Championship football club has £2.7m debt wiped

Wednesday 8th June 2011

A major creditor for a Championship football club has swapped part of its debt for equity and a stronger presence on the club’s board.

Mike Hall, co-owner of Cardiff City creditor PMG, has rejoined the club’s board as a director after an agreement between his firm and the football club’s Malaysian backers.According to the South Wales Echo, PMG has turned a “significant sum” of owed debt into equity.A statement on the club’s website went on to say PMG – a property firm owned by Mr Hall and Paul Guy – also backed the decision to hire forensic accountants to examine paperwork dating from former owner Sam Hammam’s time in charge.It said: ‘As a result of a series of meetings and given the undertakings and plans by the Malaysian investors, PMG have agreed to convert a significant amount of their debt into shares while also agreeing a new payment plan which will improve the balance sheet.‘As part of the agreement Mike Hall will join the Board and will work with the Malaysian investors to address the key historical issues facing the club, namely Langston. PMG fully endorse the stance taken by the Board in appointing forensic accountants investigating Sam Hammam and his business dealing whilst Chairman of Cardiff City Football Club.’In May 2010, PMG converted £300,000 of money owed into 1,912,046 new ordinary shares and restructured the balance owed to be repayable by September 30, 2013.Mr Hall told the South Wales Echo: “Paul and I have restructured the plan and turned a significant sum into equity to back the Malaysians going forward, which will hopefully secure the future of the club.“We’re looking forward to working hand-in-hand with the Malaysians and are delighted to restructure the debt and solve what was an ongoing problem for the club.“At the end of the day I’m a fan – I’m interested to see who our next manager will be, which players we will sign and I want us to do what Swansea did.”At the time, it was said a further £2.7 million of the PMG loan could be converted into shares by notice in writing to PMG up to December 31, 2011.It is not clear how much of that £2.7 million has now been converted and seen Mr Hall appointed to the board.Keith Morgan, a football finance expert, said: “It is likely to be at least £2.7 million of the £9 million they are owed, or just as likely to be more. It may be they have extended the deadline for that debt to be paid as well. They are significant shareholders going forward, which suggests they are in it for the long term.“And the only way they will get any benefit from those shares is if they get into the Premier League – otherwise they are worth the square root of nothing.”
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Posted in: Championship,football,wiped

Championship director caught up in fraud scandal

A director at a Championship football club has been arrested as part of a major fraud investigation.

Alan Whiteley, a director at Cardiff City, was arrested and suspended as a partner at M&A Solicitors on Thursday, the Guardian reports.

The company also suspended a second partner, Eric Evans, 65, from Abergavenny.In a statement, M&A Solicitors said Whiteley and Evans had been suspended with immediate effect.

“This action arises from a single transaction involving a client of the firm that is under investigation by the Serious Fraud Office,” the statement said.

“The firm acted diligently by referring matters to the authorities and the Serious Fraud Office’s investigation follows on from our referral.

“We are co-operating with the Serious Fraud Office’s investigation and due to the ongoing nature of that investigation we are unable to provide further information at this time.

“We wish to reassure our clients that this is an isolated incident.

“We are committed to providing our clients with the best service possible, and we are working with clients to ensure that business will continue as normal.”

On Wednesday, the SFO said it had searched seven residential properties, including five in South Wales, one in London and one in Birmingham.

One business premises in South Wales was also searched.

The operation was conducted with the assistance of South Wales Police, Gwent Police, the Metropolitan Police and West Midlands Police.

Whiteley, 47, from Bridgend, was appointed company secretary of Cardiff City in 2006. The investigation has no connection to the Championship promotion contenders.

A Cardiff City spokesman told WalesOnline.co.uk: “We are aware that a director of Cardiff City Football Club is under investigation into a matter that is totally unrelated to the club. While the investigation is ongoing it would be inappropriate to make any further comment.”

The suspensions follow an investigation by the SFO which involved more than 90 investigators and police officers from several different forces.

The SFO said five people were arrested on suspicion of conspiracy to defraud in relation to the sale of four mining sites in South Wales.

It said those arrested were three men, aged 65, 36 and 31, in South Wales, a 47-year-old man in London and a 28-year-old woman in Birmingham.

They were interviewed and released on bail pending further inquiries.

M&A Solicitors, the law firm Whiteley established in 1999, is one of Wales’ largest commercial law firms.

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Posted in: caught,Championship,director,fraud,scandal