Often Partisan

Directorial changes and loans – BIH and Yang Yuezhou

News broke last night of two announcements made by BIH – a new loan from Yang Yuezhou, and the appointment of three directors. This is good news despite the loan being a high interest rate – as I will explain below.

For reasons I will cover further down, I’ll talk about the second announcement (pdf link) first. This announcement states that Yang Yuezhou, via his Inkatha Group vehicle, will loan BIH HK$80mil (approx £6.3mil). The loan, which is unsecured is made for a period of 24 months and has an interest rate of 12%. Twelve percent is very high for an interest rate for this sort of loan, and would indicate “junk bond” status – it means that this facility is going to cost BIH HK$9.6mil (approx £750,000) in two years to borrow.

To explain why BIH need to pay an extremely high interest rate, I’m going to use an analogy. If you have a good credit rating, you can borrow money from your bank at a good rate of interest – say 8%. This is no problem to pay back, and everybody is happy. Say you don’t have such a good credit rating – maybe you’ve racked up a CCJ or two and the bank won’t lend you the cash. But you need the money – you’ve got a new boiler to pay for, or you have a massive cashflow crisis. You’ve got no collateral, so you can’t get a mortgage, and no jewellery to hock down the pawnbrokers. Thus you end up going to somewhere like Wellcome Finance, or Provident Personal Credit – and they’ll lend you the cash… at a 95% interest rate. So you get the £500 you need, but it’s going to cost you £2000 to pay it back.

BIH are in a similar situation. However, whilst the loan is unsecured, Yang Yuezhou has got collateral in the company – as he (and two of his placemen) now have places on the board (pdf link). This is for me where the other shoe drops. By getting himself appointed vice-chairman, and two of his blokes on the board, Yang Yuezhou is taking an interest in how the company is run. He’s lent the company money but he’s going to make sure it’s spent in the correct manner. And if BIH can’t pay it back… that’s when I suspect he’ll oust Carson and take full control.

So, despite it being a massive rate of interest and an indication BIH are desperate for cash, I think this is good news – because it means there is someone new involved in running the company, who is going to look to protect his monetary interest (which can only be good news for BCFC), and hopefully it should mean BIH is run a lot better than it has been. For the Carson out types – this is where he could get forced out. It’s a long road though, and there may be joys and sorrows yet.

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36 Responses to “Directorial changes and loans – BIH and Yang Yuezhou”

  • Paul Hawker says:

    Straw well and truly clutched

  • Not a risk of asset stripping then?

  • Glynn says:

    We have already been asset stripped……

  • Bluenosesol says:

    We are constantly told by Pannu that the financial machinations of BIH are nothing to do with the finances of BCFC. So we now know that clearly this is not the case. Also saw this quote from Boomberg “Birmingham International generated 95 percent of its HK$375.4 million in revenue from its football operations in the six months ended Dec. 31, 2010, according to the company” So what football clubs did that come from?

  • Far East Movement says:

    Thanks Gorgeous George for your own personal insight. No give your single brain cell a rest and pipe down.

  • Far East Movement says:

    I guess whilst this guy will have an interest in running the company – it is not to say that he will do it well or in the interests of the club. As others have said he could just asset strip to get his cash back, however as it is unsecured then I am guessing he is bottom of the creditor list so from that perspective he may look to run the ship well. I always worry with these guys that there is an alterior motive – it would not surprise me if this is actually a loan based on next years parachute payment and we will clear it with that money and he will get half his interest, it’s not rally going to get us anywhere in the long term.

    The new guys on the board – is there any information on their backgrounds or anything?

    Lets hope the potential Ridgewell, Jerome, Beausjour and Dann money doesn’t disappear… but that’ll be wishful thinking!

  • Paul Hawker says:

    I would not call this blog patronising and it does give out good info but lets make it clear are we pro or anti board?

    Bear in mind in my own experience nobody trusts or even likes this board anymore.

    So Often Partisan which is it?

  • joe67 says:

    Ok ! carson borrowed £81m to buy us then a further £14m in feb 2011 off polyanna chu who is remarkably quiet ??? After today we will have generated £25m with the sale of players,taken £14m off the wage bill, wev’e had £5m off uefa plus the parachute money of £15m ?? plus this £6.3m loan= £95M DEBT + £65.3M GENERATED. It seems to me as though Mr yeung is getting as much money in as possible to make us viable for a sale ? but to whom ? or siphon the money off somewhere and put us into administration thus wiping out his debt !!!

