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The Council, The Club, The Loan and Mo Chaudry.

Smallthorne Dog

By Smallthorne Dog
in Port Vale present

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Smallthorne Dog Newbie

Smallthorne Dog

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I'm sure most people are aware that the clubs payment holiday on the council loan has come to an end, and it is now time to start making repayments.

 

The club applied for a further payment deferal. However the council have turned this down due to the fact that they are unwilling to saddle the incoming council with a 12 month financial burden. I understand that the council wants to start recouping its money but doesnt want to be seen as the force that liquidises the club and for that reason are delaying a decision on reapayments.

 

But i'm unsure if it is widely known that in the original agreement with the council when the loan was taken out, that if the club changes hands, the council can reclaim the loan in FULL.

 

Does Mo know of this and given the Council's relationship with Mr Chaudry over the Dimensions episode are they likely to enforce this clause?

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Bede Proficient

Bede

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Yes, Mo is aware of this clause, negotiated by Jackson I believe. This info is available through the freedom of information act I believe.

 

It's another stumbling block put in to hinder a takeover bid from ever happening.

 

Democratic? Yeah right.

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TheLegalBeagle Newbie

TheLegalBeagle

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I'm sure most people are aware that the clubs payment holiday on the council loan has come to an end, and it is now time to start making repayments.

 

The club applied for a further payment deferal. However the council have turned this down due to the fact that they are unwilling to saddle the incoming council with a 12 month financial burden. I understand that the council wants to start recouping its money but doesnt want to be seen as the force that liquidises the club and for that reason are delaying a decision on reapayments.

 

But i'm unsure if it is widely known that in the original agreement with the council when the loan was taken out, that if the club changes hands, the council can reclaim the loan in FULL.

 

Does Mo know of this and given the Council's relationship with Mr Chaudry over the Dimensions episode are they likely to enforce this clause?

 

Dear SD,

 

We have asked this question several times of the club lawyer and still he has yet to respond and clarify. I have asked for a definitive reply.

 

We will of course find out for ourselves if we get to the stage of due diligence but we have tried to ascertain this fact now but like so many things asked, we receive no answers - which is ironic considering the amount of questions we (I) have been asked and have answered...

 

I am sure the shareholders are entitled to ask for a response of the Board to this pertinent question.

 

 

Kind Regards.

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Smallthorne Dog Newbie

Smallthorne Dog

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The council have two choices:-

 

Take what Mo offers or risk ending with nothing when the club goes into admin...

 

Aaah, but there lies the point. The council are currently holding off enforcing the repayments because they know they will be seen as the villains if they force the current skint regime into oblivion.

 

Mo Chaudry is publically talking of a £5M investment. More tham enough to cover the £2M owed. That can be reclaimed in FULL. Is Mo Chaudry aware of this? Would it affect his decision to invest? And would it give the council a perfect excuse to reclaim the money, knowing that they cant be held responsible for killing the club, because it is widely known that Mo can cover the debt?

 

Given my belief that Mo, is only interested in Mo and what benefits Mo, this makes me more than a little bit worried.

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Santa Veteran

Santa

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I think that another reason why the land is overvalued in the accounts is because it has been used as collateral for a loan which is far bigger than it's real value.

 

If Vale go into administration and the Council reposesses the ground then they would get next to nothing back by selling it back to the new owners of the club in a fire sale.

 

If the Council wanted to make as much money back as possible then they would probably grant planning permission for alternative use and sell on the land on that basis. That's one theory anyway.

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Jacko51 Veteran

Jacko51

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There is the question as to whether Mr Chaudry's investment would be seen as a change of ownership. He is investing 51% in an existing company. Does that constitute new ownership?? It is not a new company taking over the club.

 

The next question, of course, is who inserted the "payment in full" clause? Was it the Council or was it at the instigation of V2001 to place a further obstacle in the way of switching ownership??

 

EDIT - sorry Bede, didn't realise you'd already posted question 2.

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TheLegalBeagle Newbie

TheLegalBeagle

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There is the question as to whether Mr Chaudry's investment would be seen as a change of ownership. He is investing 51% in an existing company. Does that constitute new ownership?? It is not a new company taking over the club.

 

The next question, of course, is who inserted the "payment in full" clause? Was it the Council or was it at the instigation of V2001 to place a further obstacle in the way of switching ownership??

 

EDIT - sorry Bede, didn't realise you'd already posted question 2.

 

Spot on Jacko 51,

 

I have asked the Board lawyer to clarify the precise terms of the trigger clause.

 

You would expect change of ownership to constitute 100% ownership. However if there is a lesser default clause that would trigger repayment we have asked to know.

 

Feel free to take this up with the Board. I will continue to press the Board lawyer for a response.

 

Regards

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Fosse69 Veteran

Fosse69

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Aaah, but there lies the point. The council are currently holding off enforcing the repayments because they know they will be seen as the villains if they force the current skint regime into oblivion.

 

Mo Chaudry is publically talking of a £5M investment. More tham enough to cover the £2M owed. That can be reclaimed in FULL. Is Mo Chaudry aware of this? Would it affect his decision to invest? And would it give the council a perfect excuse to reclaim the money, knowing that they cant be held responsible for killing the club, because it is widely known that Mo can cover the debt?

 

Given my belief that Mo, is only interested in Mo and what benefits Mo, this makes me more than a little bit worried.

 

Why are you worried? Because the council will no longer own the ground? I shall rejoice, the council owned the ground in Hanley and booted us off. Or are you worried MC and/or the shareholders would own the ground? So what, it will be possible to raise a loan against it, back to square one.

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Timothius Newbie

Timothius

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Why are you worried? Because the council will no longer own the ground? I shall rejoice, the council owned the ground in Hanley and booted us off. Or are you worried MC and/or the shareholders would own the ground? So what, it will be possible to raise a loan against it, back to square one.

 

The council don't own the ground, it is held as security for their loan. They can only own it if PVFC defaults on its loan.

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Smallthorne Dog Newbie

Smallthorne Dog

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Why are you worried? Because the council will no longer own the ground? I shall rejoice, the council owned the ground in Hanley and booted us off. Or are you worried MC and/or the shareholders would own the ground? So what, it will be possible to raise a loan against it, back to square one.

 

Because if the Council can recall the debt in full, then it would be a severe stumbling block to Mr Chaudry making a profit from PVFC. Mo has admitted publicly that he'd ideally like to do that. In my opinion that is still his primary motivation here. If he was £2 million down before he'd even started it would hinder those chances severely. In which case he might not bother.

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