Watford's short-term future secured as Lord Ashcroft agrees to cover cash shortfall until rights issue (From Watford Observer)
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Watford's short-term future secured as Lord Ashcroft agrees to cover cash shortfall until rights issue
3:27pm Wednesday 23rd December 2009 in
Lord Michael Ashcroft has offered to cover Watford’s cash shortfall until the proposed £7.5m rights issue is completed.
This afternoon a statement was released by the Hornets’ parent company Watford Leisure Plc confirming major shareholder Lord Ashcroft had stopped the club from going into administration on Monday by loaning the club the £4.93m it owed former chairman Jimmy Russo’s company Valley Grown Salads.
It also stated the board supported Fordwat’s proposal to underwrite a £7.5m rights issue.
On November 30, Watford Leisure announced more money needed to be found by December 22 to pay the club’s bills and although there was no reference to yesterday’s deadline in this afternoon’s statement, the Watford Observer understands Lord Ashcroft is willing to provide the cash needed until the rights issue is completed, which it is hoped will be by the end of January.
Lord Ashcroft’s company Fordwat, which holds a 37 per cent shareholding in Watford Leisure, paid VGS the £4.88m it was owed by Watford and around £50,000 in interest and legal costs, as previously agreed, on Monday.
The £4.93m was then loaned against the club on almost identical terms as the VGS agreement.
The interest rate will once again be 4.5 per cent plus Barclay’s base rate, the loan will be repayable on demand and the statement confirmed the Fordwat loan was expected to be secured against Vicarage Road Stadium in “due course”.
The Watford Observer understands an agreement had to be in place by 4pm on Monday after VGS contacted the High Court on Thursday to start administration proceedings, leaving the club 48 working hours to repay the money owed.
The statement confirmed: “The purpose of the Fordwat loan was to prevent the company being placed in administration by VGS.”
The club now have a £4.7m hole to fill before June and Watford Leisure stated more money need to be found by the end of January if the rights issue had not been resolved by then.
The club have moved to ease their immediate cash problems by using the money which has been raised by selling tickets to next summer’s Sir Elton John concert.
Former Watford chairman Sir Elton offered to hold the Vicarage Road concert next May to help raise money for player transfers and the club have assured that money will be “restored” once the rights issue is complete.
Today’s statement read: “The board of Watford Leisure estimates that the company now requires £4.7 million to cover its projected cash flow requirements for the period to 30 June 2010.
“As previously announced, the board supports a proposal from Fordwat to underwrite a £7.5 million rights issue of a debt instrument with either warrants or conversion rights, offered to all shareholders (“Rights Issue”).
“This proposal will take time to refine and put in place. As such the board has determined to utilise all available funds currently held by the company to cover the company’s working capital requirements until the end of January 2010.
“This includes the funds received from ticket sales from the “Playing for Players” concert to be held in June 2010 but with the expectation that these funds will be restored on completion of the rights issue.
“At the end of January further short term funding will be needed to cover working capital requirements until the rights issue can be finalised.
“Trading in Watford Leisure’s shares resumes on AIM with immediate effect.”
It ended by stating “further announcements will be made in due course” but we understand the club are unlikely to make any further comment today.
Click here to see the statement in full
Comments(35)
Mick, Bray
says...
3:53pm Wed 23 Dec 09
So we are back now to the dark days of no communication between club and fans??
Toxic
says...
3:57pm Wed 23 Dec 09
s all about the money and less about the fans!
SuperNova
says...
4:04pm Wed 23 Dec 09
And I hope you earn a lot next year and enjoy it as much as our players do!.
Happy New Year.
Elton Bog
says...
4:04pm Wed 23 Dec 09
oh yeah, a Tory. Tell me Mick, which way do you think the Russo's vote? I'd put a very large amount of my house on them voting conservative.
Just a thought - Ashcroft has a lot more to lose in bad publicity as a prominent politician if he does anything underhand to stitch up a well-loved community club. Not saying he won't, but who can say the Russos wouldn't have?
DoctorChinnery
says...
4:28pm Wed 23 Dec 09
Perhaps the ground is what he has been after all along.
That hook-up with Wycombe will probably see us groundsharing there within time!
pete50
says...
4:51pm Wed 23 Dec 09
pete50
says...
5:06pm Wed 23 Dec 09
herts hornet
says...
5:07pm Wed 23 Dec 09
Elton Bog wrote:what right do WFC have to use the Elton John money to keep club running ,many more people than WFC supporters have bought Elton tickets ,i have 8 friends alone who do not support WFC but like Elton and wish to see him so bought tickets and MM would benefit as money designated to buy players so i helped them by getting tickets for them ,for them to have a chance ,maybe only a slight one ,but a chance they could lose there money is disgusting ! ,interesting to see if that now changes and money not used for players after all ,IT IS AN ABSOLUTE DISGRACE that this money is being used ,short term or not and says everything about how skint this club is if they have to resort to these tactic,have a mind to demand my money back this was not what i invested in shame on the board !!
