"investment" confirmed as a loan

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The Sheepfolds End said:
That Donald was always open about this sort of investment for starters. Don’t recall him saying he’d look for a loan and have it secured against the clubs infrastructure.

In fact, within the last few days, we were told that the investment was a private arrangement between Madrox an
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It was reported not long after he took over and he said himself on one of the early podcasts he was looking at the option of a loan. It's no coincidence that this is the same amount that was reported then. I seriously don't see why people are worrying about this.
 


sksk3021 said:
Fair enough which would mean that it’s more of a cash flow issue for the owners than anything else.
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Precisely. The charge documents look alarming because they're designed to cover any potential future circumstance. The reality is that (especially given the political pressures on the EFL following Bury) the worst case scenario would be Madrox being placed into administration and the shares in Sunderland being sold off to repay the debt. Either that or FPP exercising the right to convert the loan, and getting ownership of the club for $12m.
 
Comeback_Kenwyne said:
He took a punt, didn't work out, has found someone who might buy him more time, but only at a high cost (potentially to both us and him) is seemingly the deal, no?

I don't like securing anything against the SoL either - but I can't really see that the Americans would want to bulldoze it.
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The very fact that we are discussing it as a possibility is really shit. The fact that we are losing money and taking out a loan, is shit. The evidence provided that we have no way what so ever in our set up to make money nor get value for money is well.... you get the point.
 
Roger said:
But what assets and business interests apart from Sunderland does Madrox have. Is Madrox trading in any way?

Technically not SAFC's loan to pay back, but I fail to see how else Madrox will do so apart from using SAFC's money.

I am not saying the loan is a necessarily a bad thing. But for all intents and purposes it is surely just like a loan to SAFC?
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The loan is the responsibility of the Madrox shareholders. Yes, they could borrow money or take dividends from SAFC to repay it, but equally they could pay it from their own resources.
 
Dilligaf60 said:
Why were we told it’s investment when in actual fact it’s a loan using the stadium and the academy as security?
how can the debt “not be on the clubs toes?
i wouldn’t be half as bothered if he’d just told the truth instead of trying to dress it up as something else.
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If it isn't paid then we have new owners. Unlike previous arrangements where failure to meet payment would have resulted in administration.
 
Grumpy Old Man said:
Precisely. The charge documents look alarming because they're designed to cover any potential future circumstance. The reality is that (especially given the political pressures on the EFL following Bury) the worst case scenario would be Madrox being placed into administration and the shares in Sunderland being sold off to repay the debt. Either that or FPP exercising the right to convert the loan, and getting ownership of the club for $12m.
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I’m not sure it’s the charge that’s alarming, it’s the talk of investment, it’s not investment it’s a loan. Then Charlie talking about it having no connection to the club, I know you said you agree technically, but it’s the latest in a long line of financial statements that are misleading at best.
 
Grumpy Old Man said:
Depends on the term. Loans can also be rolled over. Many large companies have pretty much revolving debt.

Also, the club don't have to repay the debt - Madrox do. The Americans have no interest in seeing a company fail unless it's utterly unavoidable. Companies and assets are at their most valuable when part of going concerns,
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Grumpy; it seems to me that there must be more to this. I cant think why these guys would bother loaning £10m to an obscure third division club without having some potentially bigger plan in mind. The sum is probably a pittance in relation to their usual rolls of the dice and the returns correspondingly meagre for such big players - why are they playing the game at all, if not to possibly throw a bigger hand in later?
 
Grumpy Old Man said:
The loan is the responsibility of the Madrox shareholders. Yes, they could borrow money or take dividends from SAFC to repay it, but equally they could pay it from their own resources.
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It's only their legal responsibility if they have personally guaranteed it (which seems really unlikely).
Otherwise, if composite group security has been taken, it's the responsibility of the group as a whole.
There will be standard intergroup cross guarantees and debentures under which each group company guarantees all monies owed to the lender by any group member and offers its assets as security.
 
Isn't the academy's only real value being its existing use? Could someone sell it and re-purpose the facility, given the reasons it was allowed to be built there in the first place?

I'd say, rather fortunately, that it's bulletproof.
 
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S.S.R.. said:
Isn't the academy's only real value being its existing use? Could someone sell it and re-purpose the facility, given the reasons it was allowed to be built there in the first place?

I'd say, rather fortunately, it's bulletproof.
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Aren’t the mags looking for a new training ground.....
 
Grumpy Old Man said:
To be fair, CM actually said "approaching eight figures".
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Several outlets, including RR, which at the time was being viewed as the official unofficial source of club announcements, just said eight figures, so people were on here at the time of the announcement saying "at least 10 mill," presumably based on that statement, but you're right, it doesn't look like there any actual quotes to the effect - just lazy journalism rounding it up for a story and sending people off with inaccurate info. 9 is quite an odd number though - why not just round it up to 10?!
 
Grumpy Old Man said:
Which means they lose the club. I suspect that if it came to that, and the Americans wanted the club, they'd simply activate the bail in clause.
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Indeed, they would lose the club and the Americans have covered all eventuality to get a profit. What if the manner they have planned for that eventuality is firmly against the clubs best interests?

All hypothetical but to suggest we aren't at risk because the loan is to Madrox is wrong imo there.
 
andymcnish said:
It's only their legal responsibility if they have personally guaranteed it (which seems really unlikely).
Otherwise, if composite group security has been taken, it's the responsibility of the group as a whole.
There will be standard intergroup cross guarantees and debentures under which each group company guarantees all monies owed to the lender by any group member and offers its assets as security.
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While not a strict legal responsibility, repaying the loan by taking out additional share capital or making directors' loans to Madrox is possible. I was simply pointing out that the money did not necessarily have to come from the club.
Coeus said:
Indeed, they would lose the club and the Americans have covered all eventuality to get a profit. What if the manner they have planned for that eventuality is firmly against the clubs best interests?

All hypothetical but to suggest we aren't at risk because the loan is to Madrox is wrong imo there.
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Politics. The fallout from Bury going bust has changed the landscape. Furthermore, if they weren't interested in owning and running the club, they'd never have started negotiating in the first place.
Crayola-Kid said:
Several outlets, including RR, which at the time was being viewed as the official unofficial source of club announcements, just said eight figures, so people were on here at the time of the announcement saying "at least 10 mill," presumably based on that statement, but you're right, it doesn't look like there any actual quotes to the effect - just lazy journalism rounding it up for a story and sending people off with inaccurate info. 9 is quite an odd number though - why not just round it up to 10?!
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It's $12m, roughly £9m at current exchange rates.
 
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Grumpy Old Man said:
While not a strict legal responsibility, repaying the loan by taking out additional share capital or making directors' loans to Madrox is possible. I was simply pointing out that the money did not necessarily have to come from the club.


Politics. The fallout from Bury going bust has changed the landscape. Furthermore, if they weren't interested in owning and running the club, they'd never have started negotiating in the first place.


It's $12m, roughly £9m at current exchange rates.
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That's nothing more than opinion GOM, whilst I respect that you have yours, I'm not relying upon rich people worrying about a possible blowback on their reputation.

We know absolutely zero about the "negotiation" nor their intentions.
 
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