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Club Reveals Debt Information

Club Reveals
By Chris O'Brien
May 4 2005
Interesting news about foreign investors in Cardiff City have been revealed. The news follows a letter written by Labour Welsh Assembly member Leighton Andrews asking for answers regarding the reported £30million debt.
The state of affairs with Cardiff City

The state of affairs with Cardiff City's finances have taken another twist as the soap opera continues. Labour Welsh Assembly member Leighton Andrews, a shareholder and season ticket holder at the club, has received an interesting response to queries he asked the club via letter regarding our potentially lethal financial circumstances.

Credit must go to the club for replying to a detailed letter from Mr.Andrews that asked detailed questions on whether Sam Hammam's company Rudgwick Limited are still receiving management fees, what rates of interest the club is paying on its debts and a number of other questions in an attempt to get an insight in what really his going on behind the scenes at South Wales' number one football club. The results make interesting, if not even more confusing, reading for supporters as the anguish continues both on and off the field.

The club wrote back to Mr Andrews informing him that management fees were no longer being paid to Rudgwick Limited, simply because the club could not afford to do so. More interestingly, it has emerged that the club owe much of the £30million debt to overseas investors in the form of loan notes. Stipulations with the loans included favourable 7% interest rates per annum with a repayment date of 2011.

The plot is thickening day by day, and each time more information is unveiled to supporters the mist seems to get thicker. The fact remains that Cardiff City are in a dire situation both on and off the pitch. Player cutbacks over the summer now look essential, whilst the new ground project would seemingly remain a must if the club is to avoid administration or even the threat of bankruptcy.

Well done to Mr Andrews on contacting the club, and his letters can be seen below with expressed written permission from the Welsh Assembly member.

Letter to the Club from Mr Andrews AM:

I am writing as a shareholder in Cardiff City Football Club (Holdings) Ltd to ask for some information. I am also writing on behalf of other shareholders who have contacted me.

As a longstanding supporter, and as a season ticket holder, I wish the club well in its continuing efforts to achieve a satisfactory resolution to the stadium situation. The new stadium plan, if brought to fruition, will provide a strong base for the club.

I have read with interest the accounts recently released for Cardiff City Football Club (Holdings) Ltd, Cardiff City Football Club Ltd, and Rudgwick Ltd to the end of May 2004. I note what the auditors say about the importance of the stadium project in the Going Concern section of their report.

I also note that all three financial statements refer to plans by the Directors to arrange a financial restructuring of the company after May 2005. I would be grateful if you could advise me whether that still remains the plan.

I would also be grateful if you could advise me who holds the £24 million in loan notes referred to in Post balance sheet events section of the Directors’ Report. I ask this since the only significant asset of Cardiff City Football Club (Holdings) Ltd is its stake in the club. In particular, I would like to know whether the loan notes are secured or unsecured, and whether the holder or holders of the loan notes is/are a ‘connected person’. I would also like to know what are the terms of the loan notes, and what rate of interest is being paid on them.

I would be grateful if you could advise me whether the club is still paying a management fee to Rudgwick Ltd, and if so, what has been paid since 31 May 2004.

Please could you also inform me what rate of interest is being paid in this financial year by the club on its loan from Rudgwick Ltd.

I would be grateful if you could supply me with minutes of all board meetings of Cardiff City Football Club (Holdings) Ltd since July 31st 2003.

I would also be grateful if could advise me when the 2003 accounts of Cardiff City Football Club (Holdings) Ltd were sent to shareholders, as I do not appear to have received them.

I would be grateful if you could advise me whether any AGMs or EGMs of Cardiff City Football Club (Holdings) Ltd have been held since 31st July 2003. If so, please could you forward the Minutes, and advise me when shareholders were told about these.

Please could you also advise me when the AGM of Cardiff City Football Club (Holdings) Ltd to receive the Financial Statements for the year to 31 May 2004 will be held.

Finally, I would be grateful for a copy of the share register of the club.

I believe that there are many fans who feel that the more information that the club is prepared to share, the greater will be its credibility in dealing with the difficulties that it currently faces.


Yours sincerely,

Leighton Andrews AM


Letter From the Club to Mr Andrews AM:
 

Dear Mr Andrews,

Thank you for your letter of 10 March.

The concerns which you express in your letter are very understandable and the Directors are re-assured that your concerns are well meant and that you do wish the Club well in its continuing efforts to achieve a satisfactory resolution to the Stadium situation. The Directors hope that both you and other long standing Supporters like yourself also wish the Club well in its continuing efforts to overcome the recent difficulties which have now been widely reported in the Press. The reference in the accounts to a financial restructuring does of course refer to such difficulties; various alternatives are being considered and more details will be released in due course if the Board considers such re-structuring to be necessary.

With regard to the Loan Notes, these were subscribed for last year by non UK resident investors who, by so doing, have expressed their confidence in the Club, the Club’s current Management and in the Stadium project. The Club is not obliged to advise Shareholders of the names of the party or parties who hold the Loan Notes but I can advise you they are independent parties. The Loan Notes were issued by the Club and not by Holdings and the monies raised were used to repay the Club’s substantial indebtedness to Citibank. The Loan Notes are unsecured and have been issued at a fixed rate of 7% per annum with a repayment date in 2011 and are, in the meantime, redeemable by the Club. The Club’s intention is to make the Stadium project successful and to redeem the Loan Notes as soon as possible. The Club is satisfied that the terms of the Loan Notes are favourable to the Club and the Club’s Board does appreciate that it was only through the good offices of Rudgwick Ltd that such favourable terms were achieved.

You have inquired about two commercial agreements namely the Management Agreement between Rudgwick Limited and the Club and the loan agreement between Rudgwick Limited and the Club. Neither of these agreements are relevant to the accounts of Holdings of which company you are a Shareholder. Nevertheless, I can advise you that there is still a Management Agreement between Rudgwick Limited and the Club, but the Club has not been able to make payment of the Management Fee for some considerable time due to cash flow difficulties. The rate of interest on the Loan from Rudgwick to the Club was at market rate. The Loan was unsecured and, I believe, has been repaid, but I will check on this.

Due to the considerable pressures which the Stadium project has put on the respective Managements of both Holdings and the Club, the approval of Holdings’ 2003 and 2004 Accounts has been delayed and the Board is therefore, proposing to call an AGM this Summer in order to lay before the Shareholders, for their approval, Holdings’ Accounts for the years ending 31 May 2003 and 31 May 2004.

Shareholders are not entitled to see or to be provided with minutes of any Board Meetings but they are entitled to see and to have copies of the minutes of any AGM of companies of which they are shareholders and, therefore, if you so request, copies of the Minutes of the Holdings’ AGM to be called this Summer will be sent to you after the AGM.

You have asked for a copy of the Share Register of the Club. I am not sure that is what you actually want since the Club is a wholly owned subsidiary of Holdings. As a shareholder in Holdings you are entitled under the Companies Acts to receive a copy of the Share Register of Holdings and whilst the Company is entitled to make a charge for supplying a copy of the Register I have been asked to send a copy to you, on this occasion, free of charge. However, if other Shareholders start asking for copies of the Share Register then the Company reserves the right to make a charge for providing any such copies. I will send your copy of the Register onto you just as soon as I receive my updated copy from the Management.

I note what you say in the penultimate paragraph of your letter and I trust I have been able to answer your questions to the extent that I am able to do so and, of course, you will have every opportunity at Holdings’ AGM to ask questions about Holdings’ Accounts for 2003 and 2004.

Yours sincerely,

(Signed)

Peter Lloyd-Cooper
Company Secretary

 

 

 

 

 

 

 

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