So Holly, and all you other russo fanboys, according to you Ashcroft's not putting his hand in his pocket? 1) repays VGS after they threaten admin by taking on the loan on the same terms (or were those terms OK for Jimmy but not for his lordship because..........??? ) 2) Underwtites the rights issue and therefore guarantees that £7.5m will be invested in the club (probably he will take the majority of the shares himself and thus personally invest, not loan, the money) 3) He provide short term funding to carry us through January until the rights issue can be completed. What more do you expect?. As for the Elton Money, why should he make a bigger short term loan when there is £1.5m sitting in the bank? The money should be repaid when the rights issue is completed. You can question Ashcroft's long term motives, but you could also question the Russos long term motives in wanting to own 100% of a club which they concede they haven't got pockets deep enough to finance single handed.
Derek Payne
says...
5:14pm Wed 23 Dec 09
Elton Bog
says...
5:19pm Wed 23 Dec 09
It's called funding cash-flow.
herts hornet
says...
5:42pm Wed 23 Dec 09
Elton Bog wrote:perhaps it is you who should grow up and maybe wake up ,you are once again being spun ,when you buy a season ticket you buy into WFC as football club so take what is happening at the football club ,buying a ticket to see Elton John is completley different and a completley different set of circumstances ,when selling tickets to the general public like they are doing they are selling tickets to see Elton John not a football match so non supporters of WFC can purchase them and expect to see Elton ,now there is a doubt they could even get what they are paying for ,it is a disgrace and supporters should wake up and see what is going on at this club ,what hope does club have of moving forward if they have to take this money to fund a "short term " deficit or more inportantly what would have happened if they did not have this money to use ,kindly made possible by Elton !! AND no this is far from all ii have to complain about when we are now at the mercy of a business man who does not give two hoots about football of more importantly Watford Football Club .wait until money dries up and we go cap in hand to him again ,he holds all the cards now AND our ground ,but hey you keep clapping !
That's your biggest complaint now, is it Herts Hornet? Grow up. You could just as easily say the same as every season ticket holder - season ticket money should be put in a special account and only made available to the club in 23 chunks one after each home game, in case the club goes belly-up. It's called funding cash-flow.
duckfan10
says...
5:42pm Wed 23 Dec 09
herts hornet wrote:There have been many idiotic comments posted lately but this takes it! Essentially you are paying to see an Elton John concert and your ticket is like any other you buy to a concert. BTW are you JR and the Salads under an assumed name?
Elton Bog wrote: So Holly, and all you other russo fanboys, according to you Ashcroft's not putting his hand in his pocket? 1) repays VGS after they threaten admin by taking on the loan on the same terms (or were those terms OK for Jimmy but not for his lordship because..........??? ) 2) Underwtites the rights issue and therefore guarantees that £7.5m will be invested in the club (probably he will take the majority of the shares himself and thus personally invest, not loan, the money) 3) He provide short term funding to carry us through January until the rights issue can be completed. What more do you expect?. As for the Elton Money, why should he make a bigger short term loan when there is £1.5m sitting in the bank? The money should be repaid when the rights issue is completed. You can question Ashcroft's long term motives, but you could also question the Russos long term motives in wanting to own 100% of a club which they concede they haven't got pockets deep enough to finance single handed.what right do WFC have to use the Elton John money to keep club running ,many more people than WFC supporters have bought Elton tickets ,i have 8 friends alone who do not support WFC but like Elton and wish to see him so bought tickets and MM would benefit as money designated to buy players so i helped them by getting tickets for them ,for them to have a chance ,maybe only a slight one ,but a chance they could lose there money is disgusting ! ,interesting to see if that now changes and money not used for players after all ,IT IS AN ABSOLUTE DISGRACE that this money is being used ,short term or not and says everything about how skint this club is if they have to resort to these tactic,have a mind to demand my money back this was not what i invested in shame on the board !!
ralphinator
says...
6:06pm Wed 23 Dec 09
All the arguments have now been aired, ad nauseam you could say.
What about calling it off for a bit and letting events now take their course for a while? I'd say that persistent slagging off from here on can only be counterproductive. He may not spend his spare time reading fans' blogs, but I'm sure some of his allies do.
chrisptrifle
says...
6:11pm Wed 23 Dec 09
herts hornet
says...
6:18pm Wed 23 Dec 09
chrisptrifle wrote:That is my point chrisptrifle the following part of the statements says it all
I understand the reasons for 'borrowing' the concert money. BUT, if I was Elton I would not be happy. Money that was ring-fenced has 'disappeared' in the past.
