The Esk alleges that 777 Partners will need to inject up to £360 million into Everton and has outlined the probable implications.
The 777 Partners are scrambling to raise funds to repay £158 million in loans from MSP Sports Capital; failing to do so could result in MSP buying the club.
MSP then has a number of options to evaluate, each with its own set of consequences in both the near and long term.
The Esk has proposed three solutions for the takeover, as he describes the third one: “To complete the takeover, 777 Partners must provide an urgent cash injection of £340-360 million (assuming £80-100 million for Laing O’Rourke). If the conversion of debt to equity necessitates refinancing elsewhere within the 777 Partnership, the cash required is anticipated and reasonably estimated to exceed £500 million.
“Option (iii) provides a stadium worth significantly more than the debt owed to MSP, but (a) the stadium is incomplete and requires additional funding, and (b) the stadium’s value is entirely dependent on Everton’s future solvency and capacity to play there in the future, as well as the League or division in which Everton will compete.
“Acquisition of the stadium alone, does not solve Everton’s liquidity problems and may arguably push Everton Football Club Company Limited into balance sheet insolvency, as without the stadium its liabilities are surely greater than its assets.”
Everton find themselves in a dire situation
The situation for the Toffees is grim, with the club facing a potential insolvency catastrophe amid a convoluted web of financial issues and takeover negotiations.
The club’s directors have a fiduciary duty to preserve the best interests of creditors and stockholders, yet they find themselves in a difficult situation.
Option 3, which entails MSP Capital acquiring the stadium, may appear enticing because of its worth.
However, this approach would not alleviate Everton’s immediate liquidity issues and may force the club into insolvency.
This is because the stadium’s value is inextricably linked to the club’s future viability and ability to compete in a certain league or division.
Without the stadium, the club’s liabilities could surpass its assets, rendering it insolvent on a balance-sheet basis.
Furthermore, the club’s directors must examine their legal responsibilities to all creditors, employees, and HMRC.
They must balance the interests of various creditors and ensure that any action taken does not unduly benefit one over another.
In other Everton news, Ian Wright has slammed a senior member of the club following a new development about PSR and the 777 Partners purchase.
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