HCST Name Change Statement

[Obadiah]

The SMC has never been profitable, there is not nearly enough security for that deal to be done under normal circumstances, I suspect that it only happened due to Bartlett's dodgy mate at RBS in Essex.

Doesn't have to be profitable. The receiver just collects the rent and pays it to the bank. One of the wonders of English law. I thought that under Bartlett it was reasonably profitable and he took close to a million a year salary to reduce the reported profits. Its a long time since AN posted the accounts so I may be mistaken.

 

[John Ex Aberdeen now E.R.]

The SMC has never been profitable, there is not nearly enough security for that deal to be done under normal circumstances, I suspect that it only happened due to Bartlett's dodgy mate at RBS in Essex.

I think you answered my question, even though I posted it later than you.

 

[The Omega Man]

The bank could appoint a Law of Property Act Receiver. In reality what that means is the Receiver collects the rent from Hull City AFC and Hull FC and pays it directly to the bank. When the debt is paid the lease goes back to the SMC.

The bank could try and sell the lease but its value would be determined by the amount of rent received and whether the clauses could be renegotiated. In this case that may be very difficult given the experience of Boothferry park.

Without seeing the lease details I would say the bank would most likely appoint a Receiver to collect the rents and pay the mortgage.

I've tried to make something complicated fairly straightforward to understand. Let me know if you have any more questions.

This isn't a straight forward lease nor was it a straight forward mortgage.

The SMC has never been profitable, there is not nearly enough security for that deal to be done under normal circumstances, I suspect that it only happened due to Bartlett's dodgy mate at RBS in Essex.

Correct.

 

[Obadiah]

Tks for this, and OLM for his input. If I remember correctly in reality SMS have actually paid very little rent, a figure of £50k seems to come to mind during the 10 years SMC have leased the ground, as from memory it was based on what profits SMC made. This being the case, and one would assume the bank would want evidence what rent would be coming in, how could they lend the money they did, which on the face of it very little rent actually coming in?

I've made up the figures for the purposes of illustration. If Hull City AFC pay £1.5 million a year rent and Hull FC pay £1 million then the receiver would collect that money and use it to pay the mortgage. If the SMC's running costs were £2.5 million a year Hull City Council would receive no rent because income would be £2.5 million and expenditure would be exactly the same, so no profit. Which is what has happened over the past 12 years, more or less.

If after the payment of the mortgage and receiver's fees there was a shortfall to pay other creditors then tough that isn't the banks problem but the SMCs. Its a bit more complicated in reality, but in effect the clubs play at the KC and all the bank can do is collect the rent and take its mortgage payment out first before everybody else. The SMC also pays for the privilege of having the receiver as his wages come out the rent as well.

 

[originallambrettaman]

I've made up the figures for the purposes of illustration. If Hull City AFC pay £1.5 million a year rent and Hull FC pay £1 million then the receiver would collect that money and use it to pay the mortgage. If the SMC's running costs were £2.5 million a year Hull City Council would receive no rent because income would be £2.5 million and expenditure would be exactly the same, so no profit. Which is what has happened over the past 12 years, more or less.

If after the payment of the mortgage and receiver's fees there was a shortfall to pay other creditors then tough that isn't the banks problem but the SMCs. Its a bit more complicated in reality, but in effect the clubs play at the KC and all the bank can do is collect the rent and take its mortgage payment out first before everybody else. The SMC also pays for the privilege of having the receiver as his wages come out the rent as well.

Sorry Obi, but I'm afraid that's nonsense.

If the SMC didn't pay it's operating costs(staffing the stadium etc), then there would be no games staged and therefore no rent paid, as the stadium simply couldn't operate.

Effectively mortgaging the £2m a year SMC income from the Premier Club is the only way that I could see that they could possibly justify the deal and even then it still required a dodgy associate at RBS.

 

[John Ex Aberdeen now E.R.]

I've made up the figures for the purposes of illustration. If Hull City AFC pay £1.5 million a year rent and Hull FC pay £1 million then the receiver would collect that money and use it to pay the mortgage. If the SMC's running costs were £2.5 million a year Hull City Council would receive no rent because income would be £2.5 million and expenditure would be exactly the same, so no profit. Which is what has happened over the past 12 years, more or less.

