UKIO agree to proceed towards a CVA (merged threads)

[Hartley Jambo.]

 

 

 

Yes. Based on what the rumoured offers are, Ukio can scoop the lot.

 

I've maybe not made myself clear so apologies for that.

My concern that it might be in Ubig's interest not to vote for a CVA as they may get a return from the "preferred part" as mentioned in my previous posts from the BDO report.

 

As mentioned I'm no expert and just reading the BDO report as such.

I'm looking for someone to say that's bollocks.

[kingantti1874]

 

Others seem to have no difficulty. Would the use of more emoticons help?

 

My point was more directed at the "clarity we were promised" statement..

[Footballfirst]

Quite, so the question remains what the claims and counter-claims are between Ukio and UBIG. If Ukio effectively call the shots with UBIG, then they can secure UBIG supporting 0p in the ? dividend and claim the proceeds.

 

If not, interesting times remain.

 

That's certainly a possibility, but if Lithuanian insolvency law works in a similar way to Scotland's, then the UBIG administrator must act in the interests of ALL UBIG's creditors and not the largest one (Ukio).

 

We have already seen the power of UBIG's other creditors in that they managed to get a court to freeze Vlads assets.

[Munch]

suicide watch at the methadone.net maybee write a letter to complain

[Geoff Kilpatrick]

That's certainly a possibility, but if Lithuanian insolvency law works in a similar way to Scotland's, then the UBIG administrator must act in the interests of ALL UBIG's creditors and not the largest one (Ukio).

 

We have already seen the power of UBIG's other creditors in that they managed to get a court to freeze Vlads assets.

 

True, that's the part we don't know. That said, given UBIG is basically a shell now, I'm guessing the recommendation will be to proceed to liquidation of UBIG, so feck knows what happens in that case as well!

[Hungry hippo]

 

 

 

I've maybe not made myself clear so apologies for that.

My concern that it might be in Ubig's interest not to vote for a CVA as they may get a return from the "preferred part" as mentioned in my previous posts from the BDO report.

 

As mentioned I'm no expert and just reading the BDO report as such.

I'm looking for someone to say that's bollocks.

 

No reason for concern on this point. If we were liquidated Ubig would definitely get zero as Ukio would scoop the lot.

 

Ubig still need at least a slight incentive to vote for a CVA though and this will either be because Ukio tell them they have to or that there is a small financial benefit possibly via share purchase as suggested.

[Watt-Zeefuik]

Given that under liquidation, because of the size of their secured debt Ukio gets the lot and everyone else gets nothing, the unsecured creditors have no reason to oppose a CVA. But as others have said, the big question is UBIG, simply because of the very strange situation it's in right now.

[Jammy T]

In the uncertain murkiness of everything that is going on and the Lithuanians that ultimately still appear to hold our destiny in their hands....

 

....this appears to be excellent news

[Hartley Jambo.]

 

 

 

See my last post if Ukio intend to claim all the proceeds (i.e. there will be no CVA in that event)

Cheers, posts going on between replies.

 

So for a CVA it would require Ukio to give up part of what they were due under the secured debt, is that right?

How does that affect FoH bid for example?

Do they put in an offer x for the secured creditors (Ukio) and then y for the unsecured creditors.

 

Are you saying that if a CVA isn't agreed, that the secured part doesn't come into play.

I assume so as a unsecured creditor would then get something, so it's effectively in the hands of Ubig then.

My previous question regards if this makes any difference as to where the money ends up still applies.

[Watt-Zeefuik]

No reason for concern on this point. If we were liquidated Ubig would definitely get zero as Ukio would scoop the lot.

 

Ubig still need at least a slight incentive to vote for a CVA though and this will either be because Ukio tell them they have to or that there is a small financial benefit fir then.

 

The concern is that there effectively is no UBIG to vote one way or the other right now. There is no board and control of the company is in dispute.

[Hungry hippo]

 

 

The concern is that there effectively is no UBIG to vote one way or the other right now. There is no board and control of the company is in dispute.

 

Someone will be acting for them before any decision is made with us.

