Often Partisan

Deed of Novation Update: Carson Agrees to Swap Debt for Equity

Birmingham International Holdings made an announcement on Friday that they have entered into a Deed of Novation with Carson Yeung which will see his loan of £15million to the club wiped out and thus make Birmingham City a much more attractive prospect for buyers.

As always, I am going to start with the caveat that I am not an accountant and that people should treat what I write with the scepticism it deserves. I will try to stick to facts but where I need to wonder into the realms of speculation I will do so.

Haven’t we heard about this deed of novation before?

Indeed we have. This was first announced on November 12 to the stock exchange. The reason for the new announcement is that it was only a proposal back in November; the company and Carson have now agreed the deed as of December 20. Effectively the agreement sees the holding company assume the debt freeing the club of it, and then swapping that debt for equity in itself.

However, that doesn’t mean that it has actually happened. The company have confirmed it will only happen provided the Stock Exchange approve and the judiciary raise no objection prior to the conclusion of the currently unscheduled EGM where shareholder approval will be sought.

EGM? Isn’t there an AGM on January 10?

Yes there is. However, the company needs to release a circular prior to the proposals for this being announced and agreed at a shareholder meeting and this has been twice delayed already. The AGM will proceed as normal and will confirm directors and approve accounts but it will require another shareholder meeting to approve these proposals.

BIH have to release documentation to shareholders including an independent report from the independent non-executive directors fourteen days prior to an EGM. Time is very much of the essence also, as it was confirmed in the November 12 announcement that a debt was due to fall within 90 days.

So does this mean the club will be sold soon?

It doesn’t guarantee the quick sale of the club by any means. However, what it should do is lift a major obstacle to the sale of the club. One of the chief issues for buyers has been this loan; not just because of the amount but because of the other parties and variables involved. Firstly, the loan is subject to the charging order placed upon Carson by the department of justice which would mean that any negotiations to reduce the amount paid back would have to involve the HK judicial system. Secondly, as noted in previous statements there is a problem with Carson’s loan in that the money didn’t necessarily come direct from him. There has been an idea that it would be foolish to pay anything back for fear of someone else demanding the loan back saying it is owed to them.

So what happens next?

Nothing more can happen now until a circular is prepared for shareholders and an EGM arranged. Once that is confirmed then it’s my belief that the other permissions that have been sought should fall into place. I will state my belief (based on the fact the stock exchange demanded accounts be up to date and unqualified) that the resumption of trading of shares may well be problematic and that might be holding everything up. Thus it’s very much my belief that we’re still very much beholden to the regulatory bodies and it’s down to them to make the next move. I don’t believe I will be telling anyone anything new when I say that that move might not be the quickest.

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  • mark

    surely everything fall in to place its christmas………………….

  • Lee

    Is the debt still 15m? Have we not been making payments to pannu as payment for the loan?

  • Blueboy 88

    Think I am suffering from deed of novation fatigue…

  • mark

    It doesn’t guarantee the quick sale of the club by any means. imo Daniel Carson has no intention of selling the club…………………………………you mentioned the loan outstanding……… again imo 32mils is what Carson wants if that is his true motive to want to leave bcfc………….no takers…. gp not a chance
    if you paid 80mil surely you would want as much money back as possible??………
    Also Carson and his associates know they are one league away from the riches of the promise land…………would you give it up??

    • Blueboy 88

      If you cant pay the bills , that decision is taken away from you.

      He needs to borrow , sell or lose the lot …& on that basis the clubs value to BIHL is an ever diminishing asset.

      • mark

        not a bad gesture possibly removing his 15 mil loan dont you think!!

        • Blueboy 88

          Who’s £15 Million….?

    • Lee

      We may be only 1 league away from the prem, but in our situation you may as well be a million miles away, they won’t give it up because without it bihl is actually nothing, what can it trade as as it actually is nothing, they need to relist, to relist they need to be a going concern, to be a going concern they need money , to get money they have to borrow, if they don’t borrow how do they pay the due debts? And who in their right mind is going to lend it to them? Another case of carsen living with the fairies I’m saying

      • mark

        if i had said to you 20.000 brummies in the stans you would have laughed me out of town…..its all about opinions mate…………….

    • StaffsBlue

      They’re also one division away from losing (almost) everything. What price BCFC in League one?

      I’ve a no(va)tion that this will drag on and on.

      • mark

        staffsblue from the start of the season we agreed in principle where we might be……….imo i still have that opinion……………these lads playing their hearts out not chance of regelation,this was all to see on saturday…… otherwise i would happily eat humble pie myself…….. How things work out for Carson not got a clue until possible verdict in February……..i have opinions but only God know :-0

        • StaffsBlue

          I wasn’t saying we’d get relegated mark, you know me better than that, I hope? ;-)

          I just meant that being one division away from the prem, is exactly the same as one division away from League 1. We’re just as close to either, but at the moment, neither are that close.

