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Takeover in trouble

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KittenMittens said:
These are all from Donald's own words and things we know

The deal:

37m purchase
25m SBC liability paid on behalf of Short by Donald (guaranteed vs parachutes) - characterised as 'club debt', but used by Donald as 'funding' for initial deal - eg: taking away Short's obligation to pay it off in lieu of Donald paying actual cash.
12m madrox pay for club 'personally' (initially 15m, reduced to £12m upon due diligence)

The financing:

Paid £5m deposit
Remaining £7m (Madrox) secured vs parachute payments
agreed to pay balance in September £9.6m (Actual money for this was loaned to Madrox from the club, big question here about how much and what was paid off, I believe the reduction from £15m-£12m debt to Short was negotiated after this which may mean he got £2.6m 'back' effectively)
£25m SBC debt secured vs parachute payments and paid off. ('to be put back into the club' no specified timeframe or means)

The cash flow:

-£32m operating costs 18/19 ( including outstanding player costs)


+£20m revenue
+£3m from Sartori (for 20% equity)
+£?m of 19/20 parachute payments (£15m loan taken out, not all used 'bulk' still left over, he says £5m, but given the vagaries of his accounting, they could theoretically have used £7m).
+£1.5m Maja up front payment
+£? transfer fee installments from Borini, Lens, Khazri, McNair and Asoro sales (I think it's reasonable to say that £2.5-3m of the 20m total may have been available as working capital from installments).

That takes us to £31.5m of £32m, with not a penny paid by Donald yet. Did he put in the extra £500k? Maybe. Or maybe the 'running costs of £32m' were actually um... y'know... um... um... um... '31.5m')


My biggest concern is that right now, the only thing we know for a fact is that the amount Donald has outright paid for the club from his own pocket, without funding via a loan to Madrox from the club, without using parachute payments advances on next season, is somewhere between £5m to 5.5m . of a £37m deal.

Sure, he's accrued debt on behalf of madrox, but if a future buyer in turn waives that debt, they are effectively giving madrox £10m instead of the club. Given the financial means of someone buying the club today, that is not an insignificant amount. Similarly, the £25m that Donald claims he will drip-feed in over time (more likely via investment) will be turned over to the new owner as that is the club's shortfall and Donald has simply committed to getting rid of it in an unspecified time frame, with no obligation to do so.

'We did a good deal, we did a GREAT deal, yeah, we got in at the bottom'

He is too vague. You don't need to spend an hour tripping over yourself and defending the right to use those payments as you see fit if you have nothing to hide. They sued the DM not because they got it wrong in principle, but because they felt the figure (32m in parachute payments used to fund the purchase) Should have read as £25m. The rest? They loaned it to themselves.

Incredible.
Click to expand...

Some of this is right. Some is very wrong.
 
kildaremackem said:
well thats a fair enough piint. and it could be that the club appraoched catts ages ago..and negotiations have been going on for a while, my piint is simply, its no more valid to link the event of his departire to the takeover allegedly failing than it is to link it to it being the day after 30 June. Catts could say he wants both, but he wouldnt be entitled to both, legally, so his negotiaitng power is different than if he says nowt and waits until July 1.
Its all speculation/
Click to expand...

Not sure what your piint is
 
KittenMittens said:
These are all from Donald's own words and things we know

The deal:

37m purchase
25m SBC liability paid on behalf of Short by Donald (guaranteed vs parachutes) - characterised as 'club debt', but used by Donald as 'funding' for initial deal - eg: taking away Short's obligation to pay it off in lieu of Donald paying actual cash.
12m madrox pay for club 'personally' (initially 15m, reduced to £12m upon due diligence)

The financing:

Paid £5m deposit
Remaining £7m (Madrox) secured vs parachute payments
agreed to pay balance in September £9.6m (Actual money for this was loaned to Madrox from the club, big question here about how much and what was paid off, I believe the reduction from £15m-£12m debt to Short was negotiated after this which may mean he got £2.6m 'back' effectively)
£25m SBC debt secured vs parachute payments and paid off. ('to be put back into the club' no specified timeframe or means)

