Heart of Midlothian make move to cut debt by £10m
Heart of Midlothian have announced their bank’s plans to reduce debt by £10 million by turning money owed to creditors into shares in the Scottish Premier League club.
The Edinburgh-based side is currently facing debts of £35 million and the latest move, which mirrors a 'debt-for-equity' plan (carried out in 2008), will be placed before the club’s shareholders at a general meeting on 11 November.
If the plan is allowed to go ahead, it would increase the total share held by Ukio Banko Investicine Grupe to 98 percent.
The club’s owner, Vladimir Romanov, has a controlling interest in the Lithuanian-based group and UBIG would receive 100,000,000 ordinary shares valued at 10 pence each.
Hearts chiefs say that the move will reduce the club’s interest payments by £500,000 per year, and it will also help bring the Tynecastle outfit into line with UEFA’s new rules regarding professional European clubs.
In May, the UEFA announced that from 2014, every club involved in the governing body’s competitions would be expected to, over a three-year period, be spending no more than it earned.
Hearts chairman, Roman Romanov (the son of the owner), told reporters, "The directors of Hearts are pleased to inform shareholders that an agreement has now been reached with UBIG, conditional upon passing of the resolutions, to remove a further £10m of
the current debt owed to UBIG by converting it into ordinary shares."
"As before, in 2008, when the company reached an agreement with UBIG to convert £12m of debt into equity, this will strengthen the company's capital position in keeping with UBIG's strategy for Hearts, whilst removing a considerable amount of the company's
short-term liabilities."
The club added that the move speeds up the long-term aim of reaching "...the point at which Hearts may return to profitability."
Tags: