McCabe - loans to be swapped for shares?

[Micalijo]

Post on Mad saying shareholders have been getting letters saying £17m of loan to be converted into shares.

Anyone seen the letter?

This for me is pretty much McCabe writing it off. Quite rightly so in terms of the rotten property dealings but fair play if true.

 

[beightonblade]

Oh i do hope he's writing if off.... but i'll wait n see........... get the freehold in a trust while yer at it !

 

[boo radley]

As a non shareholder, if i wanted to invest how would this work?

 

[SteelCity Blade]

That would certainly be an interesting story if its true. Its hard to believe any one individual would write off that much money at this stage but I suppose we can wait and see.

In terms of mistakes that have been made I agree with mic to some extent. KM is clearly trying to look at ways to reshape the business though, so this supposed lack of interest may be a little unfair. We'll see.

 

[lenners]

McCabe created the debt, he's had doors opened to him throughout the world through his involvement with SUFC and he picked up a hotel pretty cheapish recently from the club.
Writing off debt would be the least he could do in the circumstances. He still stands to make money if and when he sells on.

 

[sheffielder]

Whatever the rights and wrongs of how we got to where we are, this gives me greater hope for the future. Still a bit suspicious without seeing a letter or it being on OS.

 

[lenners]

Have now seen the letter.
The plan is to convert up to £17.3m debt into equity with that equity going to McCabe without an open offer to other shareholders.
The bit I don't get is on the 2nd page where it says by converting more than £10m of debt owed to them into further shares...
That sounds like the £17.3m includes debts other than those to McCabe.
Mebbes one of our financial whizzkids can explain more.

 

[sheffielder]

I might be shooting one in the dark Len, but does that not suggest that is 27 million of debt which would go with the estimated debt. 10 million which was probably a loan by the McCabes and the other 17.3 general including property etc; All being written off against 27 million of shares going the McCabe's way?

 

[norfolkblade]

I might be shooting one in the dark Len, but does that not suggest that is 27 million of debt which would go with the estimated debt. 10 million which was probably a loan by the McCabes and the other 17.3 general including property etc; All being written off against 27 million of shares going the McCabe's way?

Sounds logical to me mate, there's probably a bit more too it I should imagine, effectively he has just issued and bought a load of new shares in the club.

 

[Micalijo]

Not something I know a great deal about but very simply if McCabe is still looking for a set figure before he sells up it doesn't really help with the search for new investment in my opinion. By investment I mean new ownership as I just think a scenario where someone chucks wedge in without 100% control is too far fetched.

For example if he has a loan of £17m and is looking for £10m to get out then it is irrelevant if he swaps the £17m loan to share capital - ie he would look to sell his shares for the same £10m.

If the company is worth £1 then again it is irrelevant as any buyer will pay £1 for the shares and McCabe won't get anymore whether it be loan or share capital.

However, no doubt it improves the balance sheet in terms of these headline grabbing creditor figures which people jump onto.

 

[sheffielder]

Sounds logical to me mate, there's probably a bit more too it I should imagine, effectively he has just issued and bought a load of new shares in the club.

I think your right, there has to be something more in it. This would probably inflate the value of the club to about £50m which would mean investment would be impossible. My suggestion is that what other property investments we had left will go to the McCabe's leaving United with a good opening balance

 

[Trafford]

Have now seen the letter.
The plan is to convert up to £17.3m debt into equity with that equity going to McCabe without an open offer to other shareholders.
The bit I don't get is on the 2nd page where it says by converting more than £10m of debt owed to them into further shares...
That sounds like the £17.3m includes debts other than those to McCabe.
Mebbes one of our financial whizzkids can explain more.

The key part of the above is that the equity is all going to McCabe - why should we be concerned if he is prepared to repay debt owing to somebody else by injecting equity (although I suspect that it will all be family debt)? The deal is good news for the Blades, as the loans will not need to be repaid if the club is ultimately sold and McCabe only benefits if the value of the club has increased by more than £17.3m in the meantime (on which basis we should all be happy)

 

[Micalijo]

I don't think a debt to equity conversion increases the value of the company. Totally agree it leaves SUFC with a good starting point.

It's just a very 'simple' sequence of accounting entries which does nothing to increase the actual value of the company in terms of McCabe being able to seek a higher price.

By writing the £17m loan off SUFC Ltd makes a paper profit of £17m but it is all accounting entries and presentation as far as I am aware.

 

[Nick Jansky]

What it does do is to turn a fixed debt, ie the loan, into something that can vary upwards or downwards, ie the value of the shares. So yes, its a really good thing for the football club, less good for K Mc. He is converting something he could have called in intom something he can only sell for what a buyer is prepared to pay for it.

 

[lenners]

What it does do is to turn a fixed debt, ie the loan, into something that can vary upwards or downwards, ie the value of the shares. So yes, its a really good thing for the football club, less good for K Mc. He is converting something he could have called in intom something he can only sell for what a buyer is prepared to pay for it.

Mr J, do you get why the difference between the £17.3m and the 'more than £10m' bit?

 

[Foxy]

It's something that's been in the pipeline for some time, which I'd mentioned just the odd time when certain people were suggesting Mr McCabe was about to pocket millions with "extortionate" interest rates.

The only way he stands to gain with an increased shareholding is if we become successful and/or someone decides to come and throw money at him.

 

[Highbury_Blade]

What it does do is to turn a fixed debt, ie the loan, into something that can vary upwards or downwards, ie the value of the shares. So yes, its a really good thing for the football club, less good for K Mc. He is converting something he could have called in intom something he can only sell for what a buyer is prepared to pay for it.

I'm being wildly optimistic here, and probably a little bit naive, but It's not going to do McCabe much good on that front to see us down in the third tier.

Loan signings on the way.......?

 

[MunXy]

could it just be mr McCabe, has a buyer in the pipeline but if hes owed a debt, maybe the "buyer" is a little cold on that fact so changing it from debt to shares etc could mean that clever kev gets a decent price as the club technically has no debt, when blades are bought, prices of shares increases so mr mcCabe now has money in his pocket from sale plus future money from sale of shares?

im no expert but that seems logical to me.

MunXy

 

[JohnDenver]

It's something that's been in the pipeline for some time, which I'd mentioned just the odd time when certain people were suggesting Mr McCabe was about to pocket millions with "extortionate" interest rates.

The only way he stands to gain with an increased shareholding is if we become successful and/or someone decides to come and throw money at him.

Do you know if this changes his previously stated position of wanting investors, not buyers to hand to the keys to?

 

[Worksop II]

Owd Kev luvs a share issue, I wonder if he sits up all night counting them, or are they bundled up into one big lumpy mattress.

 

[norfolkblade]

I don't think a debt to equity conversion increases the value of the company. Totally agree it leaves SUFC with a good starting point.

It's just a very 'simple' sequence of accounting entries which does nothing to increase the actual value of the company in terms of McCabe being able to seek a higher price.

By writing the £17m loan off SUFC Ltd makes a paper profit of £17m but it is all accounting entries and presentation as far as I am aware.

Strictly speaking it makes no difference to the value, but it makes the business much more attractive to an investor because of the lower creditors, it's pretty much win win for McCabe, and is definitely better this way for the club.

 

[beightonblade]

it actually means fook all ....................... debt or shares have to be 'bought' from McCabe to own the Blades

 

[Foxy]

Do you know if this changes his previously stated position of wanting investors, not buyers to hand to the keys to?

As far as I'm aware, it's still wanting investors unless another Abramovic with the right intensions arrives.

 

[MunXy]

but important thing BB is with debt, kev might have to take staggered payments or write off some.

MunXy

 

[Paulus]

Last year Abramovich turned about £600M of loans into Equity at Chelsea, wasn't this prompted by forthcoming rule changes on club debt by UEFA? Is it possible that McCabe is caught up in the same thing?

 

[norfolkblade]

Last year Abramovich turned about £600M of loans into Equity at Chelsea, wasn't this prompted by forthcoming rule changes on club debt by UEFA? Is it possible that McCabe is caught up in the same thing?

You have to be in a UEFA sanctioned competition such as Europa League etc for it to apply I thought?

 

[sheffielder]

You have to be in a UEFA sanctioned competition such as Europa League etc for it to apply I thought?

5 years Norfolk, 5 years!

 

[alcoblade]

Sounds very good to me. No chance of charging interest on loans and it leaves a simple debt free club. Any buyer can haggle over a share price, but a £20M debt looks horrific. Any maybe he'll re kindle his own love.

Well done to the man if it comes off. I've been criticical but I will give credit where / when it is due.

UTB

 

[parisblade]

Totally agree, it's a good gesture and he should get credit for this. Remember to read the small print, the value of shares can go up or down 17m stays 17m whether we are bottom of the 2nd or top of the PL. McCabe has always said he wouldn't ask for his loans to be repaid unless an Abramovitch-type investor turned up. That didn't mean his heirs wouldn't though...

 

[sheffielder]

Sounds very good to me. No chance of charging interest on loans and it leaves a simple debt free club. Any buyer can haggle over a share price, but a £20M debt looks horrific. Any maybe he'll re kindle his own love.

Well done to the man if it comes off. I've been criticical but I will give credit where / when it is due.

UTB

I am with you. I usually back McCabe and just when you start to lose faith (well alot of faith) he does something which appears to be for the good of United. It's what happens in the next 6 months which will define McCabe in my opinion