The cash flow:

-£32m operating costs 18/19 ( including outstanding player costs)


+£20m revenue
+£3m from Sartori (for 20% equity)
+£?m of 19/20 parachute payments (£15m loan taken out, not all used 'bulk' still left over, he says £5m, but given the vagaries of his accounting, they could theoretically have used £7m).
+£1.5m Maja up front payment
+£? transfer fee installments from Borini, Lens, Khazri, McNair and Asoro sales (I think it's reasonable to say that £2.5-3m of the 20m total may have been available as working capital from installments).

That takes us to £31.5m of £32m, with not a penny paid by Donald yet. Did he put in the extra £500k? Maybe. Or maybe the 'running costs of £32m' were actually um... y'know... um... um... um... '31.5m')


My biggest concern is that right now, the only thing we know for a fact is that the amount Donald has outright paid for the club from his own pocket, without funding via a loan to Madrox from the club, without using parachute payments advances on next season, is somewhere between £5m to 5.5m . of a £37m deal.

Sure, he's accrued debt on behalf of madrox, but if a future buyer in turn waives that debt, they are effectively giving madrox £10m instead of the club. Given the financial means of someone buying the club today, that is not an insignificant amount. Similarly, the £25m that Donald claims he will drip-feed in over time (more likely via investment) will be turned over to the new owner as that is the club's shortfall and Donald has simply committed to getting rid of it in an unspecified time frame, with no obligation to do so.

'We did a good deal, we did a GREAT deal, yeah, we got in at the bottom'

He is too vague. You don't need to spend an hour tripping over yourself and defending the right to use those payments as you see fit if you have nothing to hide. They sued the DM not because they got it wrong in principle, but because they felt the figure (32m in parachute payments used to fund the purchase) Should have read as £25m. The rest? They loaned it to themselves.

Incredible.
Click to expand...
Sorry the Daily Mail story mind have holes and misinformation but the bones of the story was true?
 
KittenMittens said:
These are all from Donald's own words and things we know

The deal:

37m purchase
25m SBC liability paid on behalf of Short by Donald (guaranteed vs parachutes) - characterised as 'club debt', but used by Donald as 'funding' for initial deal - eg: taking away Short's obligation to pay it off in lieu of Donald paying actual cash.
12m madrox pay for club 'personally' (initially 15m, reduced to £12m upon due diligence)

The financing:

Paid £5m deposit
Remaining £7m (Madrox) secured vs parachute payments
agreed to pay balance in September £9.6m (Actual money for this was loaned to Madrox from the club, big question here about how much and what was paid off, I believe the reduction from £15m-£12m debt to Short was negotiated after this which may mean he got £2.6m 'back' effectively)
£25m SBC debt secured vs parachute payments and paid off. ('to be put back into the club' no specified timeframe or means)

The cash flow:

-£32m operating costs 18/19 ( including outstanding player costs)


+£20m revenue
+£3m from Sartori (for 20% equity)
+£?m of 19/20 parachute payments (£15m loan taken out, not all used 'bulk' still left over, he says £5m, but given the vagaries of his accounting, they could theoretically have used £7m).
+£1.5m Maja up front payment
+£? transfer fee installments from Borini, Lens, Khazri, McNair and Asoro sales (I think it's reasonable to say that £2.5-3m of the 20m total may have been available as working capital from installments).

That takes us to £31.5m of £32m, with not a penny paid by Donald yet. Did he put in the extra £500k? Maybe. Or maybe the 'running costs of £32m' were actually um... y'know... um... um... um... '31.5m')


My biggest concern is that right now, the only thing we know for a fact is that the amount Donald has outright paid for the club from his own pocket, without funding via a loan to Madrox from the club, without using parachute payments advances on next season, is somewhere between £5m to 5.5m . of a £37m deal.