If after the payment of the mortgage and receiver's fees there was a shortfall to pay other creditors then tough that isn't the banks problem but the SMCs. Its a bit more complicated in reality, but in effect the clubs play at the KC and all the bank can do is collect the rent and take its mortgage payment out first before everybody else. The SMC also pays for the privilege of having the receiver as his wages come out the rent as well.

Sorry to tax your brain, but who took out the mortgage, as the council own the property paid for from the share issue of K. Communications? Normally the mortgage is given based on the property being the asset, but this goes back to my original point in what TG said, that they would not allow this?

 

[Chazz Rheinhold]

Sorry Obi, but I'm afraid that's nonsense.

If the SMC didn't pay it's operating costs(staffing the stadium etc), then there would be no games staged and therefore no rent paid, as the stadium simply couldn't operate.

Effectively mortgaging the £2m a year SMC income from the Premier Club is the only way that I could see that they could possibly justify the deal and even then it still required a dodgy associate at RBS.

So it was a bent as **** deal and the council allowed it??
Can anyone find the council thread?

 

[Boothferry2Wembley]

Amateur job compared to the one involving our previous owners the Sheffield stealers.

Edit, I reckon a few people on this forum have called it right. The similarities are there for all to see. I'm not sure if all of the Essex banking community are as bent as pigs tails but as a football club we have been rather unlucky due to the relationship between some of them and our owners.

 

[originallambrettaman]

So it was a bent as **** deal and the council allowed it??
Can anyone find the council thread?

It certainly looks dodgy as ****, the council seem to be claiming they weren't in a position to stop it, rather than it being something they approved of.

 

[The Omega Man]

The whole business was subject to a court case wasn't it?

 

[John Ex Aberdeen now E.R.]

So it was a bent as **** deal and the council allowed it??
Can anyone find the council thread?

That it what started this discussion, there was a remark Terry G made after a meeting with AA saying they wouldn't allow the Allam's to borrow money against the freehold of the KC. I asked the question isn't this tantamount to what Bartlett did to fund the buying of City.

 

[Obadiah]

Sorry to tax your brain, but who took out the mortgage, as the council own the property paid for from the share issue of K. Communications? Normally the mortgage is given based on the property being the asset, but this goes back to my original point in what TG said, that they would not allow this?

The SMC borrowed money from the bank and they obtained a mortgage on the lease. The mortgage gives them certain rights, such as the ability to appoint a receiver, to make sure they get paid.

If you have the time here is a guide to what a Law of Property Act Receiver can do, it also answers OLM's point, about whether games can be played in a round a bout way.

http://www.fieldfisher.com/media/1687801/LPA-Receivers.pdf

I may have written it badly, but the receiver manages the business but ensures the bank gets its mortgage paid first.

 

[John Ex Aberdeen now E.R.]

The SMC borrowed money from the bank and they obtained a mortgage on the lease. The mortgage gives them certain rights, such as the ability to appoint a receiver, to make sure they get paid.

If you have the time here is a guide to what a Law of Property Act Receiver can do, it also answers OLM's point, about whether games can be played in a round a bout way.

http://www.fieldfisher.com/media/1687801/LPA-Receivers.pdf

I may have written it badly, but the receiver manages the business but ensures the bank gets its mortgage paid first.

Thanks for your explanation, I will certainly read it.

 

[The Omega Man]

The SMC borrowed money from the bank and they obtained a mortgage on the lease. The mortgage gives them certain rights, such as the ability to appoint a receiver, to make sure they get paid.

If you have the time here is a guide to what a Law of Property Act Receiver can do, it also answers OLM's point, about whether games can be played in a round a bout way.

http://www.fieldfisher.com/media/1687801/LPA-Receivers.pdf

I may have written it badly, but the receiver manages the business but ensures the bank gets its mortgage paid first.

The problem is that the risk in making the loan is far higher than a mortgage based on leaseholder interest would normally be acceptable.

 

[John Ex Aberdeen now E.R.]

The problem is that the risk in making the loan is far higher than a mortgage based on leaseholder interest would normally be acceptable.

