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Debt Cut To Bank By ?12m


Sexton Hardcastle

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Sexton Hardcastle

Hearts have reduced their debt by ?12m after their their bank converted money owed to it by the Scottish Premier League club into shares.

 

The club were about ?34m in debt in the year to July 2007, but the latest move will improve the next set of accounts.

 

Conversion of bank debt into shares for Lithuanian bank UBIG was approved by shareholders at an extraordinary meeting at Tynecastle on Thursday.

 

Hearts say the move will save the club ?600,000 in annual interest charges.

 

http://news.bbc.co.uk/sport1/hi/football/teams/h/heart_of_midlothian/7493075.stm

 

More good news. Were on a roll here.

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The headline of the OP is wrong.

 

The debt to Ukio Bankas has not been cut. Ukio Bankas were not directly involved here.

 

The debt to UBIG has been exchanged for equity. This is merely a rearrangement of UBIG's claims on Hearts - and reduces the quality of its claims.

 

I think that this deal may well have been done to benefit Ukio Bankas however - it may not have to take such big provisions on its exposure to Hearts.

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Hearts have reduced their debt by ?12m after their their bank converted money owed to it by the Scottish Premier League club into shares.

 

The club were about ?34m in debt in the year to July 2007, but the latest move will improve the next set of accounts.

 

Conversion of bank debt into shares for Lithuanian bank UBIG was approved by shareholders at an extraordinary meeting at Tynecastle on Thursday.

 

Hearts say the move will save the club ?600,000 in annual interest charges.

 

http://news.bbc.co.uk/sport1/hi/football/teams/h/heart_of_midlothian/7493075.stm

 

More good news. Were on a roll here.

 

The article was 24 days ago ;)

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marshallschunkychicken
The article was 24 days ago ;)

 

To be fair to the OP, it's been updated with news of todays EGM, and put to the front of the Hearts news on the BBC.

 

The site just doesn't show the correct 'last updated' date.

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I'M IBRAHIM TALL

Sorry guys but I'm thicker than **** in the neck of a bottle. Is this story new, old, relevant, good bad or indifferent Cos I do not have a tube of glue what the hell any of it means.

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Commander Harris
Sorry guys but I'm thicker than in the neck of a bottle. Is this story new, old, relevant, good bad or indifferent Cos I do not have a tube of glue what the hell any of it means.

it's new in a way as it was only officially confirmed when it was accepted at today's EGM.

 

http://www.heartsfc.premiumtv.co.uk/page/HeartsNewsDetail/0,,10289~1354918,00.html

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Commander Harris
But it is still wrong though!

 

That's the BBC for you.

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To be fair to the OP, it's been updated with news of todays EGM, and put to the front of the Hearts news on the BBC.

 

The site just doesn't show the correct 'last updated' date.

 

True, typical BBC though-It's sometimes hard to tell if they are actually reporting something new.

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Hagar the Horrible

It just goes to show that Vlad has more business sense than football sense.

 

our debt yesterday was ?24m at 5% was paying ?1.2m interest, we have halfed that by converting it to approx ?12m

 

If we still banked by HBOS we would have been paying around ?4m per annum on interest alone .....we would not have survived especially at the ?34m that was quoted at per July 07 that would have been ?5.4m PA.

 

Where are the Hobo-economists now?

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The Wicker Man
Where are the Hobo-economists now

 

They all seem to be way too busy - working out a feasibility plan on how to afford 'Deeks'.

 

So far they have come up with "He wouldn't sign for that shower, would he?"

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It just goes to show that Vlad has more business sense than football sense.

 

our debt yesterday was ?24m at 5% was paying ?1.2m interest, we have halfed that by converting it to approx ?12m

 

If we still banked by HBOS we would have been paying around ?4m per annum on interest alone .....we would not have survived especially at the ?34m that was quoted at per July 07 that would have been ?5.4m PA.

 

Where are the Hobo-economists now?

 

If that is supposed to be an example of Vlad's business sense then :rofl:

 

Then again, you do say it shows he has more business sense than football sense. So in a relative sense you might be right :rofl:

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True, typical BBC though-It's sometimes hard to tell if they are actually reporting something new.

 

Hearts convert debt into shares, read all about it!

 

chamberlain2.jpg

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The headline of the OP is wrong.

 

The debt to Ukio Bankas has not been cut. Ukio Bankas were not directly involved here.

