, however didnt Abramovic initially pile the debt onto the club and only last year did something to mean that Chelsea effectively owed nothing?

[Benjimino]

Would anyone be kind enough to dumb this down?! I have no bloody idea what this is about, but it sounds rather daunting. Well I have a vague idea, but I'd rather not say it to save the inevitable embarrassment!

I too have no idea what this is about.

Help us out lads!

[tony gale's mic]

Will be interesting to see what people make of the above, I am no expert so am reliant on others, however didnt initially pile the debt onto the club and only last year did something to mean that Chelsea effectively owed nothing?

Abramovich initially did put the debt onto the club but the debt was made out to him rather than any bank.

I'm no financial expert but this is definitely a totally different kettle of fish.

[Bobby G]

Spin doctors where art thou?

[Mattyblue]

Well I have been assured on this board many times that they have PAID OFF the debt and they are richer than their balance sheets suggests, never seen any proof to back that up however...

[philipl]

The Steve Kean thread has a discussion running about we don't know how much the Venky's family has paid for Rovers but it is probably best to answer it here.

For the record, I understand Venky's agreed to pay £23m for the shares in Rovers payable £20m immediately and £1m on each subsequent anniversary over three years. In addition £10m was paid into Rovers immediately and this was reflected as one of the provisions in the new Articles of Association filed at Companies House as the issuance of 10 million fully paid shares to Venky's London Limited- so that came in as capital and not a debt.

There was a further £5m to be paid into Rovers within 15 days of the sale being completed- I assume that was paid in but I don't know whether that too is going to be added as equity or it is a loan of some form. However, it doesn't take a great logic leap to guess that it was the January transfer and fees budget being paid in.

Then the Rovers had £16.1m in bank debt which I understand was taken off Rovers' books and transferred to Venky's London Limited (the company set-up to buy Rovers) with the intention that this be paid down over four years with Venky's London Ltd (and not Rovers) bearing all interest costs.

Add that all up and it comes to a £54.1M commitment by Venky's.

Finally there was a non-interest bearing loan of £5m from the Walker Trust to the Rovers which nobody has talked about being cancelled or repaid but which was/is repayable in annual instalments each summer.

If there were no changes to what was said at the time of the takeover then as I see it there should be no need for any sort of bank facility for Rovers at present provided the new ownership get their cash flow calculations correct. However, we have to remember that what was said back in November and what has actually happened are two rather different things and I also have heard that the lumpy cash inflow of PL clubs has come as a bit of a surprise to the whizzes from Pune. Plus there is the pay-off of Sam and the new player contracts which must be adding pressure on the club's cash.

That said, there are strong rumours that RSC's £90k a week is coming straight out of a Venky pocket and not from Rovers.

Even so, on the face of it, taking out a new bank mortgage with calls against all Rovers' assets and our media income should not be required now so this looks like a very concerning turn of events. Of course an ability to borrow from a bank can be put in place without actually borrowing but the very extensive terms of this mortgage are such that no director or owner would willingly tie themselves like this without an immediate intention to borrow money from the bank.

[Bobby G]

Seeing is believing. If it smells like chicken, looks like chicken, tastes like chicken then chances are it is chicken.

[BPF]

Sorry I think my earlier post may have been a little confusing.

I have already seen this document and have had experts break it down.

My understanding of this particular document are as follows:

Glass Half Full View

Venkys have this in place to cover the time until Premier League TV money is paid to the club. Essentially in the same way that people pay their last few bills with their overdraft until their wages are paid in.

Glass Half Empty View

Venkys clearly plan to have debt taken out against the club. Is this to fund summer transfers?

I believe that as this stage it is impossible to ascertain which of the scenarios are taking place. Please be very careful about what you write in the public domain about this.

[Majiball]

Perhaps this is the new way of doings things JW spoke about?

Does anyone know if we are to remain a PLC?

[Exiled in Toronto]

Am I reading that correctly in that it is only against future income from the PL, ie. if the club borrows money and doesn't pay it back then the creditor essentially owns our PL revenues? Rather than it being a mortgage of the ground and Brockhall.

[Glenn]

Please be very careful about what you write in the public domain about this.

All we know for sure is what's written in the publicly available document from companies house. Given Philip's professional standing I trust his analysis (and he points out which bits are conjecture on his part). Please don't turn something posted as pure financial analysis into pure Pro/Anti Venkys mudslinging.

[imy9]

Thankyou BPF and Phillip, very interesting to hear your thoughts.

A further question, will we ever know if Venkys are taking money out of the club or are using their own cash? As we are not listed will figures be available?

[Herbie6590]

Echoing BPF's comments above - strikes me that the only reason Barclays would require such a charge against the company is to secure a substantive loan facility. That doesn't mean that the loan has been drawn down nor does it mean that it would necessarily endure.....but why would you go to all that trouble & pay all the arrangement fees for such a facility if you didn't intend to use it ?

[philipl]

I would echo BPF's comment that we need to be careful what we write here.

The offer to minority shareholders contained a firm statement that existing management were to be retained is factual and is OK. Saying perjorative things about what has subsequently happened and drawing conclusions about people's character is not.

Taking the glass half full approach, yes I had heard that the brothers had not understood when the money comes into the Rovers from the media deal but the bank should not need a charge against all the clubs assets AND its 2010/11 media income to cover short term cash flow - the bank has not liked something of what it has seen to have insisted on taking such an excess of security.

Glass half full or half empty, I cannot help but observe that billionaires would normally meet the cash flow for operation themselves- I have just checked Manchester City's Companies House records and they don't have a bank mortgage but their cash flow must be even lumpier than Rovers'.

[imy9]

Phillip what are Villa's company house records like? I ask as Lerner seems be worth in the region of our owners, whereas City are on a whole other level!

[philipl]

Thankyou BPF and Phillip, very interesting to hear your thoughts.

A further question, will we ever know if Venkys are taking money out of the club or are using their own cash? As we are not listed will figures be available?

The rules of disclosure are no different now than what they were when the Trust owned Rovers.

Annual accounts will be filed at Companies House each year and that will require all the usual information including Directors' remuneration and related party transactions (anything to do with the owners directly or indirectly).

Of course there are ways of masking what is going on in annual accounts if you so wish- I am not saying for a moment that Venky's would wish to do so.

The annual accounts are how the Man U supporters follow what the Glazers are doing. However, this year the Glazers issued two new shares in MUFC held by Red Football LLP- a Delaware registered company. As a result, the hugely onerous Payment in Kind loans have disappeared to the most secretive jurisdiction in the world where no information has to be divulged.

[Kelbo]

I would echo BPF's comment that we need to be careful what we write here.

The offer to minority shareholders contained a firm statement that existing management were to be retained is factual and is OK. Saying perjorative things about what has subsequently happened and drawing conclusions about people's character is not.

I have PM several members over the last few weeks regarding this as I was aware of this fact but declined to post this until appropriate, so now Philip, the purchasing of shares based on a firm statement of fact is surely a legal document and so are not Venkys guilty of fraudulant behaviour?