|SJ MASKELL: The sluggishness of the reluctant owner of PFC set to be challenged|
Mon 25th Jun 2012 08:47 by SJ Maskell
Slugs are rampant at the moment, have you noticed? Wet and warm conditions lure them out from underground and they start to chomp, chomp, chomp on the tender leaves and shoots in the garden; tiny persistent bites of greedy destruction and a perennial pest to gardeners.
So it has been in the affairs of Pompey this last month, a certain sluggishness has set in. Waiting for financial events to unfold in the close season has become a perennial occupation for fans. The slow crawl towards the creditors meeting has led to a certain amount of in-house bickering with fans taking sides in the unequal contest for ownership between Balram Chainrai and the Pompey Supporters’ Trust.
The idea that a moneyed owner brings with him the chance to build a team for success prevails in some quarters, despite the evidence of Chainrai’s last two attempts at football club ownership. People asking where the money will come from for transfers if the Trust runs the club need to ask the same question of Mr C. He hasn’t exactly been forthcoming on that front himself in the past. Whoever takes on the club, player salaries and costs will have to be severely constrained – the League 1 Salary Cost Management Protocol will dictate that.
The only way Pompey can ever be a contender again is if the club’s turnover can be significantly increased. This requires infrastructure investment. Mr Kushnir’s avowal to be out in less than three years precludes any chance of Portpin undertaking the necessary development for that to happen. In that respect there will be little difference between ownership by Chainrai and the early years of ownership by the Trust. Economy will be essential. The difference lies in the potential for improvement.
Current conditions have allowed the slugs another go at the garden. Chainrai’s barrel-scraping offer of £500K, offering 2p in £ to current creditors, an equivalent of 0.4p to those owed under the unpaid 2010 CVA, buys him the right to shift his charge from Pompey (2010) to the Newco that comes out of administration. Chomp! Reduce the debt the club owes. Yet Portpin (Chainrai and Kushnir) can ‘loan’ Newco (Chainrai and Kushnir) the money to buy the club – and charge interest on top. Chomp! Increase the debt he is owed. All with some unencumbered parachute payments to come. This is very likely what the offer to pay the £4.5m to football creditors means. This debt will be pinned to an asset of debateable value – Fratton Park.
This is the weak point in the plan. The book value of Fratton Park is set at £13.2m in the CVA proposal. Yet Chainrai has a £18.6m debenture. The value of FP with PFC as a going concern in the CVA is £10m. Yet Chainrai has a £18.6m debenture.
Potential buyers are quoted as valuing the Park at £5m which Andrew Andronikou claims Chainrai would have accepted – if only proof of funds could have been provided.
More detached valuations depend on whether the club is seen as a going concern or not but figures ranging from £2.1m down to less than £1m have been suggested. Some discrepancy with £18.6m.
What prevents the club flourishing again is Mr Chainrai’s continued involvement and his wish that any new owner take on the club’s debts in spite of the discrepancy between his valuing of the stadium and that reached by others. In any change of ownership he is legally entitled to demand the £18.6m he claims to be owed. This has, and always will, put off potential realistic owners. No one is prepared to run the club in order to provide Mr Chainrai with an income.
Unless, of course, the charge he holds can be challenged. Which the administrator can do if he is enabled by the court to sell Fratton Park ‘as if it were not subject to the security’ (Telegraph 22/06/12) thereby leaving the debenture with Portsmouth (2010) and not moving it along with the ground into the Newco.
This is very likely why the Pompey Supporters Trust’s bid involves an offer for the ground. If they can make a significantly better offer to the creditors than Chainrai’s 2p in the £ plus offer a fair value price for Fratton Park then the administrator is in a position to make a case to a judge for the charge to be left behind in Portsmouth (2010). Such an offer is likely to be seen as better value for the creditors as a whole. It all hinges on what can be called a fair price for Fratton Park.
It is a situation with a fair amount of salt in it. Whether or not the creditors accept Chainrai’s proposal on Monday, there is now another offer on the table which must be considered. If Chainrai truly is, as he says, ‘the owner of last resort’ and if the Trust offer is good enough then he has the chance of walking away with some of his money and maybe some of his pride intact. If he is not what he says, then we will know by his actions. If he stays to fight we can only assume he wants another bite.
It seems to me that the Trust is prepared for a battle to break the hold of the pests on the garden. Once the pests are gone the conditions will give the garden a better chance of flourishing.
The Trust is still seeking pledges from Pompey fans to back their bid. Information can be found here
The views of SJ Maskell are their own and do not necessarily reflect the editorial view of pompey-fans.com