www./news_2302-new ... aints.html www.saintsrlfc.com/news/1917 Sound footing going into our new Stadium £1.75million has been added to shareholders funds by way of a conversion of £1.35million of directors' loans into new shares and a private placement of £400,000 of new shares.

www./news_2302-new ... aints.html www.saintsrlfc.com/news/1917 Sound footing going into our new Stadium £1.75million has been added to shareholders funds by way of a conversion of £1.35million of directors' loans into new shares and a private placement of £400,000 of new shares.

Any chance of a new prop with some of the cash?

Good old mac... he had his money sat in there to long

anyone know what this means in reality?

has Eamonn put more cash in, or written off debts the club owes him and other directors?

I cannot wait for saints stadium to get finished it can only look good for the games premier team to be playing in a great stadium infront of big crowds. KR is great but does not do the game any favours. I also cannot wait to visit for the first derby game there.

he's not daft, sir mac. My understanding is that the directors who have carried the club have converted their loans into shares in the club, at a time when they are worth very little, so they own a massive proportion of the club which was, because of the debt not worth much. In two years with very little debt and a shiny new stadium on its books, the club could be worth 20x what it is now. Any potential investors/sponsors will be much more likely to invest in that situation.

How can loans be turned into shares?

I really don't understand this corporate finance stuff.

That's what I think it all means.

its just crafty business stuff really, it could take me all night to explain it, but the end result is that the club is much more secure.

I guess I won't be getting the 'Sack the board' banner out of the cupboard for a while then. I had expected it to be used frequently when Harry was appointed.

debentures are directors loans changed into shares in the club.

This means that its even more in the best interests of the big debenture holders to ensure the club goes from strength to strength.

debentures are medium to long term usually, those who have converted loans will undoubtadly be with us for some time!

Surely its taking debt off the "balance sheet" to improve the club's credit-worthiness before attempting to raise finance to part fund the stadium.

There is no way in the world that anybody would be given finance in the current financial markets if they were carrying that amount of debt with minimal assets until the new stadium is completed.

I would also imagine that the director's loans were re-payable on demand thus makking the club even more un-bankable.

This is another step on the way to completing the stadium but I would say that there is no way in the world a contract for the build will be in place by Christmas.

No they are not. Paul Youane above is pretty well spot on.

Debentures are loans (i.e debt) secured on the assets of the company. Usually but not always with a fixed future repayment date and an interest "coupon" (rate). There is usually a formal debenture agreement, similar to a mortgage, to cover the rights and obligations of all parties, including what happens in the event of default. Bank overdrafts and loans are secured by debenture, and larger companies issue debt instruments to the market secured by debenture. Where debentures are issued to investors directly, there is usually a trust deed and trustee appointed to look after the interests of the debenture holders. In the case of sports clubs, you tend to find that debentures may have no fixed repayment date - or its a very long way in the future - and carry no interest coupon.

Anyway, from the press report, it appears two things happened:

1. Directors' (I presume mainly McManus, but have not seen the accounts) loans of £1.35m were converted into shares.

2. A further £0.4m of new shares were issued.

Maybe I can add a bit of general background, which may expand on what the guy above said and possibly help some more? Making some assumptions - and if I had hold of the latest published accounts I could be more specific and accurate:

Item 1: NO new cash will have come into the club. What happened is that £1.35m of debt - money that the club owed creditors, in this case directors - was converted into shares. Shares are at the bottom of the pecking order when it comes to distributing the assets of the company in a winding-up. They rank behind ALL the creditors.

Where a company is technically insolvent - its liabilities exceed its assets - then it will have difficulty borrowing money or obtaining trade credit, and indeed can only continue if key creditors - usually lenders to the company - continue to support it and do not require their loans repaying. This is often the case with sport clubs which can only survive because of the generosity of a rich owner.

In such cases, the lenders - the directors - often recognise the reality of the situation, which is that they will not get their money back, and so convert the loans into shares. This paper exercise at a stroke writes off the loans, and probably eliminates the technical insolvency, and locks in the directors' money probably until the club is finally wound up. The big big losers are of course the directors, but they will in reality have already taken the hit on the loans which were never likely to be repaid.

Quite a bit more to it than that, but I've tried to simplify it.