Sure, he's accrued debt on behalf of madrox, but if a future buyer in turn waives that debt, they are effectively giving madrox £10m instead of the club. Given the financial means of someone buying the club today, that is not an insignificant amount. Similarly, the £25m that Donald claims he will drip-feed in over time (more likely via investment) will be turned over to the new owner as that is the club's shortfall and Donald has simply committed to getting rid of it in an unspecified time frame, with no obligation to do so.

'We did a good deal, we did a GREAT deal, yeah, we got in at the bottom'

He is too vague. You don't need to spend an hour tripping over yourself and defending the right to use those payments as you see fit if you have nothing to hide. They sued the DM not because they got it wrong in principle, but because they felt the figure (32m in parachute payments used to fund the purchase) Should have read as £25m. The rest? They loaned it to themselves.

Incredible.
Click to expand...
Juan paid more than £3m for the club though-£3m was 20 per cent of the first payment-so subsequent payments were also pro rata;d.
if he sells madrox on that could happen-but in that instance-he would get a lower purchase price.

Black Cat Gypsy said:
Sorry the Daily Mail story mind have holes and misinformation but the bones of the story was true?
Click to expand...
except the forgpt juan owns 20 per cent. the next set of accouns will reveal all.
 
kildaremackem said:
Juan paid more than £3m for the club though-£3m was 20 per cent of the first payment-so subsequent payments were also pro rata;d.
if he sells madrox on that could happen-but in that instance-he would get a lower purchase price.


except the forgpt juan owns 20 per cent. the next set of accouns will reveal all.
Click to expand...
But they were right that Donald has only paid £5m. So it proves that there's some truths about the club in press.
 
Black Cat Gypsy said:
But they were right that Donald has only paid £5m. So it proves that there's some truths about the club in press.
Click to expand...
it was a £15m deal though, they paid £15m for the shares of safc..not £37m. The rest of the cash was money owed by safc to sbc corproation, and safc money was used for that. the purchase price for the club e=was never £37m or £40m,,thats why people ae getting confused. The cost of the shares was £15m, the rest of the money cleared an safc debt that arose under the previous owner.
 
chave said:
I've got no idea what happened, however it's essentially Nixon's word (or at least what he's been told by someone he trusts as a source) against Donald's. Donald may be right, but if I was a Sunderland fan I wouldn't be taking his word as gospel just because he's your chairman.

A possible scenario is that he needs investment or a takeover to be able to run the club, as he gambled all his money on Grigg getting the club promoted last year. He's not got any way of continuing to run the club, without running up increasing amounts of debt. That would explain why there's been limited transfer business, with only free transfers currently being linked, and could also explain Cattermole leaving, with his full wages being paid over a longer period of time. It lessens the current financial burden, but doesn't take it away, like getting a 0% credit card for a balance transfer. It also becomes someone else's problem, as Donald wont be here in a few years time.

If this scenario is true, it would also mean Donald is a liar who is about to have everything crumbling down on him, but that would explain his promises of aiming for 100 points and top signings that never came to fruition, always being imminent, but then disappearing off social media when he runs out of time to come good on his promises. It's the same thing snake oil salesmen did in the wild west: string along a town for as much as they could, then disappear when they were about to be caught.

I recognise all these patterns from Portsmouth, and I hope it's just coincidence for your sakes, however it's probably best not to ignore the warning signs because you trust Donald.
Click to expand...

So following along from that logic what do you think will happen next.
 
samaistonsrightfoot said:
Takeover was closer than what we have been led to believe imo. Whilst it hasn't been made public its been discussed in private. Methven was up the week before last for it, and presumably he was able to do that ALS interview while he was here (confirming he was indeed up here?).

