Sheffield United (AIM: SUT) the football, leisure and property company annouces today that it has raised #10 million in financing by way of a unsecured loan from SDG Caledonia Holdings Limited ("SDG Caledonia"). It is intended that the funds will be used to fund player purchases and salaries, to support certain potential capital projects both at Bramall Lane and at the club's other sites in Sheffield and to provide the Company with additional working capital.
The loan, which bears interest at Bank of Scotland base rate plus 4%, is repayable by 31 August 2008 and includes an obligation for SDG Caledonia to underwrite up to the value of #10 million, any equity fundraising that the company makes during the period of the loan.
The loan will be advanced by SDG Caledonia Holdings Limited, a company controlled indirectly by Kevin McCabe and related family trusts, accordingly the transaction constitutes a related party transaction. The Directors of Sheffield United, excluding the related party Kevin McCabe, consider, having consulted with the Company's Nominated Advisor, KBC Peel Hunt, that the terms of the loan are fair and reasonable in so far as the Company's shareholders are concerned.
Commenting on the loan, Jason Rockett Chief Executive said:
"This investment is part of our long term business strategy which includes reducing bank debt. It is a strategic move in the wake of the inevitable reduction in income associated with relegation from the Premier League.
"This loan enables us to continue our robust business strategy - focused on staying competitive on-the-field and on growth off-the-field by maximising our business activities and opportunities."