Watford non-executive director David Fransen has loaned the club £500,000 to assist with the "working capital requirements of the business including potential player transfer activity during the January transfer window."

Fransen, who joined the board in March last year and is based in Geneva, is a lifelong Watford fan and managing director of energy company Vitol S.A.

The Hornets needed a cash injection before the end of January to pay its bills but it is unclear why it is Fransen and not major shareholder Lord Michael Ashcroft who has loaned the money.

Lord Ashcroft, whose company Fordwat own 37.16 per cent of parent company Watford Leisure Plc, has offered to underwrite a £7.5m rights issue to raise much-needed cash and loan the club money prior to the proposal taking place.

Last week the Hornets confirmed Lord Ashcroft had not loaned Watford Leisure or the club any more money following the £4.93m in December but reiterated he was still prepared to do so.

However, a statement which will soon be released to the Stock Exchange read: "Watford Leisure announces that on 25 January 2010, the Company's 96 per cent. owned subsidiary, The Watford Association Football Club Limited ("WAFC"), entered into a loan agreement with David Fransen, a Non-Executive Director of the Company. The agreement is in respect of a short term unsecured loan of up to £500,000 to WAFC for the purpose of assisting with the working capital requirements of the business including potential player transfer activity during the January transfer window (the "Loan").

The Loan accrues interest at the rate of 3..5 per cent. above the base rate from time to time of Barclays Bank plc and is repayable on or before 31 May 2010.

The provision of the Loan is deemed to be a related party transaction under the AIM Rules for Companies. Accordingly, the independent directors of the Company consider, having consulted with Strand Hanson Limited, that the terms of the Loan are fair and reasonable insofar as the Company's shareholders are concerned."