    • almajir says:

      I keep saying this, but Carson didn’t borrow 81mil. BIH (the company, huge difference, CY didn’t own more than 15% of it when the company bought BCFC) borrowed 57mil to buy the club, which was then repaid with share sales into BIH. Outstanding debt – nothing

      The 14mil off Pollyana Chu – Link? If you’re referring to the underwritten shares… they all got sold too.

      There are debts, but these are not the ones you are pointing out. There are obviously problems within BIH – but again, these aren’t what people are pointing at, they’re looking in the wrong direction. Is Carson priming us for a sale? Maybe – but isn’t that what people want?

      As for siphoning the money out… well, that’s an actionable comment and you might want to be careful about saying that sort of thing.

  • john says:

    Any good news? Oh, yes, we got rid of Jerome. Hope he scores as many for Stoke.

  • joe67 says:

    BIH is carrying a huge debt i.e between £60m -£90m and was pulled together by carson initially from GRANDTOP INTERNATIONAL HOLDINGS, wheres the £65.3m gone/going ??? as for actionable comments take note of the question marks ‘ and’ ‘or’ comments ………………

  • joe67 says:

    The £60-90M is made up of the loan to buy the blues in the first instance inclusive of the 14m off mrs chu plus the supposed losses of the past two years, this is debt that has to be repaid to creditors and the £65.3m doesnt appear to be coming back in wev’e got Ben Turner willing to come to us as a true blue and cant afford 750k for him!! the financial situation is dire and concerning we havent bought one player and won’t in this transfer window. Although carsons assets are frozen he only controls 24% as i understand it? why arent we spending any money at all ??? its clear weve been bought on borrowed money that the supply of has dried up.

  • joe67 says:

    As i understand it a reputable bank are owed a 60-90m loan that is outstanding, thats the second time youve ignored the £65.3m and the fact we arent spending a bean !

  • almajir says:

    My honest opinion right now is one of cautious optimism; there is definite interest in BIH as demonstrated by Yang Yuezhou loaning a shed load of money and taking a place on the board along with two place men.

    I suspect if there is any more money coming in, it’s going to come from the same direction – ie the PR China. Time will tell though

  • Dean Giblin says:

    Good news for BIH doesn’t mean the money will filter down to BCFC (and I doubt it will).I still think that the money is being paid back to the people who loaned the initial money. Great interview with Neil Moxley in which he pretty much asks the question “where has the 100 million gone?”
    Dann going for £5M is ridiculous if a few months ago stoke were offering 10.
    The sooner we get the ST up and running and unite all supporters and getting everyone singing off the same hymn sheet we can be one voice asking the questions to the directors of BIH

  • joe67 says:

    Ok me again,i done research on CY and grandtop which was a clothing manufacturer with a turnover of 3m per annum and bought as a front for the blues bid, and raised my concerns to the previous board prior to them selling, ive also got experience of chinese business deals. A chinese business venture is usually done the way blues was bought i.e you put in the bid then raise the funds not like western business deals, anyone living in birmingham should remember the proposed chinese takeover at mg rover longbridge before it went into administration ? the prp is still communist controlled thats how there deals operate we are bought on borrowed money , no disrespect almajir youre doing a great job,but we have no evidence that the loans are repaid, CY is facing serious charges,65m has been raised in 10 weeks 25m off player sales,14m off the wage bill,5m off uefa,15m parachute, 6.3 m loan where is it ??? its not gone on players !!!!! we are in serious trouble and MRS CHU needs to come in shes loaded or we need a very quick sale asap !!!

    • almajir says:

      No evidence?

      When the deal was done, a share issue was launched for the 57million. The shares were fully subscribed – you can check the filings with the HKSE. Thus the money was paid off.

      Sorry mate, but you’re barking up the wrong tree regarding Pollyana Chu.

  • rollingeyes says:

    Just how thick are some people on here? The £57m was a bridging loan, underwritten by Kingston Securities, and paid back. Nothing to do with HSBC at all

  • almajir says:

    Here’s a general warning.

    I do not and will not tolerate offensive comments at me. If you don’t agree with what I post, then that’s fine, but don’t be a dick when you reply because I will bin your comments.

    Also, don’t be a dick to other people either.

    Thanks

  • Masaccio says:

    I think the next BIH AGM should be a fun one to attend – normally they’re full of pensioners moaning about the quality of the tea and biscuits!

  • […] Media – Debts and Yang Yuezhou Yesterday, I linked the news from China that Yang Yuezhou had loaned BIH around £6mil, and had taken the vice-chairship of the board, as well as installing […]

  • darren says:

    i think the waters will always be murky around our board but im glad somebodys trying to make things a little clearer, keep digging, love reading your articles.


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