[Francis Albert]

 

 

My point was more directed at the "clarity we were promised" statement..

OK, it was just a reference to the IMO somewhat optimistic view that administration would bring clarity and a quick resolution, which was expressed by quite a few on here. Obviously I hope it will in time produce clarity (of the right sort!).

[Watt-Zeefuik]

Someone will be acting for them before any decision is made with us.

 

And how long will that take? That's the source of the "still in admin in January" worries.

 

I've speculated in the past that the Ukio admin could perhaps sell a chunk of what UBIG owes Ukio on to Hearts at an equivalent dollar amount to what Hearts owes UBIG, but that doesn't help with CVA voting.

[kingantti1874]

OK, it was just a reference to the IMO somewhat optimistic view that administration would bring clarity and a quick resolution, which was expressed by quite a few on here. Obviously I hope it will in time produce clarity (of the right sort!).

 

Ah ok get ya

[Hartley Jambo.]

 

 

 

See my last post if Ukio intend to claim all the proceeds (i.e. there will be no CVA in that event)

 

Thanks, so the offer from FoH will be reduced by the BDO fees plus an amount to the unsecured creditors as well.

I know the BDO fees will be paid either way.

 

Sorry I'm not hounding you, but isn't the decision essentially up to Ukio and Ubig to get the 75% vote

So if Ukio want all the money, Ubig will reject, is that correct?

[The Gasman]

Someone will be acting for them before any decision is made with us.

 

Agreed, and I've been led to believe that the story in the media that they wouldn't have an administrator in place till the end of September to be no more than wildly pessimistic speculation, and the appointment is likely to be confirmed by Lithuanian Court in the next week or two.

[Hartley Jambo.]

 

 

 

No reason for concern on this point. If we were liquidated Ubig would definitely get zero as Ukio would scoop the lot.

 

Ubig still need at least a slight incentive to vote for a CVA though and this will either be because Ukio tell them they have to or that there is a small financial benefit possibly via share purchase as suggested.

 

Given that under liquidation, because of the size of their secured debt Ukio gets the lot and everyone else gets nothing, the unsecured creditors have no reason to oppose a CVA. But as others have said, the big question is UBIG, simply because of the very strange situation it's in right now.

 

So you are saying the BDO report saying the preferred part would apply if a CVA isn't agreed is worthless?

[Watt-Zeefuik]

So you are saying the BDO report saying the preferred part would apply if a CVA isn't agreed is worthless?

 

Sorry, I must have missed something -- if there's a BDO report on something, I'm not going to say it's worthless.

 

My concern is that UBIG is a zombie at this point, and it's impossible to get to the 75% required for a CVA without them. In order for them to vote, there has to be someone with executive authority. Until that happens, we can't have a CVA.

 

It is my understanding that UBIG would get nothing from liquidation so has no financial reason to oppose a CVA, but there has to be either a board or an administrator in a position to make that determination. I very much hope that Gasman is again right when he says that will happen within the fortnight.

 

If this is in opposition to the word from BDO, please tell me, as I trust them on these matters far more than my own understanding.

[Hartley Jambo.]

 

 

Sorry, I must have missed something -- if there's a BDO report on something, I'm not going to say it's worthless.

 

My concern is that UBIG is a zombie at this point, and it's impossible to get to the 75% required for a CVA without them. In order for them to vote, there has to be someone with executive authority. Until that happens, we can't have a CVA.

 

It is my understanding that UBIG would get nothing from liquidation so has no financial reason to oppose a CVA, but there has to be either a board or an administrator in a position to make that determination. I very much hope that Gasman is again right when he says that will happen within the fortnight.

 

If this is in opposition to the word from BDO, please tell me, as I trust them on these matters far more than my own understanding.

 

I quoted the text from the relevant BDO report in post #71 regarding the preferred part.

I had taken a hard copy of it, I'll try to find the post on here so you can read the full document.

 

Edit, found it here.

 

http://www.hmfckickback.co.uk/index.php?app=core&module=attach&section=attach&attach_id=6478

[redm]

Right...so is this good news or not?

