Prospective new Everton owners remain confident on the timeframe they set out to complete takeover
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Prospective new owner Dan Friedkin and Everton fans in the Main Stand at Goodison Park
Prospective new owner Dan Friedkin and Everton fans in the Main Stand at Goodison Park
Prospective Everton owners, The Friedkin Group (TFG), are in discussions with American financial services giant JP Morgan Chase & Co. over restructuring the club’s heavy debt. TFG remain on course to be the new owners of the Blues before the end of the year.
As first reported by Bloomberg on Thursday, Houston-based TFG have opened talks with JP Morgan over raising fresh debt to allow soon-to-be new owners to tackle the club’s balance sheet and reduce some of the heavy interest that is currently being paid on the £660m worth of debt that exists.
No agreement has yet been reached with New York-based JP Morgan, but dialogue has been opened, with TFG having previously engaged the services of the firm in 2020 to aid their completion of the takeover of Italian Serie A side AS Roma.
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The need for Everton’s wantaway current owner Farhad Moshiri to raise capital for, among other things, the stadium build at Bramley-Moore Dock, has resulted in several debt raises in recent years, some with high levels of interest that came with a larger perceived financial risk.
TFG, as a major US company with turnover of $13.3bn at the most recent financial year, according to Forbes, are well placed to get access to far better rates of borrowing with more blue-chip lenders, and that will aid the balance sheet of the football club by reducing the interest rate and thus the cost of borrowing.
At present there is debt that exists from multiple lenders, including £200m that was added during the failed takeover attempt by 777 Partners, whose funding came from another US-based investment firm, A-CAP.
TFG took on the £150m debt from MSP Sports Capital this year, while Rights & Media Funding Limited are owed around £150m, and TFG want to restructure all the existing debt to reduce what has rather messy debt repayment structure.
TFG themselves, according to people familiar with the matter, have already committed “tens of millions” in working capital to aid the club’s efforts to finish the fit-out of the new 52,888-seater stadium in time for the start of next season, as well as providing funding during a particularly low point of cash for the football club as the season-ticket money and central funding cash that arrived during the summer diminishes from a working capital point of view.
The goal for TFG, as sources have repeatedly told the ECHO, has been completion of the takeover by mid-December, with the group currently awaiting regulatory approval from the Premier League, the Football Association, and the Financial Conduct Authority.
TFG’s timeframe, the ECHO understands, remains on course, and there is confidence that legal issues in the US relating to one of the creditors of the club, A-CAP, won’t be so impactful as to derail any takeover efforts or move the goalposts in terms of timeframe for completion.
On Monday, regulators in Utah ordered three insurance businesses that fall under the A-CAP group of companies to cease underwriting new business by the end of the month, stating that the collapse of the 777 Partners investment business, and A-CAP’s exposure to it, had left them in a “hazardous financial condition” and without the required capital to meet its liabilities.
TFG had been in dialogue with A-CAP over how to tackle the debt that existed on Everton’s balance sheet for some months, with A-CAP currently, along with 777 Partners, defendants in a civil case in a New York court after Leadenhall Capital Partners, a London-based firm, brought action against them alleging, among other things, ‘fraudulent’ behaviour in order to obtain funding from Leadenhall, using tactics such as double-pledging, where assets are put up as collateral that have already been used as such elsewhere.
But despite the ongoing litigation, the TFG position is understood to remain the same, and in making moves to restructure the debt it is a sign of confidence that the takeover will soon be given the green light, with the prospective new owners wanting to have as much time as possible to be impactful this season and ensure Premier League membership come the start of next season in the new stadium.