Long term readers of this blog will know that one thing I have tried to do is to work out exactly what is happening with regards to Birmingham City, and to its parent company Birmingham International Holdings Ltd. I have tried consistently to find information that is researched and provable to pass on to Birmingham City fans to stop some of the hyperbole and outright lies that are out there. I’ve put this article together to give you an idea of where I’ve got to; what we know for sure and what is still unknown.

Are Blues going to go into administration?

There is no simple answer to this question, indeed, I don’t think anyone outside Carson Yeung and maybe Peter Pannu know how close Blues and BIH are to the wall. It’s also a very open-ended question – there is no timescale given and I think that’s important to consider.

I cannot see Blues entering administration before January at the very earliest. There are (unprovable) rumours out there that Blues need to sell players to convince the auditors that they have enough money to see them through the season – particularly bearing in mind the lack of overdraft and/or Carson’s cash. Going into administration is very much a last-ditch solution to saving the company, and would in all likelihood cost Carson a lot of money. If Blues can sell a couple of players in the window, get rid of a couple of high wage earners and wing it until the summer – then there is the outside possibility we could get promoted and BIH would get a better return on selling the club. Therefore it makes no sense putting the club into administration before it’s absolutely imperative – or forced upon the club by its creditors.

Another complicated factor is the nature of Birmingham City’s creditors. With no accounts available since June 2010, we have no idea how much debt the club is in, let alone who to. The only facts we know for sure are that the club owes Carson £16million in directors loans – which is going to complicate matters if we do indeed go into administration. Documents obtained by this website from Companies House show that HSBC and BCFC agreed a debenture in mid-October which basically gives HSBC a charge against everything that BCFC has – not only the ground, but assets like future TV income, future gate receipts and parachute payments. The debenture doesn’t make any mention of any monies being owed to HSBC – it’s more of a case of the bank ensuring if they do lend any money to BCFC that they’re first in the queue should things go Pete Tong.

Is Carson stripping BCFC bare to pay his own debts?

One thing I’ve been categorically reassured by the club is that not one penny has left these shores from BCFC to go to BIH; indeed, as the above shows the club owes Carson money rather than the other way around. Furthermore evidence is available that Carson has stripped money out of his own life to pay for Blues – for instance records obtained by this website from the Hong Kong land registry confirm that Carson took out a business loan for BIH/BCFC late last year, using his multi-million pound mansion on the Peak in Hong Kong as collateral. As reported on this site, Carson is now in danger of losing his home because that debt has been defaulted on – which is hardly the action of a man asset-stripping BCFC.

What about the other shareholders in BIH? Why won’t they chip in?

Unless you individually ask each and every shareholder why they haven’t offered to invest more money in BIH, I guess we can never know for sure. A couple of things strike me though as being accurate:

1. BIH are unable to currently sign off their accounts for last year. Would you put more money into a company that looked like it was in trouble? It’s true that Yang Yuezhou put in quite a large amount – but both were loans, with punitive rates of interest, and leave Mr Yang in the position that he will own a minimum 14% of the company should he want to convert his debt to equity via his convertible notes, and give him a modicum of control as vice-chairman of the board (with three votes, as he brought on two others when he was appointed). Next year BIH will have to pay Mr Yang a rather large coupon (interest payment), and I’m interested as how they can do that let alone pay off the loans.

2. The only real ways for companies to raise money when they’re on the stock exchange aren’t open to BIH either. They cannot offer any more new shares in the company due to the shares being suspended – not that I think they’d get any takeup or even underwriting on the shares anyway, judging by previous issues. Alternatively it’s down to selling more debt – and bearing in mind the last loan they got from Yang Yuezhou was at junk bond levels (12%), I can’t see anyone else offering to put more money into the company without punitive interest and some kind of collateral.

3. Most shareholders in the company aren’t that rich anyway. I’ve updated the FAQ page on this site which now not only has the list of major shareholders, but a complete list of where all the public shares are being held. It doesn’t list the individual shareholders, but you only have to look at the size of the small holdings and the size of the brokerages that have been retained to buy them to understand the bulk of investors are like you and I. The only person I’d consider myself as possible to put money into BIH is BCFC chairman Vico Hui – who stumped up some of the bail money for Carson when he was originally arrested, and evidently has some wealth. However, he’s not been forthcoming with either investment or communication.

What can Peter Pannu and Carson do to alleviate the fan’s fears?

At this moment in time, I actually believe that there isn’t much at all that they can say that would either be believed or be detailed enough to give us new hope. Mr Pannu has been trying to secure new investment for Birmingham City, and that in my mind is all he can do – without new investment it’s going to be difficult for Blues to get out of the hole they’re currently in. It’s not as simple as emailing some Russian billionaire asking for a few quid either; anyone who wants to either buy into or buy Birmingham City are going to want to see the books and conduct some due dilligence (it’s been a while since we heard that phrase, hasn’t it?) It’s worth noting that the club isn’t for sale; Blues haven’t appointed any solicitors or similar to handle anything like that so we have to assume that for the forseeable future that Carson has no desire to sell.

In short, we’re still in the situation I’ve said we’ve been in for a long time – all we can do is wait and see. If I could do anything, I would urge people to be sensible about the situation; from the few conversations I’ve had with various people in the national media I don’t think that they have any more of a clue about what is happening than we do. Likewise, I’d encourage people to be sceptical of anything posted anywhere online about our financial situation (including here) – demand to see proof, and understand that speculation doesn’t always equal truth.

Tags: BIH, Carson Yeung, Finances, Peter Pannu, Vico Hui, Yang Yuezhou