Item 2 WILL be new money. Item 1 amounted to a financial reconstruction, and in your case I assume may have eliminated a technical insolvency (but have not seen the accounts so I am assuming). If the club WAS technically insolvent before that (or if it had only modest net assets) then the existing shares would have been pretty worthless and attracting new share investment would be very difficult. Indeed, anyone putting money in would usually require a disproportionate degree of control. But once you have written off debt and issued new shares in place of debt, then issuing further new shares becomes a more practicable option for the club - and the new investors too.

My guess is that for the club to be able to borrow money commercially for the new stadium, prospective lenders required a much stronger balance sheet and clearance of existing debt. Their loans will presumably be secured on the new stadium. Maybe your club will seek to issue debentures to supporters (i.e. get supporters to lend money to the club long-term, secured on the club assets) like many soccer clubs do. Would be a brilliant move if they did.

Sorry, that's probably all pretty boring. But to sum up from what I am guessing, most of what has been announced is probably financial engineering to strengthen what was probably a very weak balance sheet, to enable the club to obtain funding for the new stadium. The directors are recognising the realities of the situation, and the club will be much less in debt that before. Good news for you guys, and good for you that you have directors with deep pockets prepared to sink so much into the club.

If you compare, say, with a club like Bradford - no such rich owners, and what directors' loans there were were repaid in full out of the Odsal settlement cash. So, unlike you guys and most other clubs, Bulls have not been "in debt" for years - despite the nonsense to the contrary some folk spouted. But without a rich owner, they are also unlikely ever to be able to compete again with clubs like yours who have. Money is everything, and you guys are very fortunate in having a rich owner who is also a very capable businessman at the helm.

geez man didn't I just say that ffs,get a life.

I would say this bodes well for a start to the stadium in the near future. Is it to be a joint venture with Tesco? I'm sure your name is on the OJEU.

As has been stated above, it appears you are converting debt to improve your credit rating, not only to third party funding, but any potential contractor wouldn't touch you with a ty stick, if you have no credit rating.

Cheers Adeybull,thank god for Big Mac eh.

Could this also be an exercise in potentially investing for the future? That is, if the new stadium does become a reality (and I'm not counting my chickens, credit crunch and everything) and if the directors believe it could be a revenue producer, unlike our present stadium which is a big black financial hole, is this a way of hedging bets, recognising there may be a potential return at some point in the future but not in the length of term required by the loans? (If that makes sense: I'm trying to talk in a language I do not understand!)


Well, I think we've been running at a loss for years. We certainly showed a loss for the last financial year when figures were provided. So I would imagine we don't look overly healthy to a creditor. [iAre[/i there any creditors at present?

First point - defo yes. In fact, knowing the financial acumen of your board, I suspect the new stadium will prove successful financially. To the extent its funded by shares, I could easily envisage a return to the investors. As long as you get that stadium built, I am confident you guys have plenty to be optimistic about.

Second point - you and pretty well every other club. Bulls ran at a loss for years too, but without a McManus the situation became unsustainable so major cost reduction was required to produce the modest profits which are necessary to produce a neutral cash flow. I've not seen your accounts so I don't know if there are any other loans or borrowings - I suspect any will be limited - but you'll have the normal modest trade creditors for goods and services.

No, you didn't actually. Not my fault that what you said was wrong and potentially misleading.

And if you don't like what I write, no-one makes you read it.

I was trying to help, given this is my field much more than the on-field stuff where others are far better qualified to comment - and it was clear from comments on this thread that some people were understandably unsure of what it all meant. I posted as a neutral, recognising the magnitude of what McManus (and others?) has done for the club.

Was that any reason to insult me for taking the time to try and do what another knowledgeable poster on the thread said would take him all night to explain so he didn't attempt to? I thought better of you than that

I found his explanation really helpful. Some of us are not satisfied with simply 'we're ok, don't worry' or some such but would like to try and get a handle on what is happening while having very little knowledge and/or aptitude for the complex financial stuff. It's nice when people who do have the necessary, take time out to explain it.

He just repeated what I said only with a load of old mumbo jumbo!!!

You saind it in a simple sintellisn sort of way. Were getting set for that shiny new stadium, just a case of picking a brick to sponsor now, and figure out where to sit.

We have a genius at the helm.

Your being a tad harsh on Adey there Sadfish



He is an accountant so likes to account.

It would not surprise me if Saints organised a share offer once in the new stadium or failing that sold debentures eg £10k gets you a seat for 20 years.

Oh aye,Ill have two.