Often Partisan

BCFC, BIH and Finances: The OP Perspective

Long term readers of this blog will know that one thing I have tried to do is to work out exactly what is happening with regards to Birmingham City, and to its parent company Birmingham International Holdings Ltd. I have tried consistently to find information that is researched and provable to pass on to Birmingham City fans to stop some of the hyperbole and outright lies that are out there. I’ve put this article together to give you an idea of where I’ve got to; what we know for sure and what is still unknown.

Are Blues going to go into administration?

There is no simple answer to this question, indeed, I don’t think anyone outside Carson Yeung and maybe Peter Pannu know how close Blues and BIH are to the wall. It’s also a very open-ended question – there is no timescale given and I think that’s important to consider.

I cannot see Blues entering administration before January at the very earliest. There are (unprovable) rumours out there that Blues need to sell players to convince the auditors that they have enough money to see them through the season – particularly bearing in mind the lack of overdraft and/or Carson’s cash. Going into administration is very much a last-ditch solution to saving the company, and would in all likelihood cost Carson a lot of money. If Blues can sell a couple of players in the window, get rid of a couple of high wage earners and wing it until the summer – then there is the outside possibility we could get promoted and BIH would get a better return on selling the club. Therefore it makes no sense putting the club into administration before it’s absolutely imperative – or forced upon the club by its creditors.

Another complicated factor is the nature of Birmingham City’s creditors. With no accounts available since June 2010, we have no idea how much debt the club is in, let alone who to. The only facts we know for sure are that the club owes Carson £16million in directors loans – which is going to complicate matters if we do indeed go into administration. Documents obtained by this website from Companies House show that HSBC and BCFC agreed a debenture in mid-October which basically gives HSBC a charge against everything that BCFC has – not only the ground, but assets like future TV income, future gate receipts and parachute payments. The debenture doesn’t make any mention of any monies being owed to HSBC – it’s more of a case of the bank ensuring if they do lend any money to BCFC that they’re first in the queue should things go Pete Tong.

Is Carson stripping BCFC bare to pay his own debts?

One thing I’ve been categorically reassured by the club is that not one penny has left these shores from BCFC to go to BIH; indeed, as the above shows the club owes Carson money rather than the other way around. Furthermore evidence is available that Carson has stripped money out of his own life to pay for Blues – for instance records obtained by this website from the Hong Kong land registry confirm that Carson took out a business loan for BIH/BCFC late last year, using his multi-million pound mansion on the Peak in Hong Kong as collateral. As reported on this site, Carson is now in danger of losing his home because that debt has been defaulted on – which is hardly the action of a man asset-stripping BCFC.

What about the other shareholders in BIH? Why won’t they chip in?

Unless you individually ask each and every shareholder why they haven’t offered to invest more money in BIH, I guess we can never know for sure. A couple of things strike me though as being accurate:

  1. BIH are unable to currently sign off their accounts for last year. Would you put more money into a company that looked like it was in trouble? It’s true that Yang Yuezhou put in quite a large amount – but both were loans, with punitive rates of interest, and leave Mr Yang in the position that he will own a minimum 14% of the company should he want to convert his debt to equity via his convertible notes, and give him a modicum of control as vice-chairman of the board (with three votes, as he brought on two others when he was appointed). Next year BIH will have to pay Mr Yang a rather large coupon (interest payment), and I’m interested as how they can do that let alone pay off the loans.
  1. The only real ways for companies to raise money when they’re on the stock exchange aren’t open to BIH either. They cannot offer any more new shares in the company due to the shares being suspended – not that I think they’d get any takeup or even underwriting on the shares anyway, judging by previous issues. Alternatively it’s down to selling more debt – and bearing in mind the last loan they got from Yang Yuezhou was at junk bond levels (12%), I can’t see anyone else offering to put more money into the company without punitive interest and some kind of collateral.
  1. Most shareholders in the company aren’t that rich anyway. I’ve updated the FAQ page on this site which now not only has the list of major shareholders, but a complete list of where all the public shares are being held. It doesn’t list the individual shareholders, but you only have to look at the size of the small holdings and the size of the brokerages that have been retained to buy them to understand the bulk of investors are like you and I. The only person I’d consider myself as possible to put money into BIH is BCFC chairman Vico Hui – who stumped up some of the bail money for Carson when he was originally arrested, and evidently has some wealth. However, he’s not been forthcoming with either investment or communication.

What can Peter Pannu and Carson do to alleviate the fan’s fears?