That is my feeling, I have had dealing with banks, and the leading just does not have the security what I would understand banks ask for.

 

[Boothferry2Wembley]

TG wasnt bothered about Duffen borrowing money against the lease was he?

Why would anyone believe a word that comes out of his mouth?

Try not to get side tracked mr Happy, follow the money.

Who was the main beneficiary of this questionable loan?

 

[Fez]

"In a brief statement released this afternoon, Cllr Brady said that, while ownership of the KC Stadium had been touched upon in talks with the club, it had "never been discussed in any great detail".

What part of that says that the HCC was not for sale?

 

[Fez]

Allam turns up, says I will spend money in the area if you give me the KC for free and Brady says you are wasting your time the KC is not for sale, Allam walks out. Easy......end of!

This is what, a figment of your imagination, or were you there?

 

[Fez]

AA
"We are willing to do the whole scheme but we need a significant contribution from the council. If they can't generate their own funds to make a contribution, then give us the freehold of the stadium as their contribution. I accept there's a benefit to the club but it safeguards the football club and the stadium. We would pay them for the stadium, if they paid back a percentage of that to help fund the sports village. We're talking tens of millions so for him to say that we wanted it for nothing would just be untrue at all, totally false. In effect you could argue that we were prepared to pay £120m for the Sports Village. To say we wanted it for nothing is an insult."

TG
It was an amicable, laid-back meeting which lasted three hours. At the end of it, we all shook hands, agreed to continue working together on a few ideas and Mr Allam even invited me to visit his factory. The next thing I know, he's calling me dishonest and criticising the council for not agreeing to what he wants. I have got no axe to grind with him and he can call me what he likes because I have always told the truth. I have no reason to lie about anything – I'm too long in the tooth for that sort of thing. He wanted us to give him the Stadium freehold That was something we were not prepared to do for a number of very good reasons. The main one was that he could not give any guarantees on the stadium's future. It was built and opened without any debt, but his proposal was to borrow against the freehold and that would create a debt. Anything with a debt carries a risk and, as a council, we are not prepared to have a situation like that. No one wants a repeat of what happened at Boothferry Park when the club got locked out of the ground because of financial problems. His proposals for developing a sports complex on Walton Street were vague & unclear. He said he would raise £120 million by borrowing on the stadium and getting £25 million from the Sports Council. I know for a fact the Sports Council hasn't got that sort of money to hand out. When we said there was a perfectly good ice arena already in the city and Albert Avenue baths just around the corner, he said the ice arena and the swimming pool they had been talking about could be dropped. He wasn't even prepared to show us his plans. He said they had cost him £3,000 and they belonged to him.You can't really work in partnership with someone if they are not prepared to share basic information like that. We've had nothing in writing from him at all, no offer to buy the stadium or anything like that. We had offered to work with Hull City's owners to relocate training pitches at Cottingham & Ideal Standard to land next to the KC Stadium, he seemed happy about that. We also offered to help locate a squash centre as part of that development, but then he got talking about shops and boutiques. Now, he's even talking about having a supermarket on the site. Either he wants a sports village or a shopping centre. He has his own style and his own way of going about things, but I think he wants his own way and nothing else.I certainly don't think he understands the workings of local government. I'm committed to sport in the city but Mr Allam and his son appeared unaware of other existing facilities in the city. We suggested Costello as a place to put the football training pitches and they said it was too small, which is just nonsense. I mentioned we have got 23 different big sporting events lined up in Hull next year and they did not seem to know anything about them. All they were interested in was getting the stadium freehold. They kept coming back to it time and time again."

"They effectively said we will give you £20 million, but that £20 million must go into our scheme. It might be their way of doing business, but local government doesn't work like that."

There all as bad as each other.

In other words there was no offer to buy the ground, just some obscure offer to invest £20M into some equally obscure development plan that altered its image more in 3hrs that a bloody Chameleon! Aye, okay lads.

 

[Fez]

Its really not difficult to understand is it TOM.

I'm sure the council have an alternative plan for the area anyway. Its only been 3 n half years... Whats that no. Its still a ****ing wasteland. Surely not.

You seem to be making heavy weather of it.

Oh, sorry, I forgot, you don't like or approve of folk responding to your daft posts do you.