The Takeover Thread - Duchatelet Finally Sells (Jan 2020)

Enjoy the hiatus and take just a minute people, as the momentum falters and the "who knows what debate" stalls to reflect there are no enemies on here.

I sincerely hope to be wrong but, defined by repetition, deviation & hesitation, the ongoing relevance of this thread to reality, historic references apart, appears ever more distant. HI's recent post defines why the takeover falls into the same category.

There is a difference between putting the "club" up for sale and actually working to sell it. As the latest round of fervent wishful thinking fades can we get back to basics?

The signing of a few players and Bowyer's measured style provides a sense of normality but there is nothing normal about this ownership.

I see no malice just an unerring ability to veraciously and unceasingly seize & brandish the wrong end of the stick. M. Duchatelet (RD) has from the outset facilitated a self serving, self important agenda via an administration of unfailing incompetence. Seldom can anyone have fought so smugly to encase themselves in their own deluded ignorance. The sale of the club, in thought & deed, merely reflects the same values.

In truth I am not sure why anyone expected a vendor, entertaining "all comers" (not named Varney), to "fix" a price and let it stand for any period.

As Bolton Administrators can testify it is hard enough working to an agreed Heads of Agreement within a defined legal framework covering key deliverables within a set time frame and a (renewable) period of exclusivity. A non exclusive, multi party, market trawling "Dutch Auction" hugely complicates the process, notably so when working multiple pricing matrices.

M."2%" acclaims he is not involved. A £33-50mn club is being sold by a part time accountant. M De Turck (LDT) is out of his depth, yet I doubt he defined his terms of reference.

There are 2 overriding factors.

The arrogant "executive" incompetence, is noted above. The 2nd will become clear.

Unlike so many I have no idea of the investment any "group" can/ might make if ever successful in buying the club nor indeed the different prices, terms, conditions or future "dividends" any party has "agreed". Forgive me for a) believing nor do 95% of posters and b) repeating myself as the fiasco continues.

I welcome others sharing "their" information but many "logical" assumptions are based on headlines some of which interested parties want you to hear. Such "logic" is natural but no two industries or international business cultures are the same. RD operates in another dimension. M."2%" defines his arrogance.

The challenges of the past 5 yrs have arisen precisely because they were driven by a provincial Belgian parochial mindset at odds with the marketplace in which he chose to invest. The approach has borne the aloof arrogance of a remote fiefdom devoid of local market understanding or commitment.

Mr Dalman offered market experience, credibility, personal wealth & investor access.

Mr Muir offers/ offered personal wealth, a strong sporting profile & consumer expertise.

"Informed sources" advise others "have kicked/ are kicking the tyres". Their origins, status & credentials are a matter of speculation. Such anonymity at least avoids the labels of being penniless, spivs or chancers.

Many rant at the "Aussies" as if the individuals do not have any funds when Muir having sold his electrical goods chain and its commercial real estate both for cash, not only has funds but likely more liquidity than most millionaires on the planet.

For anyone to argue it should not matter to a person of wealth if they pay £26mn, £33mn or £50mn is deluded nonsense.

The issue is how much is the club actually worth? Bought (2014) for £19mn, +£5mn mortgage, +£7mn contingent liability (cl) how is it now worth £33-50mn+? Where is the new value?

It is NOT defined by the level of private debt created by the vendor.

On what basis do people expect buyers to negotiate on a basis of what they can afford?

Such distorted thinking saw club debt rise from £18.6mn to £61mn+ (2018) despite £25mn in transfer receipts. A £68mn spend in 4yrs trading to retain the same league status, uplift a mortgage (payable £1mn p.a) and spend £?mn on an incomplete & contentious training ground upgrade.

Outside of his local environment everything RD touches spreads chaos & confusion.

Evaluating the Aussie bid highlights the chaos. The Group is unashamedly a consortium of many.

With the multiple ownership iterations of Mr Murray we have been here before.

I share the challenge the process has taken 2yrs. Who with the clubs long term interests at heart entertains a dialogue for 2yrs not knowing if money is "available"? Why? Why the regular status reports if nothing materially changes? Within a defined professional sales process it is unmitigated bollocks. 

At this scale of finance there is a cultural disconnect between those whose aim is the long term well being of the club & football experience and those to whom the attraction/ challenge will sit with the 2 distinct elements bought & sold by Jimenez, Slater & Cash (JSC).

There is a football club.

There is London real estate.

Court papers position JC as property men who secured funding from BVI family trusts to acquire the club to leverage development opportunities. What do you think they sold to RD? RD is a property investor. Acquiring an organisation, he works to "invest" in its "infrastructure" and charge for the privilege.

RD is selling 2 assets. His own words on national radio define his value set. It is a matter of public record.

"I would give the club away if somebody paid me for the land." 

THE REST IS NOISE.

The irony is most Australian sports organisations do not own their stadia.  They lease the facilities to the point some Australians now challenge national & local government funding of stadia.

I suggest within their consortium there are those who have zero interest in the real estate. They just want to run a football club. Their investment "pitch" focuses on sporting aims.