We've spent a month being told takeover isn't affecting anything and we are carrying on as usual but nothing at all has happened during that time and within 24 hours of a report comes out the takeover has collapsed (and transfer targets have changed) we sighn someone we haven't been linked to at all until that day, Catts leaves, press season friendly is announced and Donald quits twitter.

That's a lot to happen in such a short space of time and is all either very coincidental, or has been hanging on this takeover either going through or not. Presumably these RAWA minutes will be quick to come out now as well.

Not that that in really arsed if there's a takeover or not as it stands tbh.
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In fairness, in his interview with SAFC, McLaughlin said he'd been in talks with us for over three weeks.
 
shepherd88 said:
What will they reveal, that hasn't already been disclosed in the accounts? Has anything changed since the 31st July?

The confirmation statement has already been filed for up to the 23/04/19, although it was wrong
Click to expand...
they could reveal how much SD or others have loaned the club-or whether the £10m has been repaid by Madrox..the confimration statement is just the numberof shares at issue and that madrox own them-that hasnt changed..its under the bonnet of that...
 
Grumpy Old Man said:
The only advantage would be in reducing the annual wage bill, and freeing up space under the salary cap, but even that doesn't make much sense in the context of the likely savings. A lump sum payoff makes more sense; it's clean, and there are tax/NI advantages for both sides.
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It would help cashflow too wouldn't it? That's where people seem to be speculating that we're in dire straits.
 
CissesUnderpants19 said:
So following along from that logic what do you think will happen next.
Click to expand...
Based on the Ponpey model:
- player's leave on deals designed improve short term balance, at the expense of long term profit
- a parade of poorer free transfers join to replace the players who have left, on deals designed to maximise wages over signing on fees so the financial dependency is on any new owners
- Donald retreats from the public eye, except to spin what's happening as a benefit and to deny any claims against him
- team starts poorly, and settles into mid table
- Donald panics he wont get his money back/lose it all, and sells to anybody who can pass F&P, regardless of their suitability for running the club, probably before January
- if new owners have no money, they asset strip during January transfer window
- fans get disillusioned with the situation, creating a toxic atmosphere that affects the team
- mid-table/relegation battle for foreseeable future, until assets are gone and administration
- fans get together and buy the club, running on a sustainable basis, regain love for team, rise back up the leagues, win Champions League in 2040

Easy
 
kildaremackem said:
it was a £15m deal though, they paid £15m for the shares of safc..not £37m. The rest of the cash was money owed by safc to sbc corproation, and safc money was used for that. the purchase price for the club e=was never £37m or £40m,,thats why people ae getting confused. The cost of the shares was £15m, the rest of the money cleared an safc debt that arose under the previous owner.
Click to expand...

The shares cost £15m (actually £12m after a negotiation with Short later in the year as Donald and Methven clairified in a podcast a month ago) but Donald paid £5m cash and then loaned the rest of that money from the club, a loan that we have no information on. All we know is that he didn't make the balancing payment out of his own cash, he loaned £9.6m from the club.

Also, I urge you again to think of the deal holistically. The SBC loan is absolutely relevant to how much Donald paid in shares, as he agreed that rather than pay money he wanted to use to run the club to Short as an acquisition up front, Short could simply defer some of the debt he was writing off and it would effectively be paid by parachute payments. In effect, Donald just cut the middle man out of that process by paying it directly to SBC. The reason? Because it would definitely have been difficult to pay Short directly from a parachute payment, so instead they paid off a liability he had agreed to clear instead.

Grumpy Old Man said:
Some of this is right. Some is very wrong.
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I think you should clarify if you have time, as I know you've been over it a hundred times.