Colour me confused.

[davemclaren]

Right...so is this good news or not?

Colour me confused.

 

It's not bad news.

[Geoff Kilpatrick]

Right...so is this good news or not?

Colour me confused.

If no news is good news, it is good news.

[Watt-Zeefuik]

I quoted the text from the relevant BDO report in post #71 regarding the preferred part.

I had taken a hard copy of it, I'll try to find the post on here so you can read the full document.

 

Edit, found it here.

 

http://www.hmfckickb...&attach_id=6478

 

Ah, thank you. There's no equivalent of this that I know of in American bankruptcy proceedings, so I had to go read up on it.

 

My understanding is that after the transfer of the security from UBIG to Ukio last December, that Ukio hold standard security over Tynecastle at a valuation of ?15M PLUS a floating charge over the rest of the assets. As such, in the case of liquidation, Ukio would get all the proceeds of the sale of Tynecastle, but would have share what will basically work out to about 20% of the sale of all assets beyond Tynecastle, which is likely at absolute most a ?500k, likely much less. Of that ?100k or less that gets distributed to the unsecured creditors, UBIG and Milson Capitol (a UBIG shell corp?) would likely have rights to over 60% of that. So we're talking probably ?30-?40k to be distributed to cover about ?5M owed to non-UBIG unsecured creditors, or less than a penny on the pound.

 

So, yes, as I understand it, the unsecured creditors would get a pittance in liquidation, but nothing more. Does this fit with your understanding of the report?

[jimbrown76]

It doesn't matter. Provided Ukio and UBIG do so the 75% hurdle is cleared.

I think I agree with that Geoff, however would that not make yesterday's creditors meeting a sham? With a CVA am I right in saying that everybody gets equal but if Liquidation comes into play then Ukio Bankas would get the first 6.8 million before anybody else gets anything? Given that the offer probably won't be as high as 6.8 why would Ukio vote for a CVA? In the BDO report for the creditor's meeting they refused to reveal what value had been put on the ground, does anyone know if that was revealed yesterday?

[Paolo]

Right...so is this good news or not?

Colour me confused.

 

Indifferent news?

[roscogt1]

Early days still, sounds pretty positive though.

[jambo-rocker]

But therein lies Ukio's quandary. If Ukio scoop the lot, then the unsecured creditors (including UBIG) would be minded to reject the CVA, thus it would fail.

 

If a CVA fails, then there is no deal and money up front for Ukio*. All they would have is Tynecastle and the club would be liquidated, or have the assets/brand newco'd a la Sevco.

 

*Technically Ukio could also claim the cash that remains within the club (e.g. from post admin Season Ticket sales, however, BDO would have first call on those funds to meet their expenses as administrators and/or liquidators.

 

I'm assuming though that with Ukio coming out and stating that they are now keen to negotiate a CVA with BDO, that they will take that on board a lot more seriously and look into making sure the unsecured creditors agree to it just as much as Ukio will as well?

[Geoff Kilpatrick]

I think I agree with that Geoff, however would that not make yesterday's creditors meeting a sham? With a CVA am I right in saying that everybody gets equal but if Liquidation comes into play then Ukio Bankas would get the first 6.8 million before anybody else gets anything? Given that the offer probably won't be as high as 6.8 why would Ukio vote for a CVA? In the BDO report for the creditor's meeting they refused to reveal what value had been put on the ground, does anyone know if that was revealed yesterday?

I've no idea what the contents of the meeting were but A creditors' meeting is part of the process, to inform them of the current status, the next steps and the likelihood of recovery. If you are unsecured you will get next to nothing.

[casper]

I think I agree with that Geoff, however would that not make yesterday's creditors meeting a sham? With a CVA am I right in saying that everybody gets equal but if Liquidation comes into play then Ukio Bankas would get the first 6.8 million before anybody else gets anything? Given that the offer probably won't be as high as 6.8 why would Ukio vote for a CVA? In the BDO report for the creditor's meeting they refused to reveal what value had been put on the ground, does anyone know if that was revealed yesterday?

