Our system detected that your browser is blocking advertisements on our site. Please help support FoxesTalk by disabling any kind of ad blocker while browsing this site. Thank you.
Jump to content
Leicester Lass

Owner wipes out debt.

By Leicester Lass, in Leicester City Forum

Recommended Posts

Leicester Lass

Leicester Lass

Posted
Posted

The financial future of Leicester City has been secured after the owner effectively wiped out the club's £103 million debt.

Chairman Vichai Srivaddhanaprabha has swapped the huge liabilities for shares in City, meaning he or his family can no longer call in what they are owed and potentially destabilise the club.

The massive debt, racked up after the club reported £52.5 million of losses in the three seasons to 2011-12, had led to concern among fans about the Foxes' long-term financial health.

It is believed the club, which has received more than £75 million in loans from Mr Srivaddhanaprabha, is now almost debt-free for the first time in at least two decades.

The move also makes it easier for the club to comply with the new Financial Fair Play rules, set up to help secure clubs' financial futures by limiting the amount of financial losses they can make.

Documents filed with Companies House show a deal has also been done to give the club a £10 million cushion, allowing it to effectively make an £8 million loss this season – the limit allowed before it faces a fine or transfer embargo.

The process used by Thai owner Mr Srivaddhanaprabha, known as a "debt-for-equity swap", has also been used by the owners of Manchester City and Chelsea.

Financial expert and City fan Andrew Howard, of Thorpe Astley, said: "It means the club no longer has any debt, or at least very little debt such as that associated with day-to-day trading.

"The owners can't call in those loans any more."

"It's a sign of commitment which shows the owners are in it for the long haul."

The club declined to comment yesterday.

The deal values the club at £113 million on paper, compared with the £39 million paid by the Thai businessman when he bought the club from Milan Mandaric in 2010.

However, it is unlikely the chairman would receive that amount should he decide to sell.

"It could be worth £65 million to £70 million if they get established in the Premier League," said Mr Howard.

Mr Howard said there was nothing stopping Mr Srivaddhanaprabha – estimated to be worth £1 billion – from pumping more loans into the club in the future through his King Power duty free business, as he has previously done.

The club, which bought the King Power Stadium from an American pension fund this year, was £26 million in debt when the tycoon took control.

Cliff Ginnetta, chairman of the Official Leicester City Supporters' Club, said the move would reassure fans concerned about the long-term future of the club.

"The debt was a ridiculous amount of money when you looked at it," he said.

"It made you think 'How are they going to get that back?' and you wondered about the long-term future of their involvement."

John Regan, 61, of Anstey Lane, Leicester, who has supported City for more than half a century, said: "It looks like the fans can now be more confident about the club's financial future. I'm sure this will be a big talking point at the QPR game."

Read more: http://www.leicestermercury.co.uk/Future-City-secure-owner-wipes-huge-debts/story-20352762-detail/story.html#ixzz2o5zgdyMj

Matt

Matt

Posted
Posted

So what does this mean for FFP?

 

I'll be honest I have really read up much about FFP and havn't took much interest, does this have any bearing on getting around FFP?

 

Fair play to the owners.

Munshi

Munshi

Posted
Posted

I think it just gives another indication that they are in for the long haul.

Just hope they dont go changing our name or anything.

Webbo

Webbo

Posted
Posted

Also, while not owing money is clearly a good thing it says that this is similar to what Chelsea and Man City have done - so is what we're doing 'moral' so to speak?

How could it be immoral? 

jamesmilner

jamesmilner

Posted
Posted

in ffp terms it doesnt mean anything . just means we are solvent . we can still spend what ffp allow . it means our club is one of a few that are not in any debt . yes , this is massive ! 

foxfanazer

foxfanazer

Posted
Posted

Not too clued up with the financial side of football but this seems like fantastic news on face value.

Could have egg on my face with this comment but our owners do seem legit

Webbo

Webbo

Posted
Posted

Dunno  :blush:  When those clubs are mentioned I have visions of angry supporters around the country bashing us for doing an Abramovich or something similar.

It means we're less likely to go bust and stiffing the creditors so that has to be better morally. As for other fans who cares? I wish Abramovich had bought us.

Babylon

Babylon

Posted
Posted

Does this mean we can afford new contracts now? :ph34r:

Probably not.

We are clearly still making a huge loss, see the part about a cushion being put in place. So there is still a large amount of cutting back to be done.

Babylon

Babylon

Posted
Posted

Whilst not perfect, they have shown themselves to be fantastic owners in certain aspects. Bought the stadium, wiped out the debt, and seem to have learnt from previous rash decisions. We could easily have wound up with a plonker like a few others have.

Devonfox1884

Devonfox1884

Posted
Posted

Probably not.

We are clearly still making a huge loss, see the part about a cushion being put in place. So there is still a large amount of cutting back to be done.

will next season be easier now??

Babylon

Babylon

Posted
Posted

i believe that as they are commenting on us 'doing a chelsea/man city',(correct me if i'm wrong) but doesn't that mean we can quite a lot again?! PLEASE TELL ME IT'S TRUE!

I'm not even sure what any of that means to correct you, with that in mind you probably are.

Archived

This topic is now archived and is closed to further replies.

Go to topic listing

  • Recently Browsing   0 members

    • No registered users viewing this page.
×
×
  • Create New...