£194,000,000 New investment ?
- Thread starter Lonesome Crow
- Start date
DagenhamFox
Blue Roofer
That’s interesting. Very interesting.
channys6thswan
Lingers Long On Cank Street
Smart people are saying it’s the family converting their club debts (which were around that figure) into equity. I say it’s linked to the collapse of Paperchase, and the fear that a notebook crisis is just around the corner.
ClaphamFox
Roofer
Converting our debt into equity would make us a lot more attractive to potential investors. It would also free us up to take on more debt.
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Adumass
Bentleys Roofer
It would...but it's also a hell of a commitment to the club.
I guess in theory it just means the value of their shareholding is now +£193m, but no prospective owner will pay that premium. I guess.
ClaphamFox
Roofer
Yes it is.
DagenhamFox
Blue Roofer
We’ve all been crying out for some kind of statement from the owners. Maybe actions speak louder than words.
Running Fox
Roofer
The Ground extension must be costing a fair chuck of that?
SemperEadem
Roofer
Wiping the debt before a sale?
Walthamstowfox
Roofer
Can someone explain this to me in simple terms please?
KP currently own 100% of the shares, how do you create more shares?
KP still own all of the shares, so now theres more of them are they diluted in value?
Do KP Create more shares ,then buy themselves & the club gets the proceeds of the sale of these shares?
Why am I suddenly writing in Italics?
As Toyah said "It's a mystery to me"
KP currently own 100% of the shares, how do you create more shares?
KP still own all of the shares, so now theres more of them are they diluted in value?
Do KP Create more shares ,then buy themselves & the club gets the proceeds of the sale of these shares?
Why am I suddenly writing in Italics?
As Toyah said "It's a mystery to me"
Walthamstowfox
Roofer
Only if you understand it
TartanFox
Roofer
The debt that LCFC owe KP has been written off and converted in to additional shares. If there were multiple shareholders it would dilute the value of their shares come any future sale. However KP own 100%.
This transaction is allowed as part of FFP and will assist in the summer. What we need now is Tete to bring the flair, Souttar to be a rock and we win the relegation title race and achieve 17th.
Rodgers just been spotted in Tesco at Beaumont Leys.
Walthamstowfox
Roofer
In a roundabout way then, is it just the owners bunging more money in?
How is that allowed under FFP?
How is that allowed under FFP?
ClaphamFox
Roofer
“It’s a housekeeping exercise as much as anything else. Realistically the club would never be in a position to repay the loans unless Chelsea bid £170 million for Jamie Vardy so might as well effectively write them off instead.”
Whitwickfox
Roofer
Or have they bought more bird food....?
buz_not_buzz
Occasional Poster
As mentioned before, what you are calling FFP is really "Profitability & Sustainability" and is related to Profit & Loss. Investment has absolutely no impact on P&L as it is not revenue. Owners of any club are able to pump as much money into a club as they like but they cannot just spend it how they like because of the "FFP" rules. This is the financial reason why Newcastle aren't just going out and buying up the best talent in the world in one go (that they have been able to do as much as they have owes more to Ashley not spending in the years previously).
If the club have converted the substantial King Power Group loans into shares then on the balance sheet liabilities will be reduced increasing net assets due to an increase in called up share capital rather than increased profit.
Capital projects (training grounds, new stands etc.) also don't impact P&L as costs for those are capitalised as fixed assets (so cash goes down, fixed asset value increases, net change on the balance sheet 0). The depreciation on them is P&L (as the value of the fixed asset decreases) but is exempted from the calculation for "FFP".
I assume that if they have converted loans to shares then it will at least have the benefit on the "FFP" calculation of removing a good sized chunk of interest. Also though does remove a source of income for the KPG [edited from "from the KPG"].
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Adumass
Bentleys Roofer
Thanks for the explanation , very helpful.
Ref the last sentence...can you clarify.
Do you mean KPG lose a source of income on their books (from LCFC - the interest payments).
Or LCFC have lost a source of income (from KPG)?
I suspect the former, but if the latter, what have we lost?
buz_not_buzz
Occasional Poster
Or put another way. If a club has turnover of £200m and spends £250m on player salaries, amortised transfer fees, paying someone to monitor football message boards etc. they make a loss of £50m. If though someone pumps in £300m in investment, then that club still has Turnover of £200m and outgoings of £250m and they still make a loss of £50m.
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buz_not_buzz
Occasional Poster
Sorry, I meant the former. KPG presumably lose a source of income, the interest LCFC pay KPG (6% in the last filed accounts and equated to around £6m for the most recent year in the last set of filed accounts).
buz_not_buzz
Occasional Poster
Oh and thanks, edited my post to hopefully make clearer
SemperEadem
Roofer
So money on the sheet has been moved around then?
hackneyfox
Roofer
Debt written off again.
hackneyfox
Roofer
How have you worked that out? Isn’t it just the debt being wiped out?
Are you saying this isn’t a good thing?
ClaphamFox
Roofer
Of course it's a good thing. It doesn't mean we can suddenly splurge £300m on players in the summer, but it puts us in a much healthier financial position overall.
Weller
Roofer
,what we'd do without your knowledge of this jungle 
Adumass
Bentleys Roofer
Disagree.
If the value of LCFC had increased overnight by £190m then I might agree.
But it hasn't, the value of the club will still be fundamentally the same as it was at the end of last year. It might have increased somewhat as a result of these actions, but not by anywhere near to £190m imo.