Everton takeover: Concern as 777 Partners plan Manchester United-style leveraged buy-out
Everton will be subject to “leveraged buyout” by 777 Partners if the company manages to complete its takeover which “we should be very nervous about”, according to Mike Gow.
The Edge Hill University lecturer and football policy expert told Giulia Bould on BBC Radio Merseyside (10 April) that with the Americans’ requesting an extension from MSP Sports Capital for their loan repayment, and the possibility of the latter acquiring control should they not agree, the situation is “very serious”.
He predicts the Toffees still require between £20million and £40m to complete the season and if that is no longer coming from 777 the prospect of administration could be on the cards, as the two companies and current owner Farhad Moshiri seemingly engaging in “brinksmanship” when a decision needs to be made, but worries about the spectre of a Manchester United-style takeover looming.
He said: “One of the reasons that 777 have requested this extension is because they’re talking to a US-based company called Blue Owl who provide credit facilities.
“So what we can essentially assume from that is that 777, if they are going to buy Everton, if they are going to get their takeover approved, then a large part of the money that they’re going to put in is going to come through what we call a leveraged buyout.
“So they are going to borrow money, essentially take out a mortgage on Everton Football Club, and use that money to buy Everton. It’s creating a lot of uncertainty….
“What we should be very nervous about is if somebody takes out large amounts of debt funding to buy a football club then that is going to massively impact the amount of resources that Everton can put into the team over the next five to 10 years as that debt is then paid down.”
Glazer family situation at Old Trafford coming to Everton?
The leveraged buyout of United by the Glazer family [Sky Sports] has long been deeply unpopular at Old Trafford due to the huge debts it piled onto the club, with protests continuing into this season [The Athletic, 24 August].
Even after the recent minority investment from Sir Jim Ratcliffe saw £120million of the debt payed off the club have a total of £653.7m more on their books [Athletic, 14 March].
And when ever-increasing debts to various creditors, protests against an unpopular board, and a need to make a transfer profit on a brittle squad are all part of the picture at Goodison Park already then the prospect of a load more on top if a grim one.
In some ways it is little surprise given the doubts that have been cast on 777’s ability to fund the takeover or potential club ownership themselves over the months since their deal with Farhad Moshiri was announced in September.
So now that they are seemingly scrambling for more leeway to keep the bid alive there will likely be plenty of Evertonians hoping that MSP turn down the deadline extension request and takeover themselves, if a leveraged 777 deal or an administration that could be disastrous for all involved are the alternatives.
Granted, they have put up close to £200m to keep the club afloat over the past 30 weeks but when that has been coming from loans they have taken out themselves it is a precarious situation all round.
In other Everton news, the Toffees could take legal action against the Premier League.
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