“This proposal will take time to refine and put in place. As such the board has determined to utilise all available funds currently held by the company to cover the company’s working capital requirements until the end of January 2010.
“This includes the funds received from ticket sales from the “Playing for Players” concert to be held in June 2010 but with the EXPECTATION that these funds will be restored on completion of the rights issue.
NICE LITTLE GET OUT CLAUSE THERE
I too wonder what Sir Elton thinks ?
silence is deafening Graham
that's my final word now Ralphinator agree with your sentiment but watching very carefully !
duckfan10
says...
6:34pm Wed 23 Dec 09
chrisptrifle wrote:Ok - ring fence it - but it is hardly worth having money for new players when the club has shut it's doors!
I understand the reasons for 'borrowing' the concert money. BUT, if I was Elton I would not be happy. Money that was ring-fenced has 'disappeared' in the past.
Richard - Come On You Golden Boys!
says...
8:25pm Wed 23 Dec 09
Code word: give-roof , now that's a nice thought; although we also need a stand to put it on !
bomber18
says...
8:32pm Wed 23 Dec 09
WFC4ever
says...
8:46pm Wed 23 Dec 09
bomber18 wrote:I suppose it is rather sad when you consider we have 2/3 pretty wealthy men invovled with the club....yet we were the closet to administration just because a few egos got bruised and they couldn't just get on.
After all the comments re the lack of money at WFC it would appear that we are the only club in the Championship that is skint.Which is ridiculous.I would hazard a guess that the majoriy of clubs are "on paper" in a far worse position than Watford but they get on with the job,without the hysteria that we are witnessing.
Holly68
says...
10:08pm Wed 23 Dec 09
1. We owe £4.93m to Fordwat (secured against vicarage rd)
2. We need £5.5m to cover trading loss until June 2010 (when we supposedly break even)
3. We raise £7.5m in rights issue
4. £5.5m of the £7.5m goes to cover trading loss / keep us going to June 2010
5. That leaves £2.5m surplus from rights issue (where does this go ?)
6. If it goes to pay off some of the loan, that still leaves outstanding debt/loan against the ground of £2.43m
7. Come June 2010, still £2.43m in debt (possibly covered by sale of Loach !?)
8. What about Red Lion Development ?
9. What about East Stand ?
10. Winter has been talking to Saracens about them buying 49% stake in ground (clearing the £2.43m debt in case Loach not sold), plus them funding 49% of new east stand & red lion development
11. If Saracens go for it, then we still need to fund 51% of east stand and Red lion, my guess is 51% of that would need £4.5m investment
12. Where does that come from, no more rights issues !
13. Unlucky 13 ! What about investment in the team ????
Elton Bog
says...
10:22pm Wed 23 Dec 09
How would the Russos have financed this funding requirement? At the end of the day, the Fordwat plan puts £7.5m of new funds into the club. That is simple fact. Could the Russos match this?
derry pigweed
says...
11:10pm Wed 23 Dec 09
Elton Bog wrote:Watford F.C. are still in the brown sticky stuff and more so with the toryboy in charge!
Holly can you answer this question as you seem to have Jimmy's ear: How would the Russos have financed this funding requirement? At the end of the day, the Fordwat plan puts £7.5m of new funds into the club. That is simple fact. Could the Russos match this?
Elton Bog
says...
11:22pm Wed 23 Dec 09
duckfan10
says...
11:37pm Wed 23 Dec 09
derry pigweed wrote:Why are you complaining about Lord Ashcroft putting his money into the club? It is clear that without him the club is bust. The Salads were not going to put up enough money to last until Christmas.
Elton Bog wrote: Holly can you answer this question as you seem to have Jimmy's ear: How would the Russos have financed this funding requirement? At the end of the day, the Fordwat plan puts £7.5m of new funds into the club. That is simple fact. Could the Russos match this?Watford F.C. are still in the brown sticky stuff and more so with the toryboy in charge!
lutondown
says...
11:38pm Wed 23 Dec 09
derry pigweed wrote:and what is with all this Tory boy BS? Are we now part of the sneering brigade? The same that actively cheered when we managed to get an illegal immigrant a stay in the uk? I suppose if he was a Blair / Brown donator he would be okay. Open up your sticky eyes to the crap in this country, it aint the Tories who caused it.God I hate political bigots, go have a wash
Elton Bog wrote: Holly can you answer this question as you seem to have Jimmy's ear: How would the Russos have financed this funding requirement? At the end of the day, the Fordwat plan puts £7.5m of new funds into the club. That is simple fact. Could the Russos match this?Watford F.C. are still in the brown sticky stuff and more so with the toryboy in charge!
Holly68
says...
11:48pm Wed 23 Dec 09
They had a business plan which included ground development and Watford village (red lion) development over the medium to longer term.
