The Foundation of Hearts moved a significant step closer to becoming owners of Hearts after the administrators, BDO, secured a draft agreement with the majority shareholder.
UBIG, the Lithuanian bank, has given its consent to sell its 78.97% stake in Heart of Midlothian plc for a five-figure fee and BDO have set a target date of the end of March to hand over full control of the club to FoH, a coalition of supporters groups.
The draft agreement has taken several weeks to draw up, but it was a critical part of the process of securing the future of HOMFCplc. Ukio Bankas, who own 29.9% of the shares and whose debts of £15.5m are secured against Tynecastle, had already agreed to transfer their stake in return for receiving the bulk of the £2.5m that FoH have raised for the creditors' pot. BDO hope to complete the transaction within eight to 10 weeks, although there are still three main obstacles to overcome.
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The paperwork for the share and purchase agreement has to be finalised between FoH and the two Lithuanian banks, although agreement has been reached in principle. Both UBIG, who were owed £8.2m, and Ukio Bankas also need to receive court approval in Lithuania to transfer the shares, although the legal opinion in both countries is that this should be a formality. It is, essentially, part of the framework to protect the interests of creditors and no other bids were viable. Proof of funding has also already been provided.
"This is welcome news for the club as it means that the transfer of ownership can go ahead," said Bryan Jackson of BDO. "While there remain some technical issues to resolve, the process is now gaining some momentum. From day one, I always thought procuring the shares was going to be the biggest obstacle. I would again like to thank the fans, the staff and the players for their continued patience during this time. For all of those involved with Hearts, on and off the pitch and on the terraces, it has been a very difficult period and their assistance and support has been greatly appreciated."
Jackson is hopeful that the deal will be concluded before the club runs out
of money, and he anticipates the finances becoming difficult in April. The draft agreement does, though, allow him to engage with FoH, particularly on decisions that will affect the club beyond March, such as player and staff contract renewals, the structure of the executive management team and the marketing and pricing of season ticket renewals.
The Foundation now has more than 7600 supporters making monthly donations and private finance - BIDCO - has been arranged to underwrite the purchase cost
of £2.5m. If there are any delays to the deal being finalised, the Foundation may have
to provide working capital, but BDO are hopeful that the momentum generated by yesterday's development will keep the process moving along.
The general sense is that Hearts can be optimistic. There is certainly a belief that the club can begin next season with HOMFCplc having formally exited administration, and
so the team will not be the subject of any sanctions. "This is very welcome news from BDO," said Ian Murray MP, the chairman of FoH. "We are edging closer to getting the club out of administration and we are now talking about when rather than if. Let me continue to stress that we encourage every supporter who has not yet done so, and is able, to set up their monthly contribution at www.foundationofhearts.org."
If Hearts had reached the Scottish League Cup final, the extra revenue would have removed some of the concerns that BDO will face if the deal is delayed. However, the semi-final defeat by Inverness Caledonian Thistle on Sunday is also a source of regret for the physical and mental toll on the players. Sam Nicholson and David Smith were both injured in the game and manager Gary Locke can only hope that they are not sidelined for a long period. "Sam got a bad one on the rib and it affected us a bit because I felt he was one player that was causing them problems," said Locke. "David took a bad one in the first half, that's why
he had to come off. Hopefully it's nothing
too serious. We have to lift our heads and respond in the right manner."