West London Sport (David Mac) seem to think the writing off of debts is a very positive move. http://www.westlondonsport.com/qpr/qprs-owners-write-off-180m
The posters that have concluded that converting the debt into equity is a good thing (though not necessarily for the holder of the debt) are quite correct. At a stroke it can have a material impact on the net assets figure on the balance sheet, where debt is shown (largely) as a long-term liability, but equity as part of shareholder funds. Perhaps a bit of rearranging deckchairs on the Titanic, but it can straight away make the balance sheet (and therefore the club) more attractive to either an acquirer, who won't then have to deal with the debt, or a new investor, who won't now see his investment immediately swallowed up by the need to service the debt first. It supports the old adage about how to become a millionaire. Apparently, all you need to do is start out a billionaire and then buy a football club.
Below are questions that I have asked on Report. My apologies if they have been answered in this thread & I have missed them. Please forgive my non grasp of this & feel free to answer my questions. I completely understand P&L's but balance sheets are just a jumble of figures to me! 1) Am I correct that the club has issued approx. £180 million value of shares & these have all been bought by the current board. Thus we would greatly reduce our debt & greatly increase share capital? 2) Will the greatly reduced debt improve the chances of the club being sold? 3) However, to purchase a majority share of the club, wouldn't any prospective purchaser have to buy a lot more shares? 4) If this is correct, wouldn't a buyer still have to spend more than the value of the club to gain control? 5) I can understand that this would help the club & the shareholders but how would future owners beneifit, unless they leave TF etc. with a large (but minority) numnber of shares? Read more: http://qprreport.proboards.com/thread/42143/fernandes-sell-tweets?page=2#ixzz3r1Hox5gY
3) no, the shares have no value, a prospective buyer would just negotiate a price for the club and the current owners would transfer the billions of shares to them, possibly for £1, if they want. It is, in fact, a very generous thing to do, there is no way they can get their money back. I'd be applauding if it wasn't their own stupid fault for getting in this position in the first place. Are they still loaning money to the club to meet daily running costs, or is the parachute payment being used for this? The club could of course still go into administration if they turn the tap off on their loans/gifts (I wouldn't blame them) and we can't stay within our overdraft.
smoke and mirrors A lot of money has been spent Other people have it The club does not You can only buy things with money It's a massive balls up and I agree that any new buyers would need to buy a debt with little chance of seeing any money for years Smart money won't touch football It will need another nut case Thankfully there is a untapped supply of silly rich who want London
The Mittals are steel magnates, and we know the price of steel right now don't we. So they aren't as rich as they were.
Don't the Mittals own Tata steel? I thought I heard something on the news about Tata, or one of their divisions going into administration. I could be well off the mark though.
Scrap my last post, did some digging and I'm totally wrong. Sorry if anyone had a small heart attack.
According to Forbes his wealth is down to US$10bn, about £7.5bn now. I don't think he'll ever go hungry, but for someone who was once the richest man in Europe he is now out of the top 100 in the world and his company made a loss last year. It's quite a spectacular fall. Perhaps one day he will regret spending $60m on his daughters wedding to Amit. Also according to Forbes, Fernandes was down to US$530m earlier this year, a 20% fall in a year. I suspect a lot of Mittal's wealth is real, i.e. he can get his hands on it (though the value of some of his assets like steel mills is possibly negative at the moment) whilst Tone's is largely on paper. Presumably his divorce will be less financially punitive in Malaysia than it would over here or in the US. These blokes have on plenty on their minds besides QPR. The share deal may be a way for them to draw a line under their investment, they stay as owners but say 'that's it' for interest free and unrepayable loans, and unless we balance the books we start to rack up real debt. If they really think we can be promoted with this squad and a new manager they won't play double or quits (they are really good at losing that game) in the January window, incomers will have to be financed by leavers, and come in on lower wages. Then they have to balance the return on investment from capital investments - training ground and stadium.
