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Owls chasing £20m US investment
SHEFFIELD Wednesday hope to secure a £20m cash injection through selling the club to rich American investors by the end of the year.
The Owls have appointed the merchant bank which engineered the 240m takeover of Liverpool to secure new owners who, it is hoped, would transform the fortunes of the debt-ridden club.
Club chairman Lee Strafford described the appointment of New York-based Inner Circle Sports as "a major coup" and added: "If this doesn't deliver a result, Sheffield Wednesday will never get major investment."
He said Inner Circle Sports had a strong reputation to protect and the investment group – which recently arranged a US-based takeover of Sunderland – would not have taken on the Wednesday challenge unless it was viable.
Strafford added: "This has been done brilliantly, this has been done properly. If this doesn't land a result to the best possible investor through the best possible intermediaries, then good luck to any football club."
If a deal is eventually closed, the Owls will be almost wholly owned by Stateside investors. Inner Circle Sports will focus on cementing interest already expressed by big sports franchises in the US, including in Major League Soccer.
The proposed deal – which the club hope to finalise by December, in time for the January transfer window – would see the new owners taking an 86 per cent stake in the club through an issue of shares. The 20m invested in the new share issue would then be available for spending both on and off the pitch.
Strafford and chief executive Nick Parker would remain in control of the day-to-day management of the club on behalf of the new owners.
The bulk of the investment will be available for players, upgrading the ground and other infrastructure. But the proposal is geared to block excessive spending on players' wages with a provision in place to keep annual spending around the 10m mark. The figure would still represent a significant increase on next season's budget of around 6.5m and the 10m ceiling would fall away if the Owls won promotion to the Premier League.
The club would expect an extra 20m to be made available from new owners if Wednesday reached the top flight but that figure is not written into the proposal on the table.
Staff from the New York merchant bank are currently at Hillsborough finalising the process of due diligence. Inner Circle Sports will receive up to 1m from Wednesday if investment is secured.
Although Strafford believes major investment hinges on this potential route he reiterated that even without it the Owls remain on a financially even keel and would not be under any pressure from the club's bank, the Co-Op, which is owed around 22m.
The bank would also not receive any of the 20m investment, having agreed to settle for a continued servicing of the debt with annual interest payments – in the knowledge that those payments will be more securely received if the club becomes
relatively cash-rich. Investors would also be unlikely to pump any money into the club if a large chunk of it was simply going to repay debt.
Strafford's confidence in pulling off the deal is not matched by former chairman Dave Allen who maintained his stance that there was "no substance" to the investment plans, adding: "I'll believe it when I see it."
Only around 2m of the proposed 20m is set aside for repaying loans which means Allen, who is owed around 2.5m, is unlikely to be offered the full repayment of his loans he has previously insisted upon.
Although not commenting publicly on the difficult relationship with Allen, Wednesday believe they will be in a position to offer the former chairman a longer term deal which provides a deferred return potentially greater than the amount he is currently owed.
Even without Allen's agreement, Wednesday are now confident they can push through a new investment package – if necessary leaving Allen's loans effectively in cold storage.
Allen last week reached an agreement enabling him to maintain his outstanding financial interests in Wednesday, which include a 9.9 per cent shareholding, while at the same time investing 6m into Chesterfield. He previously said his Hillsborough loans must be repaid next May but last night said he had been asked not to comment further on the issue by the Football League.
The League recently gave him the go-ahead to have interests in two clubs subject to a formal agreement which precludes him from influencing the Owls' affairs.
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Saturday 26 May 2012
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