I suggest Muir agreed to underwrite a group of sports investors seeking to;
- Add an Australian profile to UK football
- Explore the links to the strong Australian community in London
- Raise the profile & marketability of the game to sports mad Australia
- Raise the global profile of Australian sports sciences.

Muir has the wealth to underwrite Murphy's Tender Panel (TP) Approach to a 5yr operational plan. TP finance is a legitimate risk spreading tool built around a lead lender/investor inviting others to participate in the lending/ investment. I can personally attest TP Finance for major investment has existed for 30yrs.

It leaves however the pain of buying a stadium & an incomplete training ground.

"The sort of good news" for fans is they are not interested in exploiting the real estate. The bad news for the deal is they are not interested in the real estate.

Finding investors to take on the sporting real estate is the problem.

In investment & revenue terms The Valley is a huge sunk cost delivering nothing commercially beyond a vehicle for Charlton Athletic to trade in the EFL. It is a very expensive shop!

The estimated "London property values" in RDs mind, go no further than the balance sheet. Political, social & logistical challenges present almost insurmountable barriers to any isolated material development opportunity. The book value based largely on stadium building costs, in revenue generating terms, does not stack up.

Like a 1970's failed bank manager RD refuses to believe it.

Bad lending against such book values is why commercial banks walked away from the industry decades ago. He should ask Lloyds Bank about Selhurst Park.

Spending even £20mn+ on a stadium with clear usage restrictions brings no financial return.

As an aside the understandable emotion over mortgaging The Valley is disproportionate. A commercial evaluation will give a value of circa £20mn. No bank would lend beyond a 60-75% forced sale value i.e. £12-15mn or circa one season's losses under EFL rules.

Against a £33-50mn sales price, further vendor dividends and a 5yr business plan (£8-12mn p.a.) it is less than 15%% of finance.

The issue is paying £30mn for the land is 3 yrs funding costs!

Enter RD, wrong end of stick firmly in hand, ignoring market needs, to obsessively reduce operational costs to prove you can run a Championship club on a shoestring so buyers can pay him his price for the land! 

I speculate the consortium has had 3 structures.

No 1 found a property investor with other UK footballing interests. The Australians & RD, in submitting EFL papers probably argued the investor as a "sleeping partner" presented no conflict of interest. The response challenged their thinking.

No 2 arrived with the Talksport bluster and US investors taking on the real estate investment. US Investors are renown for initially being wildly enthusiastic before the reality of the baggage involved emerges at which point they disappear.

No 3 suggests Indian investors are in play.

In the sale of any property clear unencumbered title is normal standard practice. Indeed commercially where any financial facility with lien is carried forward the lien holder usually demands to specifically sanction any change of title ownership. 

The former directors waived this requirement.

None of us know the full financial assistance provided by former directors.

We know they agreed to waive immediate repayment of certain sums loaned, I repeat loaned, to the club enabling Mr Murrays' corporate restructure to facilitate the JSC takeover ..helping to fund the 2011/ 2012 promotion.

RD secured due value in acquiring a Championship club.

He chose to accept the loans and the associated contingent liabilities.

The relationships and contractual obligations rest solely with the current vendor.

The recent public attack was unprofessional, cheap & nasty.

Upon the sale of the club any liens and title issues involving BVI Corporate Law will always come into play. LDT had previously stated there was no issue with the Directors Loans and the sales price would remain the same whether the club was promoted or not.

Who but an incompetent makes such statements without specifically addressing if not resolving the lien issues?

It was a "club" statement referencing former Directors & their loans which threw LDT under the bus and effectively raised the price by £7mn.

Any confusion over Directors Loans after 2yrs of negotiations is breathtakingly professionally incompetent.

The ramifications for the Aussies appear significant. Consortium based investments above all others are governed by detailed business cases. A price hike of £7mn likely destroys any margins. I doubt they will move on price.

I have little problem with the Australians funding the clubs trading. I will however need clarity over the nature of the relationship between the investors and guarantees on the security of tenure for the club within such relationships.

However can we please be clear all these parties are expressing an interest in extracting us from a £61mn + debt sized hole for which no external party, not former directors, not the Australians, not Mr Varney, not Mr Dalman, not the EFL, not the other Mr Muir, not CARD, not Charlton Life, not Mr R Everitt is responsible.

Such deflection is FRIGGIN NOISE.

One individual is accountable for the scale of the challenge yet in his world he views himself as above accountability.

In the meantime the senior clubhouse had just 15 players (17 - 2018/2019) as they embarked on pre season training.

It was another executive failure to empower a football clubhouse which extraordinarily took us on a play off journey revealing a market potential which, even recognising a notable "day tripper" element, any sane retail business would relish exploring.

I am in awe of Mr Bowyers approach and calls for unity but it is "this market" this administration positions "lost in translation or not" as costing the owner £1000 per season ticket holder.

It defines the mindset behind the sale.

The club and its supporters are an expensive irrelevance. 

Forget the noise and "working a post promotion deal". They are just angles to get the value RD wants for encumbered freeholds with maybe suspect title (see BVI Law) & development obligations.

RD is truly of another dimension.