Steve Gibson writes off nearly £107 million of loans

It's his Xmas present to us all. Probs means borrowing for January is cheaper.

If total share Value is £65m, he's at least £140m on the hole on Boro from memory. I cannot remember how many times he's done this but I remember at least once previously
 
Priming for the Premier League..

If we do go up.. we’re not going to be in the same position as Sheffield United or Luton Town.
 
viv_andersons_nana said:
Can someone explain what these means in the most simplistic terms please? I mean, what does it actually mean? Does it mean the club can get the chequebook out again, like the old days? Can they spend that repayment money on players instead? Has the club got £107m to play with now?

It *feels* good but i genuinely have no idea if it’s good, brilliant, basic business practice, nowt to see here, etc.
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It doesn't mean anything. It doesn't make the club any more, or less secure. The club owed Gibson O'Neil £107 million as a debt. The debt carried no interest. Now GON has decided to convert the debt into shares. So MFC no longer owes £107 million to GON. GON owns another 107 million shares (assuming they are £1 shares) in a company that is not really worth any more than it was yesterday.

It won't mean MFC has any more money. It may mean that MFC has a little more FFP headroom. I'm not sure MFC borrows money from third parties, but GON would still have to guarantee any loan because MFC won't have much of a credit rating.

Why has the loan been converted to equity? Anyone's guess really. HMRC might have insisted that it be done, on the basis that the debt was artificially affecting the value of GON. I don't think anyone seriously thought it would be repaid but it would have been on the GON balance sheet. It makes MFC look a bit more saleable, but in reality it's still a basket case. Or maybe Steve Gibson is preparing his own exit as chairman. Or maybe someone has made an offer to buy the business if it is debt free, or has reduced debt.
 
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Soutra said:
It doesn't mean anything. It doesn't make the club any more, or less secure. The club owed Gibson O'Neil £107 million as a debt. The debt carried no interest. Now GON has decided to convert the debt into shares. So MFC no longer owes £107 million to GON. GON owns another 107 million shares (assuming they are £1 shares) in a company that is not really worth any more than it was yesterday.

It won't mean MFC has any more money. It may mean that MFC has a little more FFP headroom. I'm not sure MFC borrows money from third parties, but GON would still have to guarantee any loan because MFC won't have much of a credit rating.

Why has the loan been converted to equity? Anyone's guess really. HMRC might have insisted that it be done, on the basis that the debt was artificially affecting the value of GON. I don't think anyone seriously thought it would be repaid but it would have been on the GON balance sheet. It makes MFC look a bit more saleable, but in reality it's still a basket case. Or maybe Steve Gibson is preparing his own exit as chairman. Or maybe someone has made an offer to buy the business if it is debt free, or has reduced debt.
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By definition then it DOES mean something.

Of course the club is still only a Going Concern because of remaining Group Undertakings.
It will still lose money in this league.
It will still have debt to Parent.
That debt will increase again, until the loss making stops.

But it is a ridiculous thing to say this massive gesture of writing a huge amount of debt off means nothing.

If the club is promoted - big if - then another investor is far more likely to be attracted to a club with a fraction of its former debt.
 
indeedido said:
with a fraction of its former debt.
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It still has the debt, just instead of it being a loan (with a 1 to 1 value) it is equity (with a 1 to a price value).
In your opinion, the value of the shares are a fraction of £1 but I bet if a billionaire rocked up to the Riverside & asked Gibson how much he'd be asking for £1+ per share back.
 
You only have to look to Westbrom who ask use loans to cover day to day spending Gibson just continues to foot the bill for us. It is a worry if he ever does turn the tap off like. We do need to become established in premiership to become self sufficient
 
He`s bought us all a presi to get through the new electronic NFC ticketing barrier thingy.
The one that makes things so much quicker, easy and simple......you know (y)
 
newusername said:
It still has the debt, just instead of it being a loan (with a 1 to 1 value) it is equity (with a 1 to a price value).
In your opinion, the value of the shares are a fraction of £1 but I bet if a billionaire rocked up to the Riverside & asked Gibson how much he'd be asking for £1+ per share back.
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He may well ask for it, but an investor wouldn't pay it yet.
Gibson O'Neill own all the shares.
An investor will pay what they value.

Nett Shareholder Value will still be less than nothing.
The squad will have market value above book value, but not that much.

The game changer is on promotion, with the revenue unlocked.
A club with much reduced debt and PL revenue/status allows Gibson to seek more for sale.
 
This is great news. I’m sure the reality will be that it makes very little difference to fans other than to give us a bit of reassurance over the future of the club. We might never know why he’s done this now, could be any number of reasons, but to certain extent it doesn’t matter.

One comment to make on the back of some of the responses - all championship clubs are currently loss making businesses, and almost all premier league clubs. So from that perspective, a football club is near impossible to value in the traditional business sense. The only person who can decide the value of the club is Steve Gibson, it’s only worth what it is worth to him.
 
Air Resistance said:
all championship clubs are currently loss making businesses, and almost all premier league clubs. So from that perspective, a football club is near impossible to value in the traditional business sense
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The classic quote is "How do you make a small fortune out of owning a football club? Start with a large one."

A football club is more like a house than a business, you spend years spending money on it & hope when you come to sell that the market has moved on & it is worth more than you've spent on it.
 
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