 

The debt to UBIG has been exchanged for equity. This is merely a rearrangement of UBIG's claims on Hearts - and reduces the quality of its claims.

 

I think that this deal may well have been done to benefit Ukio Bankas however - it may not have to take such big provisions on its exposure to Hearts.

 

Thats my view on it as well,more to benefit Vlad's bank,or what ever,than benefit HMFC,but hey ho it look's good on paper.

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The headline of the OP is wrong.

 

The debt to Ukio Bankas has not been cut. Ukio Bankas were not directly involved here.

 

The debt to UBIG has been exchanged for equity. This is merely a rearrangement of UBIG's claims on Hearts - and reduces the quality of its claims.

 

I think that this deal may well have been done to benefit Ukio Bankas however - it may not have to take such big provisions on its exposure to Hearts.

 

Are we not just splitting hairs here?

Both HMFC and UKIO Bankas are obviously separate entities under the umbrella of UBIG. If our interest saving is ?600k pa it is obvious that the debt due to the bank is being similarly reduced by ?12m even if by indirect means or is there something more fanciful afoot?

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Are we not just splitting hairs here?

Both HMFC and UKIO Bankas are obviously separate entities under the umbrella of UBIG. If our interest saving is ?600k pa it is obvious that the debt due to the bank is being similarly reduced by ?12m even if by indirect means or is there something more fanciful afoot?

 

No not splitting hairs.

 

UBIG is not the bank. The debt to Ukio Bankas remains at the same level. It will likely be slightly higher quality for them now - and they might not have to write it down in their accounts.

 

UBIG have merely changed the quality of their claim on Hearts. And are giving up cash flow - presumably as Hearts can't afford to pay the ?600k pa.

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Surely all that has happened is that we have issued shares worth 12M to UBIG who have paid us 12M in cash for them.

 

 

That reduces our debt by 12M.

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Surely all that has happened is that we have issued shares worth 12M to UBIG who have paid us 12M in cash for them.

 

 

That reduces our debt by 12M.

 

As far as I am aware, no cash has changed hands.

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No not splitting hairs.

 

UBIG is not the bank. The debt to Ukio Bankas remains at the same level. It will likely be slightly higher quality for them now - and they might not have to write it down in their accounts.

 

UBIG have merely changed the quality of their claim on Hearts. And are giving up cash flow - presumably as Hearts can't afford to pay the ?600k pa.

 

Sorry I still don't understand.

Firstly I accept it is simply the shuffling of papers around the UBIG empire and that no money changed hands but - the HMFC arm of things has had its share number increased and the parent company UBIG have "bought" that increased allocation for a ?12m value, settled by the reduction of ?12m of our debt.

Using the figures quoted, whereas yesterday UKIO Bankas were owed ?34m by HMFC they are now owed ?22m by HMFC and ?12m by their parent company UBIG. In the final analysis therefore that separate entity which is HMFC will have ?12m less of debt on which ?600k interest would have payable, and is not now due, to UKIO Bankas. Yes or no?

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Sorry I still don't understand.

Firstly I accept it is simply the shuffling of papers around the UBIG empire and that no money changed hands but - the HMFC arm of things has had its share number increased and the parent company UBIG have "bought" that increased allocation for a ?12m value, settled by the reduction of ?12m of our debt.

Using the figures quoted, whereas yesterday UKIO Bankas were owed ?34m by HMFC they are now owed ?22m by HMFC and ?12m by their parent company UBIG. In the final analysis therefore that separate entity which is HMFC will have ?12m less of debt on which ?600k interest would have payable, and is not now due, to UKIO Bankas. Yes or no?

 

No.

 

The debt due and interest payable due to Ukio Bankas by Hearts as far as I am aware does not change. I have no idea of whether UBIG owe money to Ukio Bankas.

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Suspect Device
No.

 

The debt due and interest payable due to Ukio Bankas by Hearts as far as I am aware does not change. I have no idea of whether UBIG owe money to Ukio Bankas.

 

sorry i must be being thick here, but what you are saying is 12 mil of our debt (34mil) is being converted into shares to either Ukio or Ubink (semantics) but we still pay interest on the total 34mil ?

 

(nb not how Talk 107 were reporting it, they stated this will save 600k p/a in interest)

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No.

 

The debt due and interest payable due to Ukio Bankas by Hearts as far as I am aware does not change. I have no idea of whether UBIG owe money to Ukio Bankas.

