HEARTS administrators BDO will push to complete the club’s transfer of ownership on Monday if there is no objection from Lithuanian creditors before then.
Their hope is to have a sale and purchase agreement signed and Ann Budge in control at Tynecastle by the end of next week, although the situation remains delicately poised.
Creditors at Ukio Bankas Investment Group (UBIG) have until Sunday to object to the company’s 50 per cent stake in Hearts being transferred to Budge for a sum approaching £100,000. Provided the “cooling-off” period ends without oppositon to the deal, the takeover can proceed.
A Ukio Bankas creditors’ committee has already agreed to release the bank’s 29.9 per cent shareholding in Hearts, with no cool-off needed for that arrangement. All shares will be added together and processed in one transaction to Budge’s BIDCO 1874 holding company via BDO’s lawyers. Then the £2.5million Creditors’ Voluntary Arrangement (CVA) to take Hearts out of administration can be finalised.
BDO will attempt to accelerate that process on Monday morning in the hope that the sale and purchase agreement can be signed and delivered. That would sever the last of Hearts’ ties to eastern Europe after almost a decade of Lithuanian rule in Gorgie.
The plan is for Budge to run the club in the interim through a management agreement with BDO until the formal process of exiting administration is completed.
Different jurisdiction between UK law and Lithuanian law makes instant progress more difficult as lawyers involved try to satisfy the demands of their counterparts in the Baltic state. Both UBIG and Ukio remain sensitive to anyone involved in the deal speaking to media in Scotland about the situation so, from Hearts’ perspective, it is important the next few days pass without any hiccups.
Cash to keep the Edinburgh club operating is due to run out by early next month, so getting Budge in as soon as possible is vital. Season ticket sales would be able to commence quickly, bringing in vital cash for the summer months when there are no matches to generate income. As soon as the sale and purchase agreement is done, BDO can effectively disappear into the background and allow Budge to assume control. Exiting administration would then become a matter for the Court of Session in Edinburgh, although it would still take several weeks.
Long-term, Budge intends to pass the club on to the united fans’ group, Foundation of Hearts, which is backed by cash contributions from over 8,000 members. A legal contract for that procedure to happen within five years is currently being finalised. In short, Hearts are on the very cusp of a new era which could take off with Budge moving into Tynecastle within a matter of days if things progress smoothly.
“The sale and purchase agreement is critical,” explained Ian Murray, the Foundation of Hearts chairman.
“This would be the starting gun for moving forward with BIDCO getting into the club and starting preparations for both next season and the future. There are still a number of legal issues to be fully resolved before Hearts can officially come out of administration but these should not preclude a management agreement being put in place.
“BIDCO and Foundation of Hearts are also close to concluding our legal agreements and we are working on finalising how we move forward in the stabilisation and transition phase of the club. It’s an exciting time for everyone associated with Hearts and everyone is working very hard to get this concluded as soon as possible.”
BDO have been liaising with Budge for some time on all matters relating to Hearts but only have enough money to keep the club running in administration until early May at the very latest. The imminent drying up of cash prompted Bryan Jackson, one of the company’s senior partners, to fly to Lithuania earlier this month to push through the above deals with administrators at both Ukio and UBIG.
Jackson should not need to return to eastern Europe to complete the sale and purchase agreement. It is expected to be done through lawyers. The only scenario where he may have to return would be in the event of an objection from any creditors at UBIG before Sunday’s end to the 20-day cool-off.
Away from the political wrangling over the club’s future, Hearts play Hibs at Easter Road on Sunday in the Edinburgh derby as the cooling-off period comes to an end. A 15-point deduction last summer for entering administration has been pivotal to their relegation to the Championship for next season. Yet, as Murray alluded, there remains a fair degree of optimism amongst supporters that their future can be bright and prosperous. A fourth win over their Capital rivals this season would only enhance that feelgood factor.
Much depends on the next few days. UBIG’s creditors are not expected to object to the share transfer, but those at Hearts know from experience that Lithuania can have an unfortunate habit of throwing a spanner in the works. All concerned will hope they can get to Monday and proceed from there with the long-term aim of being governed by their own supporters.