WASPS rugby club say they have raised £35million from their ‘retail bond’ scheme launched last week.
The club say they will now use the money to pay off debts including around £13.4million owed to Coventry City Council from a taxpayer loan to the Ricoh Arena company they bought last October.
At least some of its loan debts – which include to ultimate owner Derek Richardson – will be transferred to bond holders, who were asked to invest a minimum £2000 in return for 6.5 per cent annual interest payments.
Wasps will have to pay back more than £2million in interest payments each year.
Whether bondholders ever get their money back after the seven-year scheme expires will depend on the club and their business strategy being successful.
The Coventry Observer exclusively revealed the ‘retail bond’ scheme last month, which was offered to fans as well as insitutional investors.
The last accounts for London Wasps Holdings Limited – which now owns Arena Coventry Limited on a massively extended 250-year lease from the council – revealed oustanding debts of £22million last year.
The company’s name was changed last month, with the word “London” removed from the name.
In a statement, David Armstrong, group chief executive of Wasps, said: “We are delighted at the success of our debut Retail ond which was fully subscribed, and at reaching our maximum target of £35 million.
“This is the first time a sports club has accessed the market in this way and the response from investors, both institutional and private, has been very positive.
“The funds raised will enable us to restructure our balance sheet and pay down our existing debt, including the loans we acquired with the Ricoh Arena.
“We now have a solid foundation for the long-term future of the club and look forward to the future with confidence.”
Wasps say the bonds are secured against ACL, valued at potentially £48.5million if their business strategy proves successful.
But Wasps’ own Prospectus raises the potential prospect of the terms of the lease collapsing to 38 years in the event of ACL’s insolvency.