 

If that is the case, how come we are ?600,000 better off each year due to us paying less interest if nothing has changed?

 

Not having a go, just that i don't understand. My understanding, for what it was, was similar to JamboAl's.

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If that is the case, how come we are ?600,000 better off each year due to us paying less interest if nothing has changed?

 

Not having a go, just that i don't understand. My understanding, for what it was, was similar to JamboAl's.

 

I don't have the exact figures to hand but it works something like this.

 

Hearts owed:

 

?12m to Ukio Bankas - paying interest - this is basically unchanged after today's EGM from Hearts perspective as interest will continue to be due on that (but it might change the Ukio Bankas accountants perception of Hearts risk due to lower total borrowing at Hearts).

 

They also owed:

 

?12m to UBIG - paying interest of ?600k per year - now UBIG have swapped that debt into shares which entitle them to dividends (!) but not an interest payment.

 

UBIG is not Ukio Bankas.

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The People's Chimp
No.

 

The debt due and interest payable due to Ukio Bankas by Hearts as far as I am aware does not change. I have no idea of whether UBIG owe money to Ukio Bankas.

no.

 

i was going to explain but i can't be arsed. but if you're gonna use a smart arsed "no" at least try and be right.

 

was anyone at the EGM?

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I don't have the exact figures to hand but it works something like this.

 

Hearts owed:

 

?12m to Ukio Bankas - paying interest - this is basically unchanged after today's EGM from Hearts perspective as interest will continue to be due on that (but it might change the Ukio Bankas accountants perception of Hearts risk due to lower total borrowing at Hearts).

 

They also owed:

 

?12m to UBIG - paying interest of ?600k per year - now UBIG have swapped that debt into shares which entitle them to dividends (!) but not an interest payment.

 

UBIG is not Ukio Bankas.

 

Ah, got you! One big Hearts debt split between two creditors.

 

But it is fair to say then that ?12m has come off the Hearts debt.

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Ah, got you! One big Hearts debt split between two creditors.

 

But it is fair to say then that ?12m has come off the Hearts debt.

 

Yes.

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no.

 

i was going to explain but i can't be arsed. but if you're gonna use a smart arsed "no" at least try and be right.

 

was anyone at the EGM?

 

Go on then please explain.

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Ah, got you! One big Hearts debt split between two creditors.

 

But it is fair to say then that ?12m has come off the Hearts debt.

 

And we are saving ?600,000 a year interest? :)

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Suspect Device
I don't have the exact figures to hand but it works something like this.

 

Hearts owed:

 

?12m to Ukio Bankas - paying interest - this is basically unchanged after today's EGM from Hearts perspective as interest will continue to be due on that (but it might change the Ukio Bankas accountants perception of Hearts risk due to lower total borrowing at Hearts).

 

They also owed:

 

?12m to UBIG - paying interest of ?600k per year - now UBIG have swapped that debt into shares which entitle them to dividends (!) but not an interest payment.

 

UBIG is not Ukio Bankas.

 

and how much dividends do we normally pay out when 'in loss' ?

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and how much dividends do we normally pay out when 'in loss' ?

 

That was what the exclamation mark was for. Prospect of dividends is some way off even if they can ever be expected.

 

So that is the point about UBIG accepting a lower quality claim - unlikely to get dividends, no more interest payments, ranking now below debt holders in the event of Hearts being wound up.

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Is it not the case that we have reduced the debt by ?12m because we have effectively sold ?12m worth of shares to UBIG. So the debt is reduced, the interest we pay on our debt is reduced and add in the ?9m for Gordon, the ?2.5m for Bednar, the wage reductions etc etc and our debt now stands at approx ?10/11m.This puts HMFC in a far stronger position financially.

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And we are saving ?600,000 a year interest? :)

 

Nobody is saving anything in reality,why would one company want to hinder a company it owned by paying interest on a loan that really doesn't exist, to a certain degree,paper changing files thats all and probably some sort of tax dodge as well.

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I don't have the exact figures to hand but it works something like this.

 

Hearts owed:

 

?12m to Ukio Bankas - paying interest - this is basically unchanged after today's EGM from Hearts perspective as interest will continue to be due on that (but it might change the Ukio Bankas accountants perception of Hearts risk due to lower total borrowing at Hearts).

 

They also owed:

 

?12m to UBIG - paying interest of ?600k per year - now UBIG have swapped that debt into shares which entitle them to dividends (!) but not an interest payment.

