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Donald on our January budget

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Just want to be clear I'm more than happy with the way SD is going about things.

It's just that there seems to be £30-40m left of the £63m parachute payments even after the capital debts and losses we have been told about are covered.

So we will either have this in reserve as a warchest for the Champo etc. or it's helping fund paying Short his £40m (one way or another). It would be good to have some clarity on this.

I'm quite happy if it's the latter - no net debt and with our outgoings cut down to match our income is a great position to be in compared to where we were.

But if we do have a huge cash reserve then it would be nice to know that too.
 

andymcnish said:
Just want to be clear I'm more than happy with the way SD is going about things.

It's just that there seems to be £30-40m left of the £63m parachute payments even after the capital debts and losses we have been told about are covered.

So we will either have this in reserve as a warchest for the Champo etc. or it's helping fund paying Short his £40m (one way or another). It would be good to have some clarity on this.

I'm quite happy if it's the latter - no net debt and with our outgoings cut down to match our income is a great position to be in compared to where we were.

But if we do have a huge cash reserve then it would be nice to know that too.
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it isnt the latter..it would literally be a crime to use that money to pay short...its fraud...what more clarity do you want...also no one would accept the para's as security for a debt if the debt was being paid with the para's! i think some of it is warchets money and some bneing used to pay debts from the old regime..stewart has spoken about vcash flow a few times and him having to write cheques..I think what has happened is..the money is held, as donald said, in a seperate account...until they pay ellis...then the money can be used for normal payment of bills..but at the moment stewart is paying the bills..he personally wrote the cheque to pay installemnts on papy and ndong...I would imagine when they have completed the purchase payments and the para money leaves the specific account stewart will repay himself for the cheques he has had to write bto pay for players etc..
 
Marra, I'm a corporate lawyer who has been doing deals like this for 30 years.

It's not fraud in any sense for a private company to assist in its own purchase.

It's absolutely bog standard for business buyers to use the group's resources first as personal money tends to be taxed when extracted.

Cashflow requirements are about timing. We may well not have any spare cash now, but once the full £63m parachute has come in there should be a cash surplus of £30-40m on the figures we have been told about.

I have assumed from the start that most of that will go towards paying off Short's £40m one way or another, and I'm quite relaxed about that.

If that isn't the case then that would be great as it means that we will have a huge cash reserve to use as needed in the future
 
andymcnish said:
Er they won't owe Short a penny directly. It will be their newco buying company that does. That company (being SAFC's parent) can borrow the money as and when it likes without HMRC giving a toss.

HMRC only care about extraction to individuals in this scenario and an inter-group loan has no tax effect.

SAFC will also have guaranteed the payment by its holding company of the purchase price - otherwise it wouldn't be able to secure Short on the parachute payments in the first place would it?

There used to be a legal process called financial assistance whitewash that private companies had to go through to be allowed to assist in their own acquisition, but the requirement for this was abolished in 2006 when the new Companies Act came in.
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If SAFC lends money to Madrox, that's a very far stretch from saying that that money has been extracted to the owners, which is what the OP is trying to infer. Money borrowed from SAFC to make any payments would be still be owed to, and repayable to, it. We have no indication of what, if any, capital resources, have been put into Madrox. We know only that it has £1,000 in £1 shares, fully paid. There is no indication of any associated premium on those shares. You've been pretty desperate throughout to almost want to see them using the parachute payments as the source of funding, even though doing that would conflict with the owners' business plan. I know you've seen it used in deals, but that's far from the only way of doing it. For another thing, using the acquired club's resources would conflict with the assurances given by them during the fit and proper persons' assessment by the EFL as to the availability of finances to them.
 
I'm not sure it would. Showing you have personal resources is one thing. Promising to use them to the exclusion of any group funds is another.
 
andymcnish said:
Marra, I'm a corporate lawyer who has been doing deals like this for 30 years.

It's not fraud in any sense for a private company to assist in its own purchase.

It's absolutely bog standard for business buyers to use the group's resources first as personal money tends to be taxed when extracted.

Cashflow requirements are about timing. We may well not have any spare cash now, but once the full £63m parachute has come in there should be a cash surplus of £30-40m on the figures we have been told about.

I have assumed from the start that most of that will go towards paying off Short's £40m one way or another, and I'm quite relaxed about that.

If that isn't the case then that would be great as it means that we will have a huge cash reserve to use as needed in the future
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what about using the assets that are security toi make the payment? su8rely that wouldnt be poermitted...they cant use the money as divis..as thewre are accumulated losses..if they lend it to mandorx and mandorx pays to ellis...corporate rules wouldnt like that?

@Grumpy Old Man is drumaville remaining an SAFC group company or does that become short's own property?
 
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kildaremackem said:
what about using the assets that are security toi make the payment? su8rely that wouldnt be poermitted...they cant use the money as divis..as thewre are accumulated losses..if they lend it to mandorx and mandorx pays to ellis...corporate rules wouldnt like that?