 

Because they would not get ?6.8M from liquidation either. There is a high chance they would get more from a CVA than from liquidation.

Bearing in mind the cost of clearing the site, well documented planning permission issues and bad feeling any buyer would face the ground is not worth anywhere near what people think and that is not even considering it might take months or years to complete a sale.

[Geoff Kilpatrick]

 

 

Because they would not get ?6.8M from liquidation either. There is a high chance they would get more from a CVA than from liquidation.

Bearing in mind the cost of clearing the site, well documented planning permission issues and bad feeling any buyer would face the ground is not worth anywhere near what people think and that is not even considering it might take months or years to complete a sale.

And that's the issue with the value of Tynie. It will boil down to whether Ukio accept the quantum as the best deal possible or chance it on the open market.

[kingantti1874]

 

And that's the issue with the value of Tynie. It will boil down to whether Ukio accept the quantum as the best deal possible or chance it on the open market.

 

If they had time to play with I think it would probably be the latter, sell the "club " shares and retain the stadium and chance their arm...

 

The fact is they don't have an indefinite window, they have to conduct their own business quickly which I'm sure (hope) plays in our favour

[HMFC-TILL-I-DIE]

it seems that UKIO voting to go down the CVA route that they know they wont get much if there where to chance it on the open market Edinburgh city council have stated that they will make it hard for plannig permision to be granted to build on the land that tynie is on i cant see a building contractor ect wanting to touch it with a barge pole

[Mysterion]

I'm calling this as good news.

 

I've previously described it as a boxing match...

 

Round 1 went to the Lithuanian's when they rejected the first bids.

Round 2 went to the foundation.

Round 3 was too close to call with agreement on CVA moving forward....

 

it's up to the FoH to deliver a strong 4th and overcome any UBIG hurdle and deliver the knockout in round 5 by sealing the deal.

 

'Mon the FoH!

 

Ding ding... round 4.

[Mr Brightside]

Trevor Birch was on Radio 5 this morning talking about football finances in England.

 

At the end of the interview he was asked if there was light at the end of the tunnel for Hearts. His response was a pause a bit of a sigh and then he said there was still a lot to sort out in Lithuania but he remained hopeful.

 

I think there is still a bit of work to be done, but then I think that was always the case.

[Francis Albert]

 

 

 

Because they would not get ?6.8M from liquidation either. There is a high chance they would get more from a CVA than from liquidation.

Bearing in mind the cost of clearing the site, well documented planning permission issues and bad feeling any buyer would face the ground is not worth anywhere near what people think and that is not even considering it might take months or years to complete a sale.

FOh bought an independent valuation of the ground which apparently came up with about ?4m. It would be surprising (and rather pointless) if they paid for a valuation which did not take into account the clearance costs and planning consent issues. As a valuation bought by the buyer, the seller is likely to view it as more likely to be on the low side than the high side, particularly given where we are in the property value cycle. Having bought a valuation, why would FoH (or anyone with less expertise than the valuer)second guess it?

[Hartley Jambo.]

 

 

 

Ah, thank you. There's no equivalent of this that I know of in American bankruptcy proceedings, so I had to go read up on it.

 

My understanding is that after the transfer of the security from UBIG to Ukio last December, that Ukio hold standard security over Tynecastle at a valuation of ?15M PLUS a floating charge over the rest of the assets. As such, in the case of liquidation, Ukio would get all the proceeds of the sale of Tynecastle, but would have share what will basically work out to about 20% of the sale of all assets beyond Tynecastle, which is likely at absolute most a ?500k, likely much less. Of that ?100k or less that gets distributed to the unsecured creditors, UBIG and Milson Capitol (a UBIG shell corp?) would likely have rights to over 60% of that. So we're talking probably ?30-?40k to be distributed to cover about ?5M owed to non-UBIG unsecured creditors, or less than a penny on the pound.

 

So, yes, as I understand it, the unsecured creditors would get a pittance in liquidation, but nothing more. Does this fit with your understanding of the report?

Yes, though I hadn't gone as far as getting to the figures involved, that was one of my earlier questions so thanks for that info.