 

UBIG is not Ukio Bankas.

 

 

I think you've gone a long way round to make a fine distinction if indeed there is one in reality.

The bottom line is that the accounts of HMFC will now show ?12m less in debt compared to yesterday and will pay around ?600k pa, subject to rate variation, less in the future.

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Is it not the case that we have reduced the debt by ?12m because we have effectively sold ?12m worth of shares to UBIG. So the debt is reduced, the interest we pay on our debt is reduced and add in the ?9m for Gordon, the ?2.5m for Bednar, the wage reductions etc etc and our debt now stands at approx ?10/11m.This puts HMFC in a far stronger position financially.

 

IMO hearts are only in a strong financial position as long as UBIG want us to be regardless of who owns what the who.

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IMO hearts are only in a strong financial position as long as UBIG want us to be regardless of who owns what the who.

 

We could say that about every club.

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Ryan Gosling
Is it not the case that we have reduced the debt by ?12m because we have effectively sold ?12m worth of shares to UBIG. So the debt is reduced, the interest we pay on our debt is reduced and add in the ?9m for Gordon, the ?2.5m for Bednar, the wage reductions etc etc and our debt now stands at approx ?10/11m.This puts HMFC in a far stronger position financially.

You'll need to add the losses for the year as well.

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Ryan Gosling
Now I get the driver for this may well be UKIO Bank and there potential liabilities, however, I just can't see how this is anything positive for us.

 

Have I missed something?

 

?12m off the debt, ?600k a year less on interest.

 

How is it not positive?

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Can we not get better than Coco hobonomics and Rudi i am not going backonomics.

 

Fact of the matter is Hearts debt has been reduced by ?12m in exchange for shares by Ubig.And interest payments have also been reduced.

 

For Ubig to gain from this they must make Hearts profitable to gain dividend payments.

 

Hearts win/win

 

Sounds ok to me.

 

 

:107years:

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starcatcher

think Dragon's Den, guys.

 

Romanov as Bannatyne. Hearts as the punter coming up the stairs.

 

"I'm gonna make you an offer....but in exchange for the twelve mill, i want ten per cent of your company."

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Boab Mugabe
Is it not the case that we have reduced the debt by ?12m because we have effectively sold ?12m worth of shares to UBIG. So the debt is reduced, the interest we pay on our debt is reduced and add in the ?9m for Gordon, the ?2.5m for Bednar, the wage reductions etc etc and our debt now stands at approx ?10/11m.This puts HMFC in a far stronger position financially.

 

We'll have still made a loss for the year due to our ridiculously high wage bill. I can't imagine sales figures for Hearts being great outwith the Gordon and Bednar monies either. If we do start with the new stand then that will take our debt right back up too.

 

We will see how this pans out, but ?12m off the debt is certainly encouraging.

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think Dragon's Den, guys.

 

Romanov as Bannatyne. Hearts as the punter coming up the stairs.

 

"I'm gonna make you an offer....but in exchange for the twelve mill, i want ten per cent of your company."

 

 

 

 

Not if you already have 99.9%

 

 

Clyde 3 - Hobos 0

 

tick tock

 

 

;)

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As far as I am aware, no cash has changed hands.

 

OK so no cash has changed hands but the debt that we are owed has reduced by 12M.

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OK so no cash has changed hands but the debt that we are owed has reduced by 12M.

 

 

 

He is not sure of the figures but just puts a negative spin on it anyway.

 

 

 

:rolleyes:

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starcatcher

no cash has changed hands. hearts are ?12m less indebted. Hearts save a packet on interest. There's no catch - it's all good.

 

One interesting aspect is that it will dilute Romanov's ownership to an extent...maybe the UBIG board insisted on a new manager and less interference before they would approve the debt/share swap?

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I think this is good for us - isn't this exactly the same kind of thing that David Murray has already done 3 times at Rangers?

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Geoff Kilpatrick

The point about money "not changing hands" is still relevant though. Yes, the debt is reduced by 12 million and yes, 600K interest isn't being paid but the point is that we weren't paying this interest out of money we generate anyway. Rather, this interest was being generated from UBIG capital and being repaid from UBIG capital.

 

So, it's welcome that we have a stronger balance sheet but I doubt it'll make much difference longer term. What we need to know is what the intentions of UBIG are and that is where the stadia development comes in.

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