September 27th, 2016

Joy Seppala speaks over Coventry City Ricoh bid against Wasps

Joy Seppala speaks over Coventry City Ricoh bid against Wasps Joy Seppala speaks over Coventry City Ricoh bid against Wasps
Updated: 4:37 pm, May 07, 2015

COVENTRY City are set to table a “conditional” bid for joint ownership of the Ricoh Arena company with rugby club Wasps, we can reveal.

And in a rare exclusive interview with the Coventry Observer, Joy Seppala, of the club’s hedge fund lenders Sisu/Arvo, explained why – while insisting the club will press on with “medium-term” plans for a new stadium in the local area.

In theory at least, it could prompt some investigation into whether the club has any remaining prospect of obtaining a 100 per cent stake in Arena Coventry Limited instead of Wasps – amid fans’ speculation that legal challenges could follow.

The club’s owners say they are “frustrated” by the Higgs charity failing to release key information on the ACL business needed for the club to conduct due diligence and complete a bid. Last week, it wrote to Coventry City Council chief executive Martin Reeves calling on the council to intervene in the city’s interests.

We also put key questions to the council and Alan Edward Higgs Charity concerning the sale of their Ricoh shares, with private deals and negotiations still shrouded in secrecy, to many fans’ frustration.

Coventry City Council claimed the deal unanimously approved by councillors behind closed doors on October 7 to sell its 50 per cent stake in ACL to Wasps was now completed.

But it refused to say whether it still retained the “veto” right to block any sale of Higgs’ 50 per cent to the club – or if it that right had yet been transferred to Wasps, as council sources have claimed was part of the council deal.

It leaves fans in the dark over the potential outcome for the club’s bid for the Higgs shares via Coventry City Football Club Limited, a company in the final stages of liquidation which has “first option” rights over buying Higgs’ shares. The club has until November 8 to bid.

Ms Seppala told the Observer the club was today in discussions over finalising a “conditional’ bid. It would ultimately depend on the club receiving key financial ACL information, including over an outstanding £14million council taxpayer loan to ACL.

The Higgs charity’s clerk, Peter Knatchbull-Hugessen, declined to say whether – under the first option agreement dating back to 2003 – the charity would be obliged to accept an offer via CCFC Ltd if it matched an offer tabled by Wasps, which council sources claimed is for £2.77million.

Ms Seppala, said the club via liquidator Paul Appleton was still awaiting information from Higgs about the club’s rights, the council loan, a reported agreement with Wasps to extend the ACL leasehold to 250 years, and whether Higgs had first option rights over purchasing the council’s share under the latest joint venture agreement in ACL.

She added: “It’s a pretty simple list we’ve requested. We’ve done due diligence (on ACL) in the past when we made our first offer, so it’s the minimal amount of new information we need. It’s a reasonable request. I don’t know how anyone could make a bid without that information.

“Our preference would have been for 100 per cent. How does a joint venture between two unknowns operate? We would want to be sure that any insolvency of Wasps wouldn’t trigger a minimum 10-point deduction for Coventry City Football Club. I don’t want financial risk exposure to Wasps.

“Then there’s the problem of stadium revenues needed to support the club and team. That partly goes back to the Compass agreement (between ACL and catering company Compass). Has it been varied? Has it changed with Wasps? I think Wasps would have done due diligence on that in terms of the potential cash flow.

“It’s a complex situation having 50/50 but it’s not to say we can’t work it out. We would like to secure our position for as long as it takes to build a new stadium. We don’t want to jeopardise the club’s financial position, when we’ve worked so hard to get to a position where it’s cash flow positive for the first time in many years.

“It provides us potentially with greater financial security over that period of four years or, if construction of new stadium were to overrun it goes beyond to five or six years, it protects us in that situation.

“I think they (Wasps) need us there, but I want to ensure we have the time to build what it is we want to build in the best interests of the club in the medium to long term.”

“I think the fans want us to have at least 50 per cent or own 100pc of the stadium company at this stage. It is a tragedy that it’s all come to this.”

On the new stadium, which many fans believe will be difficult to build because of funding and planning issues, Ms Seppala said: “There are still two sites we’re looking at but we’re closing in on one. I think we’re creeping closer and closer. I’m quite hopeful by the end of the year we will have signed something – I’m hopeful.”

Fans’ opinion remains divided, although many on social media believe the Ricoh Arena firm should be at least half owned by the football club it was built for, to provide vital revenues to the club.