At this moment in time, I actually believe that there isn’t much at all that they can say that would either be believed or be detailed enough to give us new hope. Mr Pannu has been trying to secure new investment for Birmingham City, and that in my mind is all he can do – without new investment it’s going to be difficult for Blues to get out of the hole they’re currently in. It’s not as simple as emailing some Russian billionaire asking for a few quid either; anyone who wants to either buy into or buy Birmingham City are going to want to see the books and conduct some due dilligence (it’s been a while since we heard that phrase, hasn’t it?) It’s worth noting that the club isn’t for sale; Blues haven’t appointed any solicitors or similar to handle anything like that so we have to assume that for the forseeable future that Carson has no desire to sell.

In short, we’re still in the situation I’ve said we’ve been in for a long time – all we can do is wait and see. If I could do anything, I would urge people to be sensible about the situation; from the few conversations I’ve had with various people in the national media I don’t think that they have any more of a clue about what is happening than we do. Likewise, I’d encourage people to be sceptical of anything posted anywhere online about our financial situation (including here) – demand to see proof, and understand that speculation doesn’t always equal truth.

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18 Responses to “BCFC, BIH and Finances: The OP Perspective”

  • Walker says:

    i think its about time we just worried about whats happening on the pitch and not about what is going on at the club. worrying will get us nothing. Pannu and yeung have no interested in telling us anything so why should we carry on signing about carson. We will survive somehow and we will be here long after those pair of idiots have gone. Yes we are skint but this season I am as proud as ever to be a blues fan. Lets just get behind every player (yes hate to say it) but even ridgewell until he leaves. Lets be positive and even though money is tight lets get some more armchair supportors back to the home of football.

    3 points tonight would be amazing. Palace are in form at home and have a good team. but our squad is up there with the best in the championship. KRO

  • Steve says:

    Excellent Blog – you talk a lot of sense and is always a great read. KRO!

  • Violent Pacifist says:

    Where is this breakdown of who owns our club AlMaj?

    Been wanting this info for ages.

  • Violent Pacifist says:

    Thanks, interesting

  • parkp says:

    We should start worrying if we see players being sold again in January. Both Zigic and Beausejour have made it clear they want to stay, only Ridgewell has made a request to leave, so cheerio to him. Other than Ridgewell, all the players want to stay and try and help Blues win promotion. It is important we keep this squad together and if anything, bring one or two in come Jan, not sell, The 3 youngsters, Mutch, Butland and Redmond are the future and CH has made a point that these 3 wont be sold as the vultures loom. If the club were to sacrifice any of these youngsters or for that matter sell our better players come January ie, Burke, Davies, King, Murphy, then i think CH would leave the club and then the turmoil begins. Its all rumour at the minute and its a case of waiting to see what happens in January. I cant say iv ever dreaded the transfer window as much as i do at the moment.

  • Reeboh says:

    Regarding the Russian email.

    That has since been removed from the page the info was posted on. It is related to amuck larger and more serious plot. If possible could you remove this from any future statement made by yourself or any other members operating OP. What I can reveal is that it was part of a scam, that is all for the moment. Many Thanks on that front.

    P.S. It may well be time to create an Xtepgate page. I’m in correspondence with a member of the club about a problem. Which I will reveal as soon as we have solved the first problem.

  • Chris says:

    The thing that worries me most is, what happens if Carson gets sent down for a few years following these charges of money laundering?. Who will put money into the club & is there a danger of Blues going to the wall?

    • almajir says:

      The thing is Chris it’s not going to happen for a long time – Carson’s trial doesn’t start until 28 November 2012 and I can’t see a verdict being reached before January 2013 – a lot can happen before then.

  • bluenoseneil says:

    Is anyone tracking the rumours that James Ha (Midfielder – currently on loan at Hong Kong FC), Bilel Mohsni (Centre Back/Centre Forward!! – Southend Utd) and Gary Harkins (Midfielder – Kilmarnock) are 3 of our January targets?

    Looks like we’re shooting for the moon and ending up in the car park at The Hawthorns..

    That should tell you everything we need to know about our immediate financial state and therefore our aspirations as a club.

    Let’s hope we can continue to punch above our weight.

  • Nick says:

    Aplogies almajir Im so passionate about the Blues didnt mean to come on so strong hope you understand hopefully come May were all be laughing lol

  • ScudMuffin says:

    do you think that the company took out the loans with the intention of converting them to shares in the case of individualinvestor loans?

  • George says:

    bluenoseneil – as a Southend-based bluenose I’d have to say Bilel Mohsni is barely worthy of playing for a league 2 team. some fine performances, yes, but his temperament makes him a liability. I heard from friends that following a recent away game he had a row with management outside the ground, refused to board the coach home and took a train instead – and this was after he’d been sent off!! let’s hope he’s not on CH’s new year shopping list…

  • Doomed says:

    As much as some of this comment was interesting, I’ve decided not to publish it for legal reasons. Sorry

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