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Kung Hei Fat Choi
Today marks the first day of the Lunar New Year in China – a time for celebration, for looking to the future and for wishing for health, wealth and happiness. For Birmingham City, one out of three wouldn’t be bad.
The Birmingham Mail reported yesterday that Carson Yeung has been talking to business contacts of his with a view to purchasing Birmingham City from Birmingham International Holdings. The report goes on to say that the announcement made by BIH to the Stock Exchange on Thursday afternoon was regarding a company that had been contacted by Carson.
As can be imagined, this story has gone down like a lead balloon online. There seems to be a feeling that any sale has to be a completely clean break – any links to the current regime will (in the eyes of some fans) make new owners guilty by association and will raise the same distrust and unhappiness that is currently directed at the present board. I have to admit myself that whilst I don’t feel the same vitriol that some do towards Carson and co that I would have misgivings if this came to pass and I wouldn’t feel comfortable with it.
What makes me feel worse is that there is precedent for Carson doing this in the past, at his newspaper Sing Pao. Carson isn’t on the board there and exercises no control over the company (although his brother-in-law Ma Shui Cheong is an executive director) whilst remaining the largest single shareholder in the company. Whilst there would be complications due to his ongoing court case and the Football League Owners and Directors test I can see it not being beyond the realms of probability that Carson arranges things so that he still keeps a stake in the club whilst new people come in to run it.
However, saying that it could happen is very different to it actually happening. As I said on Friday, the approach was nothing more than a tentative look at maybe, possibly, buying the club and the fact is that there is a long way to go before any deal could be close. I’m not of the belief that any sale will be a quick easy job – indeed, I suspect that with Carson’s current legal issues any sale will be carefully scrutinised by the regulatory authorities and the imposition of a compliance advisor on BIH should help force things to be done in a completely proper manner. If I was asked my personal gut feel about this my honest answer is that I think it will come to nought.
Birmingham City fans won’t be the only ones hoping for future wealth. The longer the sale process drags on, the more it could potentially hurt BIH. For example, in August of this year there will be two loans made by former board member Yang Yuezhou come to maturity. Firstly, a loan of HK$79.5mil (£6.5mil) will come to maturity around the start of August and providing Mr Yang hasn’t taken the share option BIH will have to pay the full whack with a five percent interest. Secondly, an unsecured loan facility was extended to the company on August 31 2011 for HK$80mil (again, around £6.5mil) with a whopping interest rate of 12%. Until the accounts have been produced for BIH we don’t know how much of this loan facility has been utilised but a worst case scenario could see BIH liable for £13mil plus in August – and I have to say, the assumption would be that they don’t have that sort of cash to pay it back. One of the most intriguing things in the soon-to-be-produced accounts will be just how much debt that BIH find themselves in and how soon they have to service it.
On the second day of the Chinese New Year, there is a custom in the Hong Kong business community to say a prayer (called “Hoi Nin”) so that they will be blessed with luck and prosperity for the year ahead. I sincerely hope someone hears Carson’s prayers.