Fan Buy Out Launched/BuyHibs/Q&A Answers

[bingo70]

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Just had a look at the Q&A posted by the BuyHibs crew. Seems to me there's a lot of marketing speak in the answers, very little if any financial know how seems to be apparent.

And they are expecting the bank and STF to forgive large parts of the debt - "for the benefit of the community". Right-o.

Is that not the deal Dundee utd and killie did recently?

Football debt us high risk so I'm sure I heard banks have an appetite to come to an arrangement that will get it off there books.

Happy to be corrected if what I'm saying isn't true or I've misunderstood what I thought I'd heard

[grunt]

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Wages to turnover is 30%?!?!?

Reported wages to turnover was 49% in the 2013 accounts, due to a combination of lower staff costs (£3.9m) and the highest turnover in five years. I expect that turnover will have fallen this year (financial year ended July 2014), so would expect the percentage to have increased again. What it is this current year is anyone's guess. Wages to turnover ratio for the last five published accounts was 61%, 68%, 69%, 60%, 49%.

[bingo70]

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Pretty sure Dundee Utd was a private arrangment, not sure about Killie but I think it was also.

Sorry, don't know what you mean?

Private arrangement with who? Was it not with the bank? That's what I thought buyhibs were trying to do?

[grunt]

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Great spot! thanks for that

changed.

I rather liked the idea of a Hibs Hostility section!

[offshorehibby]

As part of your proposals, Buy Hibs has stated that a dividend of up 10% would be offered to financial backers. Will this not take money out of the club into the private investor’s pockets?

This is the proposed (we will be revising downwards) that the CIC could return and we have included as a guideline for any potential investors that may be willing to provide a loan to BuyHibs and would require interest payments on their loan. This is not an investment opportunity for money makers. Investors will be Hibs people and we expect all monies to remain within the club.

This bit concerns me, why would we wanting to take on a loan (more debt)

[DarlingtonHibee]

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Sorry, don't know what you mean?

Private arrangement with who? Was it not with the bank? That's what I thought buyhibs were trying to do?

I think a small group of weathly supporters at Dundee United squared up the bank to save on interest charges etc...

Gut feel is the main shareholder at Killie wrote off afair bit .

Could be wrong though !

[Eyrie]

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Is that not the deal Dundee utd and killie did recently?

Football debt us high risk so I'm sure I heard banks have an appetite to come to an arrangement that will get it off there books.

Happy to be corrected if what I'm saying isn't true or I've misunderstood what I thought I'd heard

I suspect that their situations were different to our own. The bank could take one look at Hibs reducing the debt on schedule each year with Farmer as guarantor, and decide that there is no need to write anything off as there is no risk.

[SneakersO'Toole]

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No chance. It's this sort of information from folk who want to buy the club that makes me despair.

They could just be referring to the playing staff wages only, which would make it more believable.

[CropleyWasGod]

For the avoidance of doubt, the wages figure in the accounts includes all staff. That is football staff and admin.

The amount for football staff is not in the public domain. I do, though, remember the playing staff % being mentioned at the AGM in 2012. Can't remember if it was mentioned in 2013.

[Eyrie]

Thanks for the replies.

I'm confused though as to why a "10% dividend" rule is needed to allow the CIC to pay interest on a loan. Dividends are paid to shareholders, not to lenders. Unless I've picked this up wrongly?

[lord bunberry]

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Quote from Q&A

Only the current owners can approach the Bank. Without a level of debt forgiveness Hibs will have a very difficult future and that is regardless of the intentions of BuyHibs

1. So the Bank are just going to say - thats fiine don't worry about a few million - sure shareholders / bank clients will have plenty to say about that !!

2. CWG will keep me right, but Hibs have a clear timeline to pay of the remaining mortgages on the stands, which the bank are happy with - they know STF is there, so please explain why Hibs will have a very difficult future without BuyHibs ?

Has the bank not just allowed Killie and Dundee Utd to write off a large amount of debt?

[marinello59]

Thanks for the replies. It'll take me a while to digest that lot.

[DarlingtonHibee]

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Has the bank not just allowed Killie and Dundee Utd to write off a large amount of debt?

think a small group of weathly supporters at Dundee United squared up the bank to save on interest charges etc...