[Francis Albert]

I suppose it's already too late to kill the myth (even embodied in the thread title) that "Ukio have voted to go down the CVA route". What they have done is to vote for the proposals in the BDO's creditors report or "Statement of administrator's proposals". This sets out the statutory provisions under which BDO is operating, including the first objective of keeping the business as a going concern (through the CVA route), but also the other options if they fail in that first objective. As part of the process the report advises the creditors that if a suitable bid is made the creditors will be asked to vote on a CVA. The proposals also give BDO discretion, if they are unable to propose a CVA, or if a CVA is voted down, to seek liquidation without further approval from the creditors. (In fact there is rather more detail on exactly who is entitled to do what in the case of liquidation than there is about the CVA route). The creditors were not asked to "approve going down the CVA route", and as far as I see could only have objected on the grounds that BDO were not interpreting or following the statutory provisions correctly. The approval of the proposals is as much an agreement "to go down the liquidation route" as it is an agreement to go down the CVA route. The latter is just the necessary first step in the process defined by statute.

[redm]

So where was this creditors meeting?

Was it held at Tynie? If so, I'm amazed hibs.net didn't have one of their roving reporters in attendance.

[casper]

FOh bought an independent valuation of the ground which apparently came up with about ?4m. It would be surprising (and rather pointless) if they paid for a valuation which did not take into account the clearance costs and planning consent issues. As a valuation bought by the buyer, the seller is likely to view it as more likely to be on the low side than the high side, particularly given where we are in the property value cycle. Having bought a valuation, why would FoH (or anyone with less expertise than the valuer)second guess it?

 

As far as I'm aware the valuation that FOH got has not been published. Can you direct me to where you saw it? Anyway, how can you put a value on planning consent issues? There are gap sites round Edinburgh that have been sitting empty for years awaiting planning consent, the SMT site off the high street springs to mind.

Also, why would an independent valuation be "on the low side". Then it wouldn't be independent.

 

I have said this before, but I'll repeat it because I think it's important.

FOH are trying to buy Hearts, the loss making business and that is reflected in the money they have offered.

What someone is buying is the value of the assets minus money to run the business until they can turn it round.

 

Now you're going to say 'but ukio will get more liquidating'. Well, they might, but given the cost, time and uncertainty of the value of the assets there is no guarantee of that and I very much doubt that it will be a risk the lith admins will be willing to take.

[Geoff Kilpatrick]

I suppose it's already too late to kill the myth (even embodied in the thread title) that "Ukio have voted to go down the CVA route". What they have done is to vote for the proposals in the BDO's creditors report or "Statement of administrator's proposals". This sets out the statutory provisions under which BDO is operating, including the first objective of keeping the business as a going concern (through the CVA route), but also the other options if they fail in that first objective. As part of the process the report advises the creditors that if a suitable bid is made the creditors will be asked to vote on a CVA. The proposals also give BDO discretion, if they are unable to propose a CVA, or if a CVA is voted down, to seek liquidation without further approval from the creditors. (In fact there is rather more detail on exactly who is entitled to do what in the case of liquidation than there is about the CVA route). The creditors were not asked to "approve going down the CVA route", and as far as I see could only have objected on the grounds that BDO were not interpreting or following the statutory provisions correctly. The approval of the proposals is as much an agreement "to go down the liquidation route" as it is an agreement to go down the CVA route. The latter is just the necessary first step in the process defined by statute.

 

Don't worry FA. I don't see many people buying into the 'myth', as you put it. We are in the same position after the creditors' meeting as we were before it.

[casper]

Don't worry FA. I don't see many people buying into the 'myth', as you put it. We are in the same position after the creditors' meeting as we were before it.

 

A step in the right direction has been made so the position has moved forward.

Ukio could have rejected the BDO report and the fact they didn't can only be a good thing.

[Francis Albert]

 

 

Don't worry FA. I don't see many people buying into the 'myth', as you put it. We are in the same position after the creditors' meeting as we were before it.

