What does the “investment” mean

Saturday, 8 August 2020, 14:30
2 mins read

It was interesting yesterday evening to note that the Swans statement of investment into the club was quickly turned by a clearly briefed BBC article into being a loan into the club which had been matched by the majority owners of Steve Kaplan and Jason Levien.

The loan – as reported by the BBC – has the option to be converted into equity in the future with the comfort of other shareholders being able to match the investment or risk dilution.  Quite what that would mean for the club’s second biggest shareholder in the Supporters Trust is unknown but it would require you would assume a multi million pound investment to maintain that 21% shareholding putting to one side their ongoing legal action.

It seems a little bit strange why the club’s official statement referred to the injection of cash into the club as an investment.   It was clear from reading the article that the journalist – Chris Wathan – had been briefed by the PR team that represents Kaplan and Levien but the picture was very different to that portrayed via the club’s official channel.

It is understood the original investment will be in the form of a loan to the football club, providing an immediate boost to the club’s finances which had been hit by relegation from the Premier League in 2018. – BBC Sport

As we have discussed via these pages during the course of the week the club was facing into a black hole because of a loss of income not just from the pandemic but a reducing parachute payment.  Funds were needed but is difficult to know how to welcome the ‘investment’ that has been made without having a picture of the terms of the loan itself.  Are the club being asked to make payments back on a basis or is it a loan with no return but the option of being converted to equity in the future the only thing.  And at what price is that equity?  Would it still be the just under £100 per share paid in 2016 or at an amount that is more in tune with the club valuation now?  For the sake of the Trust shareholding you would hope the former but who knows.

By joining the club’s board, it will allow me to become actively involved. It’s something I am passionate about and, as such, I will be applying a lot of focus on the football club going forward.’ – new Swans board member Jake Silverstein

It is rumoured that the total amount of the loan between all parties could be in the region of £10m which if converted into equity could also dilute the shareholding of Huw Jenkins and Martin Morgan as well as that of the Trust.

Right now though what we do know is that the club have additional cashflow to help them through the period.  I don’t think anyone should believe this is going to be a transfer kitty for Steve Cooper this is needed money to keep the clubs head above water.  What price for the club remains to be seen.

Images courtesy of Getty Images, Athena Picture Agency and Swansea City Football Club.

Phil Sumbler

Been watching the Swans since the very late 1970s and running the Planet Swans website (in all its current and previous guises since the summer of 2001 As it stood JackArmy.net was right at the forefront of some of the activity against Tony Petty back in 2001, breaking many of the stories of the day as fans stood against the actions where the local media failed. Was involved with the Swans Supporters Trust from 2005, for the large part as Chairman before standing down in the summer of 2020.

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