          I said before the season started, that we’d finish between 8th and 5th. That might seem a tad optimistic at the moment, but I’m not going back on it now.

          • mark

            of course i do mate ;-) merry christmas ;-) may have differs about Carson all about opinions…….but the footballing side i edge you slightly more knowledgable lol……….. but this beauty about being a nose we love it. I dont take a fence to anything mate life too short……..kro……………….

          • StaffsBlue

            Sez you. ;-)

            Merry Xmas mate. Have a blue one!!

    • Wearynose

      We’re only a few places short of Division 1 and are set up financially and playing staff-wise to make that move rather more likely than elevation, which would need at least two years of ownership by someone with a reasonable amount of money and who is genuine in ambition for the club and, finally, is non Tan-like!

      • mark

        sorry to return your reply but………… so are other teams so what your point?/

    • steve

      One league and a million miles away.

  • thongs

    Writing off £15m of cash owed to him? He deserves more respect than he gets.

    • almajir

      He’s not exactly writing it off as he will maintain his stake in BIH whilst everyone else’s will be massively diluted

      • thongs

        its Christmas, where’s your goodwill to all men?

      • Wearynose

        A stake in a diminishing entity!

        • mark

          have you prove its a diminishing entity! oh i thought not

      • Ken

        If agreed at the EGM by existing shareholders as well as regulatory authorities and possibly the Court too, novating his loan for shares in the Holding Company may be an astute move. It all depends what he has been able to negotiate and get approval for, for this novation in terms of new shares in the Holding Company, compared to other shareholders’ respective holdings. It will be interesting to learn this (from the EGM notice perhaps) and to follow developments next year, after Carson’s court Decision is published.

  • mark

    actually there was 20.000 brummies in the stans so i can lol

    • Lee

      You can what?

    • steve

      Bet there won’t be 20,000 on new years day.

  • Aussieblue

    If it goes through, BCFC has just gone from a 7million deficit of assets over liabilities to an approx $8 million surplus (unless it is eroded in between time). We should all thank Carson for donning his red Santa suit and saving the club from admin. His return now rests in the the price gained for the club when it is sold. This is good news mates! (if/when it goes through)

    • Wearynose

      You can’t hide under an assumed name, Carson!

  • Paul Carter – The Voice Of Reason he

    Always thought Carson cared about this club.

    Hope he gets off.

    Can’t see what he’s done wrong to be honest

    • mark

      the old paul back sweet lol

    • John

      They didn’t charge him with money laundering, for a laugh !

  • Enckelman

    Still can’t see an end or any change until his court verdict. The fact that he brought us for ridiculous money probably means he’s going to ask for ridiculous money, If he does decide to sell us I can see it being sold to a business partner of his. If he’s tried this hard not to sell us I would’ve thought he would have a plan to stay involved if sold.

    • Wearynose

      If you bought a house for £360k at a time when it was worth only £200k and then you trashed it and the market fell as well due to the economic climate then you wouldn’t get anywhere near what you paid for it! If your income declined as well and you increasingly could not support the overheads then you would be foreclosed, in this allegory – put into administration in the case of Blues – and you would only get what the market would pay, which in Blues case is not remotely close to £30m. He needs to find another idiotic hairdresser otherwise eventually he will have to take a haircut, like the banks and financial institutions have done.

  • Oldbluenose

    We still live in hope, ?. Let us just hope it happens early next year, ??.

  • Peter bates

    Lets hope this is the beginning of the end of cy and pp but alas and I hope im wrong but it will probably run and run

  • http://OftenPartisan Shirley Blue

    The annual wage bill should drop significantly at the end of the season. Obviously our Serbian multi millionaire won’t be kept on so that’s £3m. I think I am right in saying the utterly useless trio of Ambrose, Lovenkrands and Mullins are also out of contract – I wouldn’t be surprised if that saved another £2m between them. There are a few other senior players who have done a decent job for us over the years ie Murphy, Elliott and Spector but who serious questions have got to be asked of due to either age, persistent injuries or both. Again, I think these are all out of contract. All those together have got to be a minimum of £6m off the current annual wage bill. Zigic is the only one out of those who is really contributing at the moment so no great loss other than him really in terms of the team.

    I believe there is another parachute payment to come at £8m. Is there a great opportunity as a result in the summer to get an influx of younger, hungry players in. Even better if we had new owners to start next season with.

    • StaffsBlue

      I think offloading all those players will make us a younger, more vibrant squad. Murphy is a good player, but we’ve never had our money’s worth. Zigic the same. Not sure how long Spector’s contract is for. He only signed it this summer, so I would expect to see him still here next season. The rest, we definitely wouldn’t miss.