Gut feel is the main shareholder at Killie wrote off afair bit .

Could be wrong though !

[The Green Goblin]

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I think I am right in saying that you have since refused that invitation. (If that is incorrect, I will remove this post).

Can you explain why you did this? It doesn't seem like a helpful or progressive decision to me. (Apologies if I have missed an answer to this in your posts above). Thanks. GG

Bump.

[w pilton hibby]

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The banks did it for Dundee utd and killie did they not?

Nope. Dundee United debts were cleared by a group of fans and businessmen who paid £4million owed to Bank of Scotland.

http://www.dailyrecord.co.uk/sport/f...ee-utd-3132959

Kilmarnock sold the hotel and a couple of the directors cancelled existing loans to the club.

http://www.dailyrecord.co.uk/news/lo...tel-24-3429341

[bingo70]

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Nope. Dundee United debts were cleared by a group of fans and businessmen who paid £4million owed to Bank of Scotland.

http://www.dailyrecord.co.uk/sport/f...ee-utd-3132959

Kilmarnock sold the hotel and a couple of the directors cancelled existing loans to the club.

http://www.dailyrecord.co.uk/news/lo...tel-24-3429341

Cheers.

[silverhibee]

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Cheers.

And there is the couple who are clearing Aberdeen's debt of around £15m.

With the Owner "Stewart Milne Group" increasing his stake in the club with £4.5m.

[Sergio sledge]

I don't see why any bank would offer debt forgiveness when the value of the assets are roughly equivalent to/greater than the value of the loans and a clear timeline to pay the mortgages off. The club has £6.5m(?) mortgages, with ER and EM being worth at least that I would have said. This isn't 'bad debt' in the sense that debt far outweighs the assets and the debtor can't make the scheduled payments. It is a bit of a stretch for buyhibs to expect, and seem to budget for, the bank forgiving some of the debt.

[DC_Hibs]

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Nope. Dundee United debts were cleared by a group of fans and businessmen who paid £4million owed to Bank of Scotland.

http://www.dailyrecord.co.uk/sport/f...ee-utd-3132959

Kilmarnock sold the hotel and a couple of the directors cancelled existing loans to the club.

http://www.dailyrecord.co.uk/news/lo...tel-24-3429341

Its common knowledge that the bank takes a "haircut" in these instances by agreeing a reduced figure making it worthwhile for both parties.

BuyHibs are hoping for the same although the bank's chances of being repaid and security in respect of our loan mean it might not be so easy to achieve.

[ancient hibee]

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Its common knowledge that the bank takes a "haircut" in these instances by agreeing a reduced figure making it worthwhile for both parties.

BuyHibs are hoping for the same although the bank's chances of being repaid and security in respect of our loan mean it might not be so easy to achieve.

The bank was repaid at Dundee-it wasn't the bank that was owed the money at Killie.The bank certainly did not lose out in either case.

[Caversham Green]

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As part of your proposals, Buy Hibs has stated that a dividend of up 10% would be offered to financial backers. Will this not take money out of the club into the private investor’s pockets?

This is the proposed (we will be revising downwards) that the CIC could return and we have included as a guideline for any potential investors that may be willing to provide a loan to BuyHibs and would require interest payments on their loan. This is not an investment opportunity for money makers. Investors will be Hibs people and we expect all monies to remain within the club.

This bit concerns me, why would we wanting to take on a loan (more debt)

That concerns me too. Dividends are a voluntary sharing out of profits made - i.e. they don't ever have to be paid - interest is a compulsory charge on profit, paid every year thereby reducing cash availability. The blurring of lines between the two is worrying. Also, in those circumstances 10% can only refer to 10% of investment - that's five times the rate the club is currently paying. It needs to be revised down a long way.

On the matter of other clubs settling their debt, my opinion is that the banks saw those debts as vulnerable because they were secured on assets of diminishing value and the clubs themselves were close to insolvency. For those reasons the banks were happy to give a discount for immediate cash - they didn't just write off the debts for no reason. In our case the debts are secured by personal guarantee so if the club was to fail the bank would get their money anyway. That means they may look less favourably on a discount for immediate payment.

