Hearts in administration: New bid made for club

A UK-based group are interested in Hearts. Picture: Ian Rutherford
A UK-based group are interested in Hearts. Picture: Ian Rutherford
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A UK-BASED consortium has lodged a “meaningful” takeover bid for Hearts with Ukio Bankas administrators in Lithuania.

The proposal is from a group of six wealthy businessmen and includes a draft Creditors’ Voluntary Arrangement to help the Edinburgh club out of administration. Ukio administrators Valentas UAB have indicated they would accept the CVA. Valnetas officials were due to meet last night to discuss the offer in depth after it was submitted on Monday evening. Ukio Bankas are to be liquidated but are owed £15million by Hearts and are the club’s biggest creditors ahead of Ukio Bankas Investment Group (UBIG), who are due £10m. Hearts stated their intention to enter administration on Monday with tax and player salaries unpaid and funding dried up on top of the combined £25m debts.

The consortium behind the new bid do not wish to be named at this stage. They are fronted by Edinburgh businessmen Stephen Paterson and Fraser Kerr of Haines Watts accountants. They claim to have been in discussions with Ukio administrators for several weeks and to have already provided evidence of their financial backing.

Paterson, a corporate finance restructuring expert, would not confirm the value of the consortium’s offer but said it was “meaningful” and that the people involved are Hearts fans. “We are acting for clients who don’t wish to be named at this moment but they are Hearts-minded,” he told the Evening News today. “The bid is for everything, it’s not about splitting the ground from the team or anything. We want the club, the players, the ground, everything.

“The Lithuanian administrator has indicated he will vote for our CVA, albeit with a 15-point penalty for Hearts for entering administration. It is up to the administrator at Hearts to go through that process. Our bid is predicated on a CVA

happening.” A CVA would see both Ukio and UBIG recoup part of the money owed to them and leave Hearts free of the £25m they owe. A total of 75 per cent of creditors must agree to a CVA for any company to exit administration. However, the situation cannot move on much further until administrators are formally appointed.

“I know things are dark right now for the Hearts support but we will emerge from this stronger and healthier,” continued Paterson. “It’s doom and gloom for the Hearts fans but administration had to happen. Now it’s happened, let’s move on. Being a Hearts fan myself, I desperately tried to come up with a solution to avoid the 15-point penalty but I could not come up with one. You would need to go through what I’d call a cleansing process to strip that debt away, which is quite frankly unbelievable. The more we looked at it, we weren’t sure that was all the debt.”

The consortium in question would wish to run Hearts themselves if they ultimately gained control. However, they are open to working with the fans’ umbrella group Foundation of Hearts and having fan representation on the club’s board.

“The investors most certainly want to work with the Foundation,” said Paterson. “They just want to make the club safe, run it properly and give the fans representation on the board. The club would be run on proper commercial grounds but the fans would be represented.”

Other interested parties are considering offers for Hearts but the UK-based consortium would appear to be best placed at the moment. A £500,000 offer from a Scandinavian group was reported to have been rejected by officials at Tynecastle before they signalled their intent to enter administration on Monday. A consortium in London and an American group are also in the running.

Hearts have incurred a delay in appointing their own administrators because Valnetas are contesting the club’s intention to put KPMG in control. Valnetas prefer BDO and are expected to lodge papers at Edinburgh’s Court of Session to ensure their own men oversee the administration process.

That could threaten the safety of the stadium, which Ukio Bankas administrators have control of due to a £6.8m floating charge which is security against the £15m Hearts owe the bank. Ukio Bankas hold a 29.9 per cent shareholding in Hearts, whilst UBIG hold 50 per cent.

Gintaras Adomonis, general director of Valnetas, said: “We thoroughly analysed (the) financial and legal framework of Hearts’ case and, taking into account failure by Hearts to cover the debt to HMRC, it appeared that administration of the club is the only option.

“We still believe that we should stay with our ultimate goal to defend the interest of the creditors of Ukio Bankas and sell the club to the appropriate investor as soon as possible. Thus, we want the administrator to be not only experienced but dedicated to football as well.”