Unless the club make public the full details I guess we will never know
I do know this was put to the board weeks before the AGM, the Ashcroft offer only appeared at the last minute (albeit Winter knew what it was long before)
once the Russo's has steadied ship, had the ground develoed etc etc, they were then looking to sell on to someone with deeper pockets in the long term, someone who could then purely invest in the team (as infrastructure sorted) to take to next Level (prem) ....
All by the by now, or is it ????
I still don't know what the Ashcroft agenda is (??), and with Simpson agreeing to ship out at the new rights issue (Ashcroft buying him out to become majority share holder 50%+), I still don't smell the roses ...
Anyway Friends or Foes, Merry Xmas, we need the 3 points boxing day !!
Holly68
says...
11:52pm Wed 23 Dec 09
Security Word : Cash-In
Beds Horn
says...
12:30am Thu 24 Dec 09
It's just poker and Michael Ashcroft has made more deals than the dear old Russo's could ever imagine.
Ashcroft, by underwriting the Rights Issue, which you can imaging will be heavilly undersubscribed, will in fact increase his holding at same time as diluting the rest of the shareholders.
Guys like him don't do what he's done today in terms of paying back the Russo's out of a sense of public duty!!
He's developing a position to execute another plan - the question is what's his plan.
It won't be about footy I'm afraid. He's not a fan and even if he was think guy is a dispassionate investor.
As far as I'm concerned there are two other possibilities. The first is reasonably positive. He builds his stake - having diluted some, will hope to buy the rest of the Russos shares. He and possibly Simpson (it was Simpson that introduced him and there must have been an exit strategy originally which I find hard to believe was purely football related) find a suitable interested investor and make their return.
The second option relates to the Ground and the deal that they thought they had done previously with the Hospital. Although the climate has changed and the hosptial might not be able to stump up the cash I still think that some form of redevelopment is the most likely scenario. The bad news is that in this scenario Ashcrofts property company will end up owning the ground and the club would end up in a lot of debt.
Whilst we're still useful to him and he thinks there's a few quid to be made we're going to be safe but if the debt position worsens or a deal that he's got on the cards blows up, his interest will go and we'll be cut loose to fend for ourselves.
I think it will settle down in the next 6 to 12 months and then the sale or development news will break and the uncertanty will kick-off all over again.
Looking forward to a Boxing day result but thats gonna be tough.
worthing_hornet
says...
10:18am Thu 24 Dec 09
Mick, Bray
says...
10:31am Thu 24 Dec 09
Will be interesting to see who Tory Boy wants as chairman to look after and control his interests?
All we can do is wait and see but i do NOT think he has WFC best interests at heart. I think the RB ran the club very well in their year in charge and achieved and saved WFC a lot of money. A lot of people seem suspicious of them (myself included when they took over) but the comunication between club and fans was the best i have seen since for a long time, money sales on players was fantastic and they also saved us 300k on cashton! Although they never had deep pockets to pump money in i was more than happy the way the ran the show.
herts hornet
says...
11:32am Thu 24 Dec 09
derry pigweed
says...
12:16pm Thu 24 Dec 09
lutondown wrote:Tory boy or not
derry pigweed wrote:and what is with all this Tory boy BS? Are we now part of the sneering brigade? The same that actively cheered when we managed to get an illegal immigrant a stay in the uk? I suppose if he was a Blair / Brown donator he would be okay. Open up your sticky eyes to the crap in this country, it aint the Tories who caused it.God I hate political bigots, go have a washElton Bog wrote: Holly can you answer this question as you seem to have Jimmy's ear: How would the Russos have financed this funding requirement? At the end of the day, the Fordwat plan puts £7.5m of new funds into the club. That is simple fact. Could the Russos match this?Watford F.C. are still in the brown sticky stuff and more so with the toryboy in charge!
Ashcroft is bad news!
This is not about politics blue or red it is about Watford FC Yellow and Black!
(believe in) V.o.R
says...
2:28pm Thu 24 Dec 09
Billie
says...
11:06pm Thu 24 Dec 09
(believe in) V.o.R wrote:An autobiography vOr?
Sec: Toss-pott
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Elton Bog says...
3:47pm Wed 23 Dec 09
1) repays VGS after they threaten admin by taking on the loan on the same terms (or were those terms OK for Jimmy but not for his lordship because..........???
)
2) Underwtites the rights issue and therefore guarantees that £7.5m will be invested in the club (probably he will take the majority of the shares himself and thus personally invest, not loan, the money)
3) He provide short term funding to carry us through January until the rights issue can be completed.
What more do you expect?. As for the Elton Money, why should he make a bigger short term loan when there is £1.5m sitting in the bank? The money should be repaid when the rights issue is completed.
You can question Ashcroft's long term motives, but you could also question the Russos long term motives in wanting to own 100% of a club which they concede they haven't got pockets deep enough to finance single handed.