When the recent West Ham company accounts were published it showed an outstanding bank debt of £44m in 2013. The re-financing of that debt on 1st July last year appears to have reduced the current bank debt from £44m to £32m not including the £5m short term season pay day loan from Vibrac. The new refinancing deal was secured as a mortgage against the Boleyn Ground and the other freehold land held by the club. The terms of the new loans are the bank debts need to be paid off or refinanced by the end of 2016. Interestingly the new bankers are named as CB Holding ehf and David Sullivan replacing the previous syndicate of five banks from the Icelandic days.
I can exclusive reveal the terms of the re-financing deal for the first time.
In May/June 2013 David Sullivan bought a further 25% of the shares in the club from CB holdings on condition they used the money David paid them to loan back to the club to replace the main bank debt for 3 years by paying off the existing bankers. David Sullivan paid £25.5m for these shares which ultimately ended back in the club to refinance the bank debt. However, there remained a 15% hole of £3.8m in cash needed to pay off the syndicate of five banks, so David Sullivan personally took 15% of the main bank debt so that it could be paid off. It was the only way it could be done as no other banks were prepared to loan us the money. Effectively, David Sullivan become one of our bankers and is named as such in the 2013 financial accounts. It means he invested another £25.5m last year on top of the £10.5m Gold and himself loaned the club last season as shareholder loans. CB Holdings have also loaned West ham £6.7m to take the total bank debt to £32.2m.
With the sale of the Boleyn ground announced last week the chairmen have a plan to be almost debt free by May 2016 when we move to the Olympic Stadium. The current plan is to pay off £5m per year off the bank debt over the next two remaining years at the Boleyn. This reduces the bank debt to £22m by which time we will need to move out and pay off the loans secured against the Boleyn ground. The proceeds of the sale of the Boleyn ground to Galliard Homes will pay the £15m we owe to the LLDC towards Olympic Stadium transformation costs and the surplus of the sale will be used to pay off the remaining bank debt.
I understand Galliard homes were not the highest bidder in the tender process by some distance but considered by the directors as the best fit to preserve the history of the area. Hopes that there would be a surplus from the sale to invest in redeveloping Rush Green or investing in new players now appear to be unfounded. This debt reduction plan relies on West Ham remaining in Premier League until 2016. If we get relegated in the next 3 years all bets and plans to be debt free are off!