I hope not. My comment was triggered by a post just before mine that repeated the myth. And I see just above a reference to a step in the right direction, when in fact it is a step in the direction of liquidation as much as it is a step in the CVA direction. Having read the proposals the only grounds I can see for rejection of the proposal to (possibly) propose a CVA was if BDO were not following their statutory obligations.

[Geoff Kilpatrick]

 

 

A step in the right direction has been made so the position has moved forward.

Ukio could have rejected the BDO report and the fact they didn't can only be a good thing.

Indeed but given the discussions that have been going on that was extremely unlikely.

 

I just hope the negotiations end soon and in a positive fashion.

 

[Francis Albert]

 

 

 

As far as I'm aware the valuation that FOH got has not been published. Can you direct me to where you saw it? Anyway, how can you put a value on planning consent issues? There are gap sites round Edinburgh that have been sitting empty for years awaiting planning consent, the SMT site off the high street springs to mind.

Also, why would an independent valuation be "on the low side". Then it wouldn't be independent.

 

I have said this before, but I'll repeat it because I think it's important.

FOH are trying to buy Hearts, the loss making business and that is reflected in the money they have offered.

What someone is buying is the value of the assets minus money to run the business until they can turn it round.

 

Now you're going to say 'but ukio will get more liquidating'. Well, they might, but given the cost, time and uncertainty of the value of the assets there is no guarantee of that and I very much doubt that it will be a risk the lith admins will be willing to take.

The ?4m or thereabouts has been quoted often on here without any of the usual suspects rubbishing it. Planning issues can be taken into account in valuation eg the reported ?1m it would cost to remove the chemical tank that is apparently the main HSE obstacle to development could be deducted. If (and I used the word "apparently" because I don't know for sure) FoH's valuation was ?4m I am not sure where the confidence comes from that it is far out. And while it is "independent" in the sense a third party did it, the seller will note who paid for it and that the terms of reference were probably not designed to get a valuation on the high side.

[casper]

The ?4m or thereabouts has been quoted often on here without any of the usual suspects rubbishing it. Planning issues can be taken into account in valuation eg the reported ?1m it would cost to remove the chemical tank that is apparently the main HSE obstacle to development could be deducted. If (and I used the word "apparently" because I don't know for sure) FoH's valuation was ?4m I am not sure where the confidence comes from that it is far out. And while it is "independent" in the sense a third party did it, the seller will note who paid for it and that the terms of reference were probably not designed to get a valuation on the high side.

 

Even if the ?4M figure is correct then the offers made to buy the club are not that far out.

The question is, would the ukio admins be willing to gamble on possibly getting maybe another ?1M from liquidating when it might take months or years to see any of the money even if they can find a buyer. I don't think they would.

[Francis Albert]

My tentative conclusions from this thread are - yesterday's vote means that BDO now have approval to liquidate the club without further reference to the creditors, only a CVA can prevent that default position occurring, barely 50% of the creditor vote has any financial incentive to agree a CVA, it is hoped that Ukio may have some sort of power over how Ubig vote

[Francis Albert]

Even if the ?4M figure is correct then the offers made to buy the club are not that far out.

The question is, would the ukio admins be willing to gamble on possibly getting maybe another ?1M from liquidating when it might take months or years to see any of the money even if they can find a buyer. I don't think they would.

I agree. (My point was simply that I have no reason to disbelieve the ?4m which so many seem keen to rubbish).

[roscogt1]

So if the CVA works out, all goes well and Foh get hearts, are we then debt free when we leave admin?

[jimbrown76]

it seems that UKIO voting to go down the CVA route that they know they wont get much if there where to chance it on the open market Edinburgh city council have stated that they will make it hard for plannig permision to be granted to build on the land that tynie is on i cant see a building contractor ect wanting to touch it with a barge pole

 

Either you are not understanding it or I am not understanding you.

 

Ukio have not stated they will accept any CVA, merely that BDO can go down that route.

[topcat]

As far as I can see this story doesn't call for champagne but probably merits a nice cup of tea and a biscuit.

 

Whether it merits a chocolate hobnob or just a digestive could be a long and bitter argument on here.