[Archived] Venky's Financial Arrangements

[roverandout]

couldnt give feck, want them out, everything else is just ######

[Mercer]

Why would that be, I'm sure we are capable of understanding them when clearly presented and argued? Just as many have enjoyed and been enlightened by Philip's annual analysis of the club accounts.

Firstly, Philip's recent company searches suggest it may all be academic.

Secondly, it all depends upon how the lending has been structured and secured. As I've already said, potential practical difficulties and complexities cannot be underestimated. For example, and the tip of the iceberg, a big difference between insolvency law in different countries can lead to complex conflict of laws situations arising in the event of administration / liquidation where the control and/or assets in more than one country are involved. Feck knows why anyone would want to read, let alone try to understand, any of this on a football MB !

[Paul]

Can't be much of a senior figure if he hasn't worked out what the plan is. It's been debated on here for months. Let me explain:

Slash the player wage bill

Reduce non playing staff and costs

Free up cash to reduced debt by selling key players

Reduce interest charges - see above

Avoid compensation payments by retaining the manager

Ensure new contracts are avoided - eg Salgado

Minimise unnecessary expenditure e.g. no ST brochure

Now I'm not supporting the above, I don't say it's good or right but it is clearly the plan. It also works whether we are relegated or not because it provides for three possibilities:

Relegation and much necessary cost cutting in place

Next season PL football with the supposed deadwood cleared out to allow Kean to rebuild

Or, quite likely in my view, to reduce or eliminate the need for "investment" in Rovers thus minimising the Raos financial exposure

It's been going on for months, accelerated in the New Year and we may not like it but it is the plan which covers every possibility.

Paul knows--I'm waiting for him to tell me on another thread.

There you go

[Kamy100]

Quick Update: The media report about debt being cleared is incorrect. The debt has been reduced and Venky's looking to clear it June.

I persume that the second part of the Jones transfer cash will be used to clear it.

[AggyBlue]

Quick Update: The media report about debt being cleared is incorrect. The debt has been reduced and Venky's looking to clear it June.

I persume that the second part of the Jones transfer cash will be used to clear it.

Or the firesale

[47er]

There you go

Ta---I agree it makes sense--from their point of view of course!

[Amo]

Surely the novelty has to wear off sooner or later (if not already?). I don't see what they're getting out of running a football club, as they've clearly realized they're out of their depth. You'd think (read: hope) they'd be looking at a quick sale.

[yoda]

Surely the novelty has to wear off sooner or later (if not already?). I don't see what they're getting out of running a football club, as they've clearly realized they're out of their depth. You'd think (read: hope) they'd be looking at a quick sale.

They want a profitable sale

[Hughesy]

Quick Update: The media report about debt being cleared is incorrect. The debt has been reduced and Venky's looking to clear it June.

I persume that the second part of the Jones transfer cash will be used to clear it.

So now your saying debt free?? Not simply moved to an Indian bank??

They want a profitable sale

They dont want any sale...

[True Blue & White]

- interest rates in India are 7.5% higher than in the UK

I presume you mean percentage points rather than percentage as that would be negligible.

[47er]

- interest rates in India are 7.5% higher than in the UK

I've pointed out that the Indian bank rate is 8% several times and does anyone take any notice? Overdraft rates will be higher than that and who'll pay? Hughesy and the Renewers that's who!

[Kamy100]

So now your saying debt free?? Not simply moved to an Indian bank??

They dont want any sale...

Nope not saying that, they could use Jones transfer cash to clear the Barclays debt or use money from Indian bank. Even if they used money from Jones transfer to clear the Barclays debt, there is nothing stopping them from using the agreed overdraft from the Indian bank to finance the club, hence still in debt. The key questions are how they clear the remaining Barclays debt and against what is the loan/overdraft agreement with Indian secured against. The Mumbai stockbroker has suggested that it would be usual for it to be secured against Venky's India assets but this has not been confirmed.

[broadsword]

It would be a strange move to make if they were desperate to dispose of the club. Presumably they'd be happy enough to tolerate Barclays for a bit longer while they found a bidder.

Seems like a lot of trouble to be going to for an asset they want rid of. And if interest rates are more punitive in India, where is the sense in it, if they're keen to run us on the tick?

It's really not making any sense whatsoever, and you have to suspect that something is not quite right about this arrangement.

[Kamy100]

It would be a strange move to make if they were desperate to dispose of the club. Presumably they'd be happy enough to tolerate Barclays for a bit longer while they found a bidder.

Seems like a lot of trouble to be going to for an asset they want rid of. And if interest rates are more punitive in India, where is the sense in it, if they're keen to run us on the tick?

It's really not making any sense whatsoever, and you have to suspect that something is not quite right about this arrangement.

Or maybe they for almost the first time being truthful when they say that they are not looking to sell.

[The Gull]

Or all the income, transfer fees and PL money, is being directed to their Indian bank l;eaving the club broke and on the bare bones of it's backside when it comes to the day to day running.