On a minor matter, they've misunderstood my question about converting the existing company to a CIC - converting the holding company needs a problem before it can be a solution, I was suggesting converting Hibernian FC Ltd to a CIC - that's the company that actually owns all the assets and fields a football team and the one whose share capital they're proposing to buy. If that was a CIC ER and EM would be locked into the club. They'd have to sell off the land a EM before conversion if they don't want to keep it though.

[Saturday Boy]

This whole thing reminds me of the French epigram, "plus ca change" but in this case, it appears that the more things stay the same, the more they change, if you know what I mean.

[ancient hibee]

Brian Kennedy was hoping to get 3%p.a.from Rangers but was prepared to get none.The use of 10% is way above any kind of return available for a loan shows woolly thinking at best or ignorance at worst.There should be no mention of a dividend in any shape or form.What security would be offered to those making loans?Don't think that possibility has been mentioned anywhere.

[Leithenhibby]

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I agree totally

Unfortunately these two posters are going beyond critique of the proposal and attacking the credibility and honesty of the volunteers

That is where I draw the line and question their motives. One is a long time Petrie supporter. The other has a personal axe to grind.

I am entitled to stand up for people I value

Is that not the case for every Hibernian fan?..... We are "ALL" entitled to an opinion and some may not like what the other one says/claims, but we just have to suck it up........

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They're not volunteers, Gogs. As far as I can see they are putting money in - investors.

It's right that they come under scrutiny. Look at The Rangers mess, Craig Whyte should have come under more scrutiny than he did, personally I don't want Hibs fans to make the same mistake.

FWIW, I thought your comments were uncalled for and more than a little insulting.

It's imperative, as fans, we leave no stone unturned

EDIT: This needs to be right for our club....

[Andy74]

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I agree totally

Unfortunately these two posters are going beyond critique of the proposal and attacking the credibility and honesty of the volunteers

That is where I draw the line and question their motives. One is a long time Petrie supporter. The other has a personal axe to grind.

I am entitled to stand up for people I value

Too much of this from the people involved is a big part of the reason there is a lack of credibility. Recent owners at other clubs show that if anyone wants to be a director of a company owning Hibs they better stand up to scrutiny.

[Andy74]

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Thanks for the replies. It'll take me a while to digest that lot.

It won't really!

[grunt]

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What will be the model of decision making at the club, and how will this work in practice? In short, what influence will the fan owners have?

Nothing would change from current decision making process with each member of the Board having a vote. However a number of Directors would represent the Fans; with the views of fans being collated through voting (one member one vote).

So a fan with 1 share will have the same voting rights as a fan with 1000 shares?

[Ronniekirk]

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It won't really!

Read it all ,and haven't come away thinking this is well thought through ,am not optimistic this is going to be the catalyst for sustainable change but it's early days yet. I am someone that would be prepared to pay something monthly but at this stage there isn't enough substance to make me pledge money at present .
Was Green Goblins question answered about whether buy Hibs have turned down a meeting with the Club ?

[IanM]

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Read it all ,and haven't come away thinking this is well thought through ,am not optimistic this is going to be the catalyst for sustainable change but it's early days yet. I am someone that would be prepared to pay something monthly but at this stage there isn't enough substance to make me pledge money at present .
Was Green Goblins question answered about whether buy Hibs have turned down a meeting with the Club ?

It was in yesterday's news - the response was that they asked to meet with the 'owners' and they got a reply saying the 'board' want to talk to them, which they refused.

I'll try find the link, think it was in the evening news though, i read it on twitter

[Caversham Green]

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It was in yesterday's news - the response was that they asked to meet with the 'owners' and they got a reply saying the 'board' want to talk to them, which they refused.

I'll try find the link, think it was in the evening news though, i read it on twitter

The two aren't mutually exclusive though, and they would undoubtedly have the necessary contact with STF at the appropriate time if the sale was to proceed. A meeting with the board of the company they're proposing to take over - together with a director of the prospective selling company - would be far more productive at this stage than a meeting with the non-participating 'owner', particularly when the board have been formulating their own plans for a sale. Declining this meeting has done nothing but harm to their cause.