      I’m wondering who is going back in January. Scott Allan seems nailed on to leave. Will Lingard sign another deal? He had a great debut, but 2 goals in his last 11 games is hardly prolific for someone who was supposed to be the answer to our goalscoring problems. I think McLean might be dispensed with too if he doesn’t get a goal or two over Christmas. We’ll have to wait and see.

      • mark

        correct if wrong staffsblue did clark put team out last year average was 22 or 23

        • mark

          sorry *age

          • StaffsBlue

            That’s probably about right. The team against Burnley had 7 teenagers.

  • mark

    the touting of new owners is ridiculous we have a trust in place if fans feel remotely passionate about the present owners please feel free to join them, they touting for new members all the time. Carson not going anywhere possible until February………..and even then the fun will start………….

  • bluenose08

    The trust don’t seem to think Carson wants to sell judging by the email I received from them and are also worried by the debt, think Burke will be on his way in january window and anyone else they receive a bid for. K.r.o.

    • StaffsBlue

      I believe that will be the case. The owners have proved time and again, that they’re not afraid to sell the silverware.. and they’re equally, not afraid to upset the fans. The only thing that may be different, is that we don’t have the quality of player to interest premier clubs anymore… so if we sold any players, we’d possibly be selling to our rivals.

  • dave mann

    chris burke will propably go in january, what worries me is if anyone offers good money
    for randolph cuz hes premership quality in what ive seen of him this season and our only
    other asset that could fetch serious money, worrying times of the pitch for blues but not
    to bad off it….7 unbeaten.KRO.

    • steve

      I think teams will wait for the summer to get Burke for nothing.As for Randolph being prem class.Nowhere near.Good championship goalkeeper at best atm.

  • dave mann

    ps… i meant ON it… sorry!. KRO.

  • Frankie

    I really do not understand how we owe him ANYTHING !
    Think it is as likely that I lent BCFC 15 million as he did !

  • http://oftenpartison sappy dad

    my dad was wounded in africa and tortured by the gestapo
    but never gave up ….after all that we have gone through in
    the last two years this has got to be a step in the right direction
    lets not give up .get behind this team .and give them the support
    they deserve

  • jazzzy786

    Wasn’t it announced recently the club made a £9m loss, does that mean we are still 9m in debt after we take off Carson’s 15m?

  • The Francis Fake

    This debt write off is a very positive step in the right direction. CY is fast running out of time, cashflow and options. I think we will see a few more interesting developments before the end of February.

    • mark

      he even get to sit in his director’s box

  • Chris W

    All I see is smoke and mirrors, CY is not actually giving up his £15M he is purely moving it.
    Though it does make the club more attractive to potential buyers it all depends on the current shareholders agreeing to CY’s proposal.
    On a playing viewpoint, I said at the beginning that a mid table finish is achievable, I still hold with this. Those calling for a play-off place are aiming far too high and if we did actually win promotion do you think CY would consider selling.
    Not a Hope!
    LC and the players have done exceptional and unless we can hold onto what we have got and bring in some decent loans I feel we will have much of the same second half of the season.
    Nothing is going to alter until CY’s verdict, then the fun will start off the field.
    KRO+DNM

  • Alan watton

    I would just like to thank everyone involved in this web site for their unstinting effort over the last 2 years keeping us informed. Your put our local media to shame. Merry Christmas to you all.

    Thanks to t the 20,000 who turned up on Saturday. Lets have 10000 more on New Years Day.

    Every time we get a team out on pitch its a victory every point gained a triumph. I’m convinced that the only way we can ensure the club stays alive and beats this ludicrous situation it finds itself is to fill the ground as often as possible. I sympathise with those who believe they are financing pannu but bite the bullet and help the team and support the other fans I believe.

    MERRY CHRISTMAS TO ALL BLUE NOSES

    • almajir

      Cheers Alan.

      merry christmas to you too

  • StaffsBlue
    • Blueboy 88

      How do you buy shares in Birmingham City ?

    • BhamCityJulian

      Only now are they looking at this

  • StaffsBlue

    Thank you to Almajir and all posters for making it a cracking year on this blog, interesting, informative and entertaining in equal measures. Here’s hoping for an even better year in 2014…. let’s pray that there is better news for us in the near future.

    I wish all Bluenoses a merry (hic) Christmas and a very Happy New Year. Keep Right On!!!

  • Lover Blue nose

    Peter Pannu’s master stroke and his efforts at the parent company to get it resumed and to facilitate the sale of the club now needs to be appreciated. My own sources at the club confirms that and I feel sometimes we are too harsh on him.

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