HEARTS achieved the biggest result of their season so far at Tynecastle yesterday as they took a major step towards emerging from administration.
They talk about must-win matches in football. Well, the Jambos could ill-afford yesterday’s creditor and shareholder meetings in the Gorgie Suite to go against them. Thankfully, for their long-suffering fans and staff, they got the aggregate outcome they were looking for.
From their creditors’ meeting, staged at 10am, they needed 75 per cent of their creditors to vote in favour of a CVA proposal of £2.5 million lodged on behalf of the Foundation of Hearts, the club’s prospective new owners. They got 87 per cent voting in favour. One up by half time, if you like.
Then, at noon, it was the turn of the shareholders to vote on the CVA proposal. Things could hardly have gone better on that front, with 100 per cent voting in favour. UBIG, a major creditor and majority shareholder, abstained from voting on both as the bankrupt Lithuanian investment firm, currently in the hands of its own administrators, awaits a clearer picture of its own situation, which is unlikely to emerge until the new year.
Bryan Jackson, Hearts’ administrator, admitted the day couldn’t have gone much better and was adamant that UBIG’s abstention was a positive rather than a negative. “It is a significant day for Hearts and good news for the club. I didn’t want to consider what Plan B might be because there wasn’t one really. It is a positive day for Hearts though.
“I was grateful to UBIG for their abstention and there are changes to the legislation in Lithuania which complicate matters further. UBIG are a 50 per cent shareholder and they have to report to their creditors and we are asking them to vote on a CVA document.
“It was positive to get them to abstain and they understood by abstaining that we could get this through today. Originally they wanted more time, but we managed to talk them out of that on the basis of costs and deadlines.
“We would have lost 14 days if we hadn’t. Whilst we have the CVA in principle, the whole thing will fall through if we cannot agree the sale and purchase agreement of the 50 per cent shares. There was no prejudice to them in allowing us to vote this through and it meant that we could move on with the process.
While he admitted that, after five months of uncertainty, yesterday was a breakthrough day for Hearts, Jackson was eager to stress that there is still plenty work to do in order to safely pass the club into the hands of Foundation of Hearts. The main hurdles before they can exit administration are securing the UBIG shares and then going through the sale and purchase agreement. He admitted that manager Gary Locke’s hope of having the club out of administration by January and therefore being able to sign players in the next transfer window is likely to be dashed.
“The chances of Hearts’ survival are better today than they were yesterday,” said Jackson. “It is a step in the right direction, but there are more obstacles to overcome. We need to sew up 50 per cent of the shares which is the main obstacle and complete the sale and purchase agreement, but the deal is a difficult and complicated process.
“All sorts of values were bandied about previously, but in Lithuania they have to convince their creditors that this is the best deal in town. We have more obstacles to get that sale and purchase agreement in place and confirmed.
“In terms of getting this over the line then I am in a more positive frame of my mind.
“We have 28 days in which objections can be lodged, but we do not foresee any objections and we are hopeful of submitting this proposal to the court as early as this afternoon.
“We can start advancing matters within those 28 days. Going into January or February we would hope to be at an advanced stage. Aspirations of this being finished in January are just not realistic in terms of legalities and complexities of the process in Lithuania.
“It has taken us so long to get to this point and we cannot get carried away and think that it will all be finished next month. It is a different country with different legislation and two major creditors and we need to be realistic about timescales.”
Jackson’s chief objective since taking control of Hearts in June has also been to ensure the club’s survival on a day-to-day basis and to that end, he believes they are in a strong enough position to get through the winter months even without the Foundation’s intervention. The administrator, however, was keen to stress that, if the impasse drags on beyond February, then things could start to get “hairy”.
He said: “When the money runs out will depend on how much the supporters give us, but, on the basis of what we have now, then I would say things will get a bit hairy going into February and March. We have enough funding to get to March, but once we get past that then we would be forced to start selling next season tickets for the following season to raise money, and that is a very difficult thing to do. There are legalities to drawing down money for games that haven’t been played – you would probably need to change the terms and conditions if you ask them to buy something they may not get. It is like a donation when you get to that stage.
“We have been asking and asking, and I know it is difficult to keep asking fans for support. But the reality is that I don’t know what lies ahead and, if we start to run out of time, then I have nowhere else to go. I have always said this is a question of survival, and this is still the case. We might effectively need a loan from fans, although things will be clearer when the sale purchase agreement moves forward.
“We will be working closer with the Foundation of Hearts, planning ahead and – if we are optimistic – looking at cash flows together. That crossover period will help us to look at timing and cash flow. If we can get out of administration earlier our cash might be okay, if we get out later it might be okay as long as we have windfall, or it could be reverse.
“I would like supporters to donate directly to the club because I am concerned about today. The Foundation is the future and will require their own cash flows and will have to make their own plans. At the moment I am looking for all the assistance I can get with our cash flow. My problem, to some extent, is the unknown. Only so much is within my control. We will push on as much as we can and advance towards the sale purchase agreement, but I can’t predict how long it will take for events in Lithuania to proceed; different country, different procedures.”