Hearts beating again after ‘great day’

Today's meeting at Tynecastle will decide the future of the club. Picture: PA
Today's meeting at Tynecastle will decide the future of the club. Picture: PA
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Hearts have today taken a major step towards exiting administration after the club’s creditors and shareholders voted in favour of a Company Voluntary Arrangement (CVA).

In a nerve-jangling day for supporters, the club’s major creditors showered relief over Gorgie by backing a 
£2.5 million cut-price Company Voluntary Agreement (CVA) deal that moves it one step closer to a debt-free future and a bright new dawn under the stewardship of Foundation of Hearts (FOH).

An administrator for one major shareholder, Ukio Bankas, revealed “a substantial part of emotion” had coloured their decision and praised the titanic fundraising efforts to keep the club alive.

FoH chairman Ian Murray insisted there was a “long, long way to go” but hailed the 
milestone as “a great day for the club”.

Finance experts now believe the biggest hurdle to survival has been cleared but the club must wait until early 2014 to discover the fate of parent company UBIG and its own 
creditors meeting.

Like UBIG, Ukio Bankas is a major shareholder, owning around 29.5 per cent of the Jambos as well as a floating charge on Tynecastle but are also in administration.

But before the club can exit administration, they must now secure UBIG’s stake, then agree a sale and purchase agreement with the firm’s administrators before completing the whole deal before the money runs out.

Failure to appease its liquidators could scupper the tentative Hearts deal and any delay is likely to propel the beleaguered club to into fresh financial peril.

Yesterday, trouble-shooter Bryan Jackson of BDO revealed that “things will get a bit hairy going into February and March” as funding reserves run low and urged supporters to invest in match day tickets and, in particular, the lucrative 
hospitality packages. If the CVA deal had failed, the BDO partner said it would have been “difficult to see anything other than liquidation” for Hearts because there was “absolutely no other feasible option” – no “Plan B”.

He said: “I accept there are plenty of obstacles ahead in terms of this club’s survival, I am optimistic in the sense that our only realistic hope is proceeding – and we’ll try to get this over the line.”

To bridge any cash shortfall after March, Mr Jackson said they could be forced to start selling next year’s season 

And he issued a plea to fans: “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.”

FOH chairman Ian Murray urged continued financial backing from the fans but insisted there was now light at the end of the tunnel.

He said: “We are only here today because the supporters have backed the club and the Foundation. All we can continue to say is ‘thank you’ to those who have contributed to the Foundation of Hearts and urge anyone who hasn’t done so yet given the incredibly good news today and the fact that the finishing line is now in sight.

“These contributions must continue for the foreseeable future until we can make sure the club’s on a sustainable financial footing.

“There’s a long way to go but today’s a good start.”

Today, Hearts supporters hailed what appears to be the beginning of a new post-Romanov era and praised administrators BDO for driving forward the deal.

Lord George Foulkes, a former Hearts chairman, said the CVA was a “monumental step” but insisted there was a “race against time” to transfer ownership before the money ran out.

He said: “We could have been staring down the barrel of liquidation so it was a pivotal day.

“I don’t think there will be any Champagne corks popping and they shouldn’t be uncorked until everything is completed but, nevertheless, we can be happy that we are moving a significant step in the right direction.”

Steven Kilgour, general secretary of the Federation of Hearts Supporters Clubs, spoke of his “huge relief” and said he would welcome stability at the club. “It’s the survival of our football club and hopefully we can get a fresh start and move onto bigger and better things.

“The Romanov era was characterised by extreme highs and extreme lows, a wee bit of sanity is what we are looking for now.

First Minister Alex Salmond added his support: “Hearts fans have been anxiously following events at the club and today’s news is a welcome step forward. Other clubs have survived the same difficult situation and that’s what I fully expect Hearts to do.”

The worst is over,claims finance expert

Football finance expert Neil Patey said the deal at Tynecastle – in which 87 per cent of the creditors and 100 per cent of shareholders passed the CVA (discounting UBIG who abstained) – saw the “largest hurdle jumped”.

A 30-day cooling off period has now begun where objections can be raised before UBIG, Hearts’ majority shareholder, sit down with their own liquidators.

Mr Patey, who brokered the deal that installed Roman Abramovich as Chelsea owner in 2003, said: “This Company Voluntary Agreement is intertwined with ownership, without that the Foundation wouldn’t be able to get their hands on shares and would have to go via a liquidation route. The Foundation is saying ‘we will give you £2.5 million as long as the major shareholders agree to transfer their shareholdings to us for £1’. That £2.5m will go to Ukio Bankas.”

He added: “I think we

have jumped the largest hurdle, normally that would be at the end but we are in a slightly strange situation where we have two other liquidators involved here. I think BDO administrators have done fantastically well to get a deal, to get the two major creditors on side agreeing or abstaining which is the same thing. They have the CVA agreed but we can’t rule out the fact that no one knows what might happen at the creditors meeting of the liquidation process in Lithuania. You can’t rule out the fact that a turn of events might occur so UBIG decides not to transfer its shares to Foundation of Hearts at which point the whole deal falls apart and you would have to start again or it disintegrates.

“But you would have thought, given the approach from UBIG so far in abstaining in the CVA, that they are minded to transfer the shares and this is more of a rubber-stamping exercise but it would be dangerous to second guess a Lithuanian liquidator.”

He added: “I struggle to see why liquidators for UBIG wouldn’t rubber-stamp it because, in reality, if they had blocked the CVA, or refused to transfer the shares it forces Hearts effectively into liquidation and they would get nothing from that either.

“All the money from liquidation would go to Ukio Bankas so they are not losing anything. They are happy with the CVA to go through. I think there is still a hurdle remaining but frankly I think the

major hurdle has been cleared and all credit to both the Foundation and to BDO.

“The CVA deal that was agreed needs the approval of the creditors, which has happened, and based on the fact that £2.5m is

going to Ukio Bankas as the secured creditor.”