This could lead to the club going in to administration in the UK but they would already have got back more in income than they had paid for the club and will quite happily give the club away. This fits in with trying to get season ticket money in early, the Jones money, the last installment of PL money all before the summer. After that the club wuill unravel and after a few months of not paying bills, and a few months more after HMRC doesn't get paid the club will go under.

They will only sell at this point as they can continue to profit from PL money, transfer fees etc until the club is insolvent and then cut and run.

[broadsword]

Or maybe they for almost the first time being truthful when they say that they are not looking to sell.

Do they realise if they carry on running the club in this manner it will suffer at least one more relegation?

[perthblue02]

Did they not use the "Money is difficult to get out of India " line when something needed paying? So would make sense to move all cash there especially in transfer windows - Ready made excuse for missing out on signing all the stars of Euro 2012 that we will be going in for.

[rovers11]

It would be a strange move to make if they were desperate to dispose of the club. Presumably they'd be happy enough to tolerate Barclays for a bit longer while they found a bidder.

Seems like a lot of trouble to be going to for an asset they want rid of. And if interest rates are more punitive in India, where is the sense in it, if they're keen to run us on the tick?

It's really not making any sense whatsoever, and you have to suspect that something is not quite right about this arrangement.

They have to put procedures in place in case they cannot sell the club. I don't believe for one minute that Venky's genuinely want to keep the club if relegated. However, if they are not willing to budge on their 30m price tag then they will have no choice.

[Mercer]

It would be a strange move to make if they were desperate to dispose of the club. Presumably they'd be happy enough to tolerate Barclays for a bit longer while they found a bidder.

Seems like a lot of trouble to be going to for an asset they want rid of. And if interest rates are more punitive in India, where is the sense in it, if they're keen to run us on the tick?

It's really not making any sense whatsoever, and you have to suspect that something is not quite right about this arrangement.

Spot on - IMO, it doesn't feel right, especially given some of the decisions we have seen made since Venky's bought the club.

There are a number of possible scenarios ranging from the good to the not so good.

I have already flagged the complexities that could be involved with such an arrangement.

I have always maintained that, IMO, Venky's would not exit Rovers with a financial loss.

Oh what a tangled web this might be. Equally, there might be justifiable reasons for this action - I hope that this is the case.

The lack of communication or transparency from Rovers, which has been the case ever since Venky's assumed ownership, does not alleviate any worries.

[PAFELL]

They have to put procedures in place in case they cannot sell the club. I don't believe for one minute that Venky's genuinely want to keep the club if relegated. However, if they are not willing to budge on their 30m price tag then they will have no choice.

With the money all in india, would it be easier for due dillegence to be carried out if they are planning on selling.

[den]

The only reason I can think for them wanting no debt, is to sell the club. Using player sales to do this simply means they don't have to use their own money to do it.

Most, if not all PL clubs use debt. It's a better idea to have a small debt in order to maintain PL existence, than reduce ot to nil, while watching us relegated. John Williams and the trustees were quite content with a small amount of debt.

[philipl]

With the money all in india, would it be easier for due dillegence to be carried out if they are planning on selling.

Much much more difficult.

A company continues in existance from one owner to another. Therefore if a new owner buys Rovers from Venky's and let's say for argument's sake, there was match fixing going on in the past, the new owner cannot reasonably expect to succeed in pleading "let Rovers off because it happened before I bought the club". Rovers are a separate legal entity and as such is expected to observe laws and regulations and can face the consequences as a body corporate for not doing.

Due diligence is the means by which a new owner makes sure there is nothing in the continuing company that can cause problems later which they are unaware of at the time of buying. If all the documentation and evidence is in the UK, it is a challenging enough exercise. Having a Bank in India means inevitably that primary records relating to Rovers are now in India.

If a British Bank is negligent in its representations to a new owner, the Courts in England are the place to go to including receiving summary injunctions within hours if required. Try doing that in Rajasthan.

[AllRoverAsia]

Venkys fall out with Barclays who want debt reduced/controlled so Venky's turn to people they already know in India. Also State Bank of India have a well established UK banking operation with HO in London and branches throughout London, Midlands and one in Manchester. SBI can easily arrange charges on Rovers UK assets if required and handle Rovers UK daily banking needs. Keep it all in the 'family' so to speak.

[patrickvalery]

The lack of communication or transparency from Rovers, which has been the case ever since Venky's assumed ownership, does not alleviate any worries.

While i absolutely agree with your point about lack of communication, i don't ever recall hearing much from the Trust in terms of financial transparency. I do recall hearing how we had a very good relationship with Barclays. But i always assumed this was because they were making a few quid from the club.

I despise everything Venky's have done and their very presence at Rovers. But i have to say, this move, although maybe not obviously beneficial to the club, does indicate some degree of interest on their part. I'm not for one second saying thats much to shout about. But they are doing something more than the usual nothing. It would indicate a level of interest in the club which we aren't used to.

I'll be honest, i'm confused. I feel like i'm a dog which has been beaten for a few years. Then one morning my owner gets up and pats me on the head. There will almost certainly be another whack in the chops coming my way, but maybe not until later in the day than usual.

[True Blue & White]

Venky's Financial Arrangements