My only worry with you, GOM, and I hope you understand what I mean by this, is that you are now a bit closer to this than you were. I know you've met the people involved, and I also know that they know who you are and how respected your characterisation can be. Yes, I can be cynical, but I work on the basis of following the money. My assessment (and not a completely uninformed one) is that Donald has obtained an awful lot for a disproportionately low amount of personal debt, and at every turn where he may reasonably be expected to pay out of his own pocket (paying off the balance of his shares, funding short term shortfall mid-season) he has loaned money either from the club or on behalf of it.

kildaremackem said:
they could reveal how much SD or others have loaned the club-or whether the £10m has been repaid by Madrox..the confimration statement is just the numberof shares at issue and that madrox own them-that hasnt changed..its under the bonnet of that...
Click to expand...

It hadn't as of June, when Charlie and Stewart said exactly that. They tried to gloss over it as 'phantom', but it's a very real debt to the club and was used to finance the acquisition of the shares from Short.
 
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KittenMittens said:
The shares cost £15m (actually £12m after a negotiation with Short later in the year as Donald and Methven clairified in a podcast a month ago) but Donald paid £5m cash and then loaned the rest of that money from the club, a loan that we have no information on. All we know is that he didn't make the balancing payment out of his own cash, he loaned £9.6m from the club.

Also, I urge you again to think of the deal holistically. The SBC loan is absolutely relevant to how much Donald paid in shares, as he agreed that rather than pay money he wanted to use to run the club to Short as an acquisition up front, Short could simply defer some of the debt he was writing off and it would effectively be paid by parachute payments. In effect, Donald just cut the middle man out of that process by paying it directly to SBC. The reason? Because it would definitely have been difficult to pay Short directly from a parachute payment, so instead they paid off a liability he had agreed to clear instead.



I think you should clarify if you have time, as I know you've been over it a hundred times.

My only worry with you, GOM, and I hope you understand what I mean by this, is that you are now a bit closer to this than you were. I know you've met the people involved, and I also know that they know who you are and how respected your characterisation can be. Yes, I can be cynical, but I work on the basis of following the money. My assessment (and not a completely uninformed one) is that Donald has obtained an awful lot for a disproportionately low amount of personal debt, and at every turn where he may reasonably be expected to pay out of his own pocket (paying off the balance of his shares, funding short term shortfall mid-season) he has loaned money either from the club or on behalf of it.



It hadn't as of June, when Charlie and Stewart said exactly that. They tried to gloss over it as 'phantom', but it's a very real debt to the club and was used to finance the acquisition of the shares from Short.
Click to expand...

Closer, but still independent. To maintain that, I have to be careful what I say. In particular, anything I comment on has to come from the club first. That's why I'm a but cryptic at the moment, and will be until we finally manage to finalise the meeting minuted with the club. I'll be critical where I feel it's needed. At the moment, all I'll say is that parts of your scenario are not in line with my thinking.

KittenMittens said:
So Donald and co buy the club shares for £15m as you state, then Sartori comes in and gets 20% for... what?

Hint: 20% of 15 is...
Click to expand...

Sartori didn't buy shares in Sunderland, he bought them in Madrox, which did not issue new shares. Any cash coming from Sartori would have to go initially to SJD, which owns (or did own) 94% of Madrox.
 
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Grumpy Old Man said:
Closer, but still independent. To maintain that, I have to be careful what I say. In particular, anything I comment on has to come from the club first. That's why I'm a but cryptic at the moment, and will be until we finally manage to finalise the meeting minuted with the club. I'll be critical where I feel it's needed. At the moment, all I'll say is that parts of your scenario are not in line with my thinking.



Sartori didn't buy shares in Sunderland, he bought them in Madrox, which did not issue new shares. Any cash coming from Sartori would have to go initially to SJD, which owns (or did own) 94% of Madrox.
Click to expand...


first bit - good to know. I think it's important people understand that you are closer to this and that you want the opportunity to get closer and may avoid criticism in order to facilitate a deeper look in the long term. It's also important that as you say, there are different opinions on this, mine being the more cynical, yours being less so.

Second bit - creative accounting aside, what did Sartori pay if not £3m for 20% of something worth £15m?
 
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