@Grumpy Old Man is drumaville remaining an SAFC group company or does that become short's own property?
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Drumaville was the old holding company, presumably owned 100% by Short, although because of the lack of filing requirements in Jersey, it's possible that someone like Per-Magnus Andersson could have been a minority shareholder. I would assume that the deal involved the sale of the shares of Sunderland Limited (and thus, by definition, all its subsidiaries) by Drumaville to Madrox. The hotel was never part of Drumaville; Short owns that via a British LLP, which is in turned owned by a US-based LLP, hence it not changing hands.
 
SAFC 2012 said:
Mary Hinge is f***ing embarrassing or should that be fookin
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Klerbs in the best finanshul shape its been in for donkeys, Fook all debt, huge wor chest and 30k a week.....For League wan and probably most of the championship.........ye Fookin clown
 
Mary Hinge said:
Klerbs in the best finanshul shape its been in for donkeys, Fook all debt, huge wor chest and 30k a week.....For League wan and probably most of the championship.........ye Fookin clown
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club is in the best shape its been in for a while for sure...though its still budgteed to lose £100k a week...but on the playing side...biggest psneders on new players in our league...hoighest wage bill in our league..even without the wasters....
 
''Corporate rules wouldn't like that" ??

On every single deal I've done in the last 30 years, if there had been spare cash in the target company it is added to the price and is paid out to the seller.

I imagine this is what happened here. SAFC is basically worth nowt and is running at a loss but if you can get it to breakeven it should have around £40m of surplus cash once the parachute payments come in.

The deal is that SD knows (unlike Short) how to run a third tier club without haemorrhaging money.

So the price is set at £40m.

Now you could pay the price out of your own or borrowed funds if you want to. But it is also perfectly legal and usual to use up the target's spare cash first.

This doesn't mean SD is being sharp or isn't putting any of his own money in (he'll need to at least until he gets us straight and next year's parachute payment comes in), but it does mean that there isn't going to be a huge warchest left in reserve and that we won't be rolling in cash this time next year.
 
andymcnish said:
''Corporate rules wouldn't like that" ??

On every single deal I've done in the last 30 years, if there had been spare cash in the target company it is added to the price and is paid out to the seller.

I imagine this is what happened here. SAFC is basically worth nowt and is running at a loss but if you can get it to breakeven it should have around £40m of surplus cash once the parachute payments come in.

The deal is that SD knows (unlike Short) how to run a third tier club without haemorrhaging money.

So the price is set at £40m.

Now you could pay the price out of your own or borrowed funds if you want to. But it is also perfectly legal and usual to use up the target's spare cash first.

This doesn't mean SD is being sharp or isn't putting any of his own money in (he'll need to at least until he gets us straight and next year's parachute payment comes in), but it does mean that there isn't going to be a huge warchest left in reserve and that we'll be rolling in cash this time next year.
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the budget for this year is a £5m loss I think

andymcnish said:
''Corporate rules wouldn't like that" ??

On every single deal I've done in the last 30 years, if there had been spare cash in the target company it is added to the price and is paid out to the seller.

I imagine this is what happened here. SAFC is basically worth nowt and is running at a loss but if you can get it to breakeven it should have around £40m of surplus cash once the parachute payments come in.

The deal is that SD knows (unlike Short) how to run a third tier club without haemorrhaging money.

So the price is set at £40m.

Now you could pay the price out of your own or borrowed funds if you want to. But it is also perfectly legal and usual to use up the target's spare cash first.

This doesn't mean SD is being sharp or isn't putting any of his own money in (he'll need to at least until he gets us straight and next year's parachute payment comes in), but it does mean that there isn't going to be a huge warchest left in reserve and that we'll be rolling in cash this time next year.
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the £20m in trade creditores that have had to be paidd to date..that came from somewhere..

what in your view is the significance of the parachute payments being security on the debt..the parachute payments are paid to safc limited..the club is bieng bought by a different company..madrox?
 
kildaremackem said:
the budget for this year is a £5m loss I think
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Yes - ignoring the parachute - dropping to about £2m next year if we stay where we are.

Of course we don't know for sure how the big four wage players will play out so there is some uncertainty around the gap.

But we are counting down from £63m here and £8m or so doesn't make much of a dent.
 
kildaremackem said:
club is in the best shape its been in for a while for sure...though its still budgteed to lose £100k a week...but on the playing side...biggest psneders on new players in our league...hoighest wage bill in our league..even without the wasters....
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100k is fook all to us man, start winning nuther 5k on the gate......
 
andymcnish said:
Marra, I'm a corporate lawyer who has been doing deals like this for 30 years.

It's not fraud in any sense for a private company to assist in its own purchase.

It's absolutely bog standard for business buyers to use the group's resources first as personal money tends to be taxed when extracted.

Cashflow requirements are about timing. We may well not have any spare cash now, but once the full £63m parachute has come in there should be a cash surplus of £30-40m on the figures we have been told about.

I have assumed from the start that most of that will go towards paying off Short's £40m one way or another, and I'm quite relaxed about that.

If that isn't the case then that would be great as it means that we will have a huge cash reserve to use as needed in the future
Click to expand...

Corporate lawyer???

Spot me a 10a marra must be rolling in it :lol:
 
you have got to laugh....from Roker Report:

'Donald also noted that when contract terminations were mooted with the representatives of both players, suggestions were made that loyalty payments and agent fees were due soon and that if something could be done there, a termination may be possible.'
 
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