Exclusive:Debt acquisition attempts fail with fresh details on Sheffield Wednesday's £7.4m concern
Multiple parties attempting to stimulate interest in the purchase of a £7.4m debt owed by Sheffield Wednesday have been unsuccessful in their efforts as far as The Star is aware, with the status around the likely outcome of the debt’s payment deadline still shrouded in mystery.
A charge against Hillsborough Stadium and owed by the club to a lender called New Avenue Projects has been rolled over with interest on an annual basis since appearing on Companies House in 2020. On those five occasions the cost of the debt has risen from around £6.3m. It came in the months following the controversial sale of the stadium to Sheffield 3, a third-party company owned by Owls chairman Dejphon Chansiri, though the Thai has claimed on record that it is a historic debt accrued before the start of his ownership of the club.
The Star reported earlier this month that there was reason to believe the club had been notified that a significant percentage of the loan would not be rolled over as has been routine and that Chansiri would be required to repay a large seven-figure sum. The deadline for the current debt payment is known to be today, September 30, though it was revealed a grace period would be permitted on any enforcement action should fulfilment of the payment not be met on time. The Star understands that grace period to be seven days in length.
As reported earlier this month, some of the more stringent enforcement actions the lender could ultimately enact in the event of any non-payment could include applying to put the club into administration or appointing a receiver over Hillsborough - which would have the authority to claim rent from the club or ultimately put the stadium up for sale. Should both of those options be taken at the same time, an expert suggestion is that an insolvency practitioner could in theory be appointed to manage the sale of both club and stadium as one.
It’s important to stress that any live demand could be subject to review at any stage, it is understood, or negotiated between the parties. The lender’s appetite for any enforcement measures in the event of late payment is not yet known and the terms of the rolling-over of the debt could ultimately be negotiated or reviewed.
Attempts to generate interest in acquiring the debt have proven unsuccessful
For the last weeks The Star has been aware of the efforts of multiple parties who have attempted to stimulate interest in the acquiring of the debt from New Avenue Projects, a move that could in theory have allowed any new owner of the debt to take control of any enforcement action should any ultimate repayment demand deadline be missed.
The Star has a dedicated Sheffield Wednesday WhatsApp Channel to bring the latest news, analysis and team & injury updates direct to your phone. Simply click here to join
With the requisite covenants and structuring of a handover of the debt, this could in some theories have allowed its owner to take eventual control of the club and / or eventually sell it on at a profit on their investment after running it in the intervening period. The Star understands some brokers and other parties have been working independently from both Sheffield Wednesday and New Avenue Projects. Any proposed deal to buy the debt would have ultimately been subject to negotiation with New Avenue Projects.
Having received initially receptive responses from potential investors, the parties The Star are aware of have not been successful in their attempts to secure immediate material interest in purchasing the debt ahead of the deadline, with investors citing the business uncertainty and volatility of any longer-term process as a factor, along with the limited time frame remaining in which to conduct adequate due diligence.
Uncertainty over where things go from here
Where this leaves the likely material status of the debt repayment remains unknown. This week Wednesday informed its workforce that they were not to expect full payment of their September salaries today - their scheduled payday - with backroom staff, academy figures and non-footballing staff paid just £1,000 of their expected payments. Senior players were told not to expect prompt payment at all and a timescale for the fulfilment of salary obligations has not been advised due to lack of information from the top.
The club’s wider financial outlook continues to look bleak, with five live EFL registration embargoes running as things stand for misdemeanours including the non-payment of monies owed to clubs for previous transfer deals, outstanding payments owed to HMRC and monies owed to other football creditors. Chansiri has so far been unable to prove to the authority his ability to fund the club for the remainder of the season.
It remains to be seen whether the Wednesday owner is able to satisfy any demand for the repayment of the loan in the short term, though sources have suggested to The Star that it is highly unlikely any payment had been made by the back end of last week.
We may well get a strong, public-facing confirmation as to the charge’s fate in the next weeks and as to whether or not the charge has been officially rolled over or called in; previous renewals of the charges have been dated from September 30, with the registration of the previous five charges having been delivered to Companies House on dates between October 8 and October 15. New charges must be registered on Companies House within 21 days of its creation.
With known attempts to stimulate a purchase of the stadium debt unsuccessful, it remains to be seen what appetite for enforcement action New Avenue Projects may have for Wednesday if ultimate deadlines for payment are not met. Little is known about New Avenue Projects or its circumstances - or its level of motivation for a stringent level of enforcement action.
Events over the last months are believed to have caused major concern over the security of the monies owed to creditors - hence the inferred demand for a repayment - though The Star has reason to believe New Avenue Projects have no interest in taking the club on in terms of ownership. Any stringent enforcement action could prove to be an arduous and potentially expensive process.
If demands are followed through on and Wednesday are unable to satisfy them, the ball would appear to be in the court of New Avenue Projects and / or further negotiations between the two parties.