McCabe - loans to be swapped for shares?

[norfolkblade]

5 years Norfolk, 5 years!

Oh yea, my bad!

 

[SwissBlade]

5 years Norfolk, 5 years!

This was stated back in 2006 wasn't it? So the 5 years is up! We're out of the FA cup now so our last chance has gone!

We've been lied to! The bastards!

 

[mickle-blade]

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.

A friend of mine, who is well versed in these matters, pointed out the following when we were discussing this.

"The McCabe situation is an interesting one converting his debt into shares.
That alone indicates to me that he will not rock the boat, but also indicates that he will not put more money in either.
If the club did well his share price would go up and he could sell.
Wonder if an investment is imminent, as the club must be more attractive with the debt off the balance sheet.
IMHO clear indication he wants out, probably no more funding but if no investment and relegation, then what.
Falling gates, plus decline in commercial revenue, less attractive for investment.
Looks like a long climb back to me with the academy playing its part.
Future manager Pemberton !"
I think he has a valid point.

 

[Yossarian]

Wait a minute... I think I've got it.

£17m of (interest free?) loans is worth £17m today, tomorrow or next year.
£17m of shares, however, can change in value. Call me a cynic, but is it possible KM knows something we don't about a possible raise in the value of the club in the near future?

 

[JohnDenver]

Wait a minute... I think I've got it.

£17m of (interest free?) loans is worth £17m today, tomorrow or next year.
£17m of shares, however, can change in value. Call me a cynic, but is it possible KM knows something we don't about a possible raise in the value of the club in the near future?

There must be oil under BDTBL.

 

[sheffielder]

There must be oil under BDTBL.

Must be as I have never seen a club go up in value after relegation

 

[Sensiblade]

Wait a minute... I think I've got it.

£17m of (interest free?) loans is worth £17m today, tomorrow or next year.
£17m of shares, however, can change in value. Call me a cynic, but is it possible KM knows something we don't about a possible raise in the value of the club in the near future?

i'd say Mccabe knows a lot we don't
it'd worry me if he didn't

 

[MunXy]

as stated or should i say guessed, if mccabe knows an investment is imminant then share prices raise meaning the £17 million (debt) stays at £17 million but in shares it increases therefore yet again clever kev makes a profit AND makes him look like a good guy, very astute either way in my opinion, very smart move as people have said a club with a £17-20 million debt looks alot less viable than a club wit £0 debt. clever kev strikes it lucky, using the blades yet again but it does appear to be a win/win situation.
tho if true it does smack a little of "insider trading" which is not good, kinda illegal and frowned upon in financial circles "well those that aren't making money out of it )
If there is a small upsurge in share buying among board members, especially mccabe family then expect an announcement shortly after.

MunXy

 

[SwissBlade]

Doesn't it also mean that KM has a greater share of the club, if we were to get major investment, then KM could then offer a large portion of his shares, still maintain the majority (i presume) share holding, but also make the club a more attractive proposition.

In this way KM could get his loan paid off, but in return the investor sees this as attractive as they are not directly paying a loan off but buying KM's shares.

 

[Deleted member 1486]

Investment and a possible share price rise is one (optimistic) reason. Call me a cynic but I can think of 2 more:

1) The status of the company as a going concern is under serious threat, the accounts are due in June and need to pass an audit. They would fail the audit with the current debt burden.

2) If you're going to put a company into administration it may be better to hold shares than a large chunk of debt. Why? Because when a company goes into administration it can enter into a CVA (Company Voluntary Agreement) with creditors, the company agrees with creditors to pay off the debt at a lower level (so many pence in the pound) or over an extended period of time. If a proposal (say; paying back 10p for every £1 owed) is agreed by 75% of creditors it is binding on all creditors. All creditors MUST be treated equally, so if the Random Bank PLC gets 10p for every £1 owed for £100,000,000 owed, so does the milkman for £10 owed. Following a successful CVA control of the company would be passed back to the Directors.

Dundee FC pulled this trick last week, paying 6p in the pound to creditors: http://news.stv.tv/scotland/tayside/226649-dundee-fc-lives-to-fight-another-day/

edit: just thought I'd warn you that link includes a video with audio in case you're at work and supposed to be doing productive stuff