Lifelong CCFC fan Professor Andrew Russell, head of politics at Manchester University, said: “I’ve had no confidence up to now that the people running the club have been good business people, but I don’t see a future for the club at the Ricoh if they don’t own 50pc of ACL. Success on the pitch would only make London Wasps richer.

“It seems to me not unreasonable to ask, ‘Does the club have a future at the ground after the current rent deal in two or four years?’ Who knows what the rental agreements will be.

“Fans’ opinion could swing to Sisu for the first time in many years. They could accept they need a smaller stadium with access to all the revenues to make a fist of running the club.

“The way the council has handled the sale to Wasps was everything that’s wrong with the tendency to obfuscate in British politics.”

Sky Blues fan Alan Limb, an independent insolvency expert from BRI (Business Recovery and Insolvency) said: “”It seems what Sisu are trying to do is reasonable in requesting the information – anyone needs to know what they are buying. You would also question whether they’re trying to take advantage of the situation and get information which could be useful as part of their ongoing action against the council.

“The uncertain position doesn’t help anybody understand what this means for the club’s future. We don’t know the terms of the (first option) agreement from 2003. In usual circumstances, the party who has first option rights to purchase should be able to do so if it meets the terms of the agreement, and price. It seems the offer from Wasps is less than the £6.5m the charity originally paid for the shares to bail out the club in 2003, but the offer may reflect what the shares are worth now. If the charity does sell the shares, its trustees have to show that they have got the best deal for the charity, all things considered.”

The Observer put the following questions to the council, Wasps and HIggs charity. We include their answers below:

1/ Are all parties open to CCFC acquiring Higgs’ 50pc share in ACL? Please also comment on the process.

COUNCIL RESPONSE: This is a commercial matter to be decided between the parties involved.

2/ Can you confirm that the proposed price for a sale of ACL to Wasps is £2.77m for each of the council’s and Higgs’ share?

COUNCIL RESPONSE: No, this is commercially confidential.

3/ If this figure is matched or bettered, is Higgs obliged to accept? Please be specific.

COUNCIL RESPONSE: This is a matter for the Higgs Charity.

4/ Has the deal for the council’s 50pc ACL share been signed off and completed? If not, at what point does that happen?

COUNCIL RESPONSE: Yes.

5/ Has the council’s right to veto any sale of the Higgs share in ACL been transferred to Wasps? If not, when does that happen?

COUNCIL’S RESPONSE: This is commercially confidential.

6/ Does the deal approved by council depend on the Wasps obtaining Higgs’ 50pc share in ACL?

COUNCIL RESPONSE: This is a commercial matter to be decided between the parties involved.

7/ Does the Wasps’ business case depend on CCFC remaining at the Ricoh (a) for the next four years and (b) beyond?

COUNCIL RESPONSE: This is a matter for Wasps and ACL.

8/ What gates do Wasps expect and are there assumptions in the business case? e.g 20,000 gates, as some have claimed?

COUNCIL RESPONSE: This is a matter for Wasps and ACL.

9/ Were councillors in approving the deal aware of who the project’s backers/funders are, and was due diligence completed?

COUNCIL RESPONSE: Appropriate due diligence was completed.

10/ If so, who are they? Is a property company involved?

COUNCIL RESPONSE: Commercially confidential.

11/ Is potentially losing CCFC, who do not want to rent, a threat to Coventry’s economy and the north Coventry regeneration project?

COUNCIL RESPONSE: CCFC have recently signed a 4 year licence agreement to play at the Arena, which ACL is bound by. The future beyond that is a matter for CCFC to resolve, but the council have been keen to ensure as far as it can that they will be able to play at the Arena in the long term if they choose to. The Council is clear that Wasps’ relocation to the Arena will have a very positive impact on the local economy and is likely to lead to further regeneration in the near future.

12/ Is the council aware if former chairmen or directors of Coventry City such as Ray Ranson or Bryan Richardson have been involved in any way with the Wasps consortium or the project generally?

COUNCIL RESPONSE: No.

THE HIGGS CHARITY SAID:

“Many of the matters that you refer to relate to matters which are best addressed to those concerned and not the charity. No doubt they will respond as they consider appropriate and to the extent that they are willing and able to do so.

“To the extent that they relate to the charity, they concern ongoing commercial matters which are both commercially confidential and sensitive. You will readily understand therefore that the charity are either not able, or do not consider it appropriate, to respond.”

NO RESPONSE WAS RECEIVED FROM WASPS.

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