Portsmouth FC expected to announce £119 million debt

Tuesday, April 20, 2010

Portsmouth are expected to announce debts of £119 million when their accounts for the last financial year are released later today.
The figure far exceeds earlier estimates of £85 million, but Andrew Andronikou, the club’s administrator, has attempted to play down the seriousness of the debts.

"I do not believe that the figures will come as a surprise to anyone who has been interested in buying the club," Andronikou said. "When they do due diligence it is there for them to see. So, for that reason, it is not unexpected, although, of course, the figures are vastly different from what has been reported. The size of the debt involved won't scare off potential buyers, far from it."

However, his latest estimate that the club could come out of administration by “the last week in May or the first week in June” makes it unlikely that the FA will approve Portsmouth’s delayed application for a Uefa licence by the May 31 deadline. So they will be unable to take up the Europa League place they have earned by reaching the FA Cup Final.

As more information about the debts comes to light under administration, it has emerged that 15 football agents, including Pini Zahavi, are owed a total of £9 million – one is owed £2.3 million for one deal alone - and that £14 million is owed to various lenders who financed the purchases of Sulley Muntari, Glen Johnson and Jermain Defoe during the 2007-08 season.

£38m is due to three previous owners in the form of loans and £5 million to trade creditors. Balram Chainrai, the present owner, is owed £14 million, but his loan is understood to be secured on Fratton Park.

“We now have a business plan in place that is a projected target over the next three to five years to pay back the creditors," Andronikou said. "The creditors will get a percentage of their debts back over a number of years, rather than all in one go.”

Andronikou is to meet creditors on May 6, hoping to secure their agreement to a creditors’ voluntary arrangement [CVA], which is essential if the club is to exit administration. The FA are also expected to insist on this before they will put Portsmouth’s name on the list of clubs requiring a Uefa Licence.

75 per cent of the creditors must agree on the amount they are to recoup from the business, and it is expected that Her Majesty’s Revenue and Customs will be especially hard-headed in negotiations.

If a CVA is not agreed then the club faces the prospect of further points reductions next season in the Championship, apart from losing their chance of a European place.

Source: http://www.timesonline.co.uk/

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