On the very day that the January Transfer Window opens West Ham face some rather large bills which need to be re-paid or refinanced.
Note 20 on page 32 of West Ham’s 2012 Financial accounts explains the terms of our current bank loans.
It explains the primary bank loan to West ham of £30,527,000 provided by a syndicate of five banks and secured freehold land including the Boleyn expires on the 31st December 2013.
A further two unsecured loans are both repayable a day later on 1st January 2014. £5,167,000 is due to CB Holding ehf (The Icelandic company which inherited West Ham through its major share holding in Straumur)
A further £1,058,000 is also due on 1st January 2014 to ALMC ehf (formerly known as Straumur-Burdaras Investment Bank)
This amounts to a grand total of £36 million which needs to be re-financed or paid off by the day the January transfer window opens.
It is a common misconception that all multi millionaires like our chairman keep tens of millions of cash in the bank. Successful business men like our owners will make their money work for them in different investments most of which will not be liquid or easily converted back to cash.
In the case of David Sullivan much of his wealth is tied up in a vast property portfolio through his property company Conegate Holdings which has £245m of assets, £110m of long term debts and £35m cash in the bank.
I am sure it is wishful thinking to believe that David Sullivan will use this £35m in the bank of this property company to wipe out the remaining debts at the end of this year. This business needs working capital to buy and invest in new properties otherwise it would of used some of this cash in the bank to pay back some of its £110m of long term debts.
This same property company already owns 12.5% of West Ham and has loaned it £16 million pounds.
In 2011 Conegate sold the 999-year leasehold of the old Radio Times buidling (35 Marylebone High Street) to a pension company for £32.3m
This is almost an identical amount to what our owners invested into West Ham after our relegation to the Championship.
Unless West Ham makes a statement in January we won’t know how they intend to re-finance or pay off these £36m of loans. The financial accounts for that period will not be released until 2015. How this affects any possible January transfer window budget remains to be seen.
UPDATE:
Since this article was published I became aware that David Sullivan covered some of the question of re-financing in his Interview with Graeme Howlett from KUMB.com in August.
When Graeme asked about the extra 25% of shares Sullivan acquired in West Ham he replied:
“It was all to do with restructuring the bank debt. If I bought these shares they would take over the bank debt which ran out in December. It’s been renewed for another three years and I’ve put a bit of money into the bank debt as well. It’s complicated really”
So it appears the pressure is now off for January.
You can find the full interview from KUMB.com here