Hearts saved: Happy ending to painful saga

Fans meet at Tynecastle to discuss the club's options. Picture: Joey Kelly
Fans meet at Tynecastle to discuss the club's options. Picture: Joey Kelly
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THE new chairwoman elect of Hearts has hailed the deal that will see her take over the reins of Tynecastle the “beginning of a new era”.

Businesswoman Ann Budge claimed “the end was now in sight” just hours after a deal to handover control of Hearts was finalised with creditors Ukio Bankas – a landmark development that should see the Gorgie club exit administration.

It follows last week’s agreement with UBIG to buy up the firm’s 50 per cent holding in Hearts.

Ms Budge, a millionaire IT guru, is expected to become the club’s new owner following Vladimir Romanov’s tumultuous nine-year reign.

It is thought she purchased 79 per cent of the club’s shares for around £2.5 million.

In a statement released on the Hearts official website, she said: “I am very much looking forward to the beginning of this new chapter in the club’s history.”

But she warned fans that their backing would be crucial to ensure the club survives until the end of the season when it is hoped the share transfer and stadium security will be completed.

Remaining hurdles appear to be the signing of the sale and purchase agreement and a cooling off period for UBIG’s 50 per cent stake which elapses on April 27 – the day of the Edinburgh derby at Easter Road.

Administrator BDO has remained tight-lipped about the tense negotiations brokered in Lithuania amid fears a misplaced comment could scupper a months of talks.

But the Evening News has spoken to sources close to the discussions who have revealed the frenetic roller-coaster journey that has steered Hearts to the brink of survival.

Insiders have revealed:

• They believed a deal with the Lithuanians was all but dead as late as last week;

• First Minister Alex Salmond made a personal plea to administrators;

• Hibs supporters “distracted” Lithuanian creditors by bombarding them with e-mails;

• The “unconditional” support of Hearts fans had helped steer talks to agreement.

It is understood negotiations between the two sides ran late into Tuesday night, with BDO chiefs still fretting about whether a deal would ever be signed.

The relatively new legal system in Lithuania – with muddy processes and jurisdiction disputes – has been cited as slowing progress but the chief stumbling block was foreign creditors believing a greater return could be realised than the £2.5m on the table from Ms Budge.

BDO go-betweens were tasked with persuading creditors that the deal was “best value” and a fair price for the club and assets.

One source said: “Because things have been so fluid and changing on a daily basis, you went from one day thinking ‘this isn‘t going to happen’ to next day thinking ‘it’s back on track’. There’s been huge roller-coaster ups and downs the whole way through with liquidation looming the whole time.”

Agreement for UBIG’s 50 per cent holdings in Hearts was sealed on April 7 leaving unresolved talks with Ukio Bankas for their 30 per cent share.

But the News has been told UBIG’s main creditor had flatly refused the deal initially and had to be persuaded with pressure from UK Ambassador to Lithuania David Hunt.

And it is understood First Minister Alex Salmond – a Hearts supporter – contacted BDO from Scotland Week in New York to offer encouragement and hear how talks were progressing.

Uncertainty tainted the negotiations right up until the deal was signed and it is believed “rogue Hibs fans” had been “a distracting” influence by “writing directly” to the Lithuanians accusing BDO of fraud and suggesting assets had been heavily undervalued.

A source said: “That was difficult because, unfortunately, it was taken seriously. It was a nuisance value because BDO had to answer those things and even had to find out who were writing them.”

Eleventh-hour bids by Bob Jamieson and Pat Munro were also said to have unsettled the Lithuanian camp.

In a statement, administrator Bryan Jackson of BDO praised the “patience and forbearing” of Ms Budge and thanked creditors UBIG and Ukio Bankas for agreeing to the deal.

Gintaras Adomonis, bankruptcy administrator of Ukio bank, said: “The deal is very significant for us in several aspects. For the fans of Hearts this has been a very emotional and difficult period and we are happy that this has now been resolved in an amicable way.”

BUDGE CALLS FOR A FINAL PUSH

Ann Budge, director of BIDCO 1874 and Hearts chairwoman elect, said: “This is the beginning of a new era for Heart of Midlothian Football Club.

“I would personally like to express my gratitude to the fans for their support and I am confident that together we can rebuild Heart of Midlothian FC to once again become one of the greatest clubs in the country. We are not across the line just yet but this is a very positive step. The fans have been magnificent throughout but I would urge them to keep backing the team during the last few games to ensure we get to the end of the season. The end is now in sight and together I am confident we can achieve our target.”

Analysis

By Neil Patey, Partner at Ernst & Young and football finance expert

This was the last major hurdle.

As Bryan Jackson pointed out there is this cooling off period and it’s not impossible that one of the creditors could object and prompt some sort of legal wrangling. But I would say that is unlikely.

Fingers crossed the deal is pretty much done. The sale and purchase agreement should be a formality between Ann Budge and Bryan Jackson the administrator, so I don’t see that being a major stumbling block.

The decision has paved the way for the ultimate exit from administration in a fairly short period.

It’s been very complicated dealing with two separate administrators. Lithuania is a relatively new country in terms of independence from the Soviet Union and some of the laws have been formulated fairly recently. From a legal perspective it was hugely complicated and at a time when the financial position of Hearts was pretty severe. I think BDO did a very good job managing the club and working with the cash resources they had during a pretty prolonged period of time.

I have not seen them come more complicated than this.

You start with a clean slate. You start with no debt which is very positive. On the negative side of the balance sheet you are relegated to the Championship and have a pretty lean junior squad that you need to build back up to try to get promotion over the next season or so. That is going to require a cash injection. Ann Budge has said resources from her and the fans’ ownership scheme will provide those funds.