Post by Golden_Boy™ on Sept 11, 2009 11:49:38 GMT -1
Statement to the Stock Exchange
When the Board announced the Company's interim results in March 2009 it confirmed that it had prepared projections through to June 2010 and that it was confident that through a combination of operational cash flows, borrowing facilities, capital raising abilities and shareholder support the Company could meet all of its financial obligations.
The Board is still confident that longer term finance can be raised and is currently considering all fundraising options including the potential issue of new equity to the Company's key shareholders. It is currently anticipated that significant funding will need to be put in place before the year end
and, as a result, discussions with these key shareholders are ongoing. If no agreement can be reached then the Company will have to seek alternative sources of financing.
Related Party Loans
The Company's working capital requirements have been assisted over the course of the last nine months by Valley Grown Salads ("VGS") which agreed to delay repayment of a short term loan of approximately GBP1.82 million, which (as previously announced) was made available to the Company's subsidiary, Watford Association Football Club Limited (the "Club") in January 2009 (the "January Loan") and was originally due to be repaid in four equal instalments from monies due from The Football Association Premier League Limited ("the FAPL") the last instalment being due on 31 July 2009. These instalments were made available to
the Club with the agreement of VGS when received from the FAPL. Further short term funding of GBP0.65 million was provided by Giacomo Russo at the end of July 2009 (the "July Loan") and a further GBP1.25 million was provided in August 2009 by Giacomo Russo (the "August Loan").
The Company has today agreed that the January Loan, the July Loan plus a previously loaned amount of GBP0.16 million, totalling approximately GBP2.63 million, will be consolidated into a single loan from VGS and will be due for repayment within twelve months of the agreement date and will accrue interest
until that time at an interest rate of LIBOR plus 3.5 per cent. per annum, payable on maturity, although the Company has the option to repay the loan at any time. VGS has also been granted security over the Vicarage Road Stadium, by way of a debenture ranking behind the existing secured creditors, in respect of
this consolidated loan. The security is subject to the finalisation of appropriate documentation. The August Loan of GBP1.25 million from Giacomo Russo is repayable in three instalments over the next twelve months on receipt of the
proceeds of player transfers agreed in August and will accrue interest at a rate of 7 per cent per annum.
The extension of the repayment terms of the January Loan and provision of both the July Loan and the August Loan are deemed to be related party transactions under the AIM Rules for Companies. The independent directors of the Company in
respect of these loans (that is, excluding Vincenzo and Giacomo Russo who jointly control VGS) consider, having consulted with Strand Partners Limited, that the terms of the loans are fair and reasonable insofar as the Company's shareholders are concerned.
A further announcement in respect of the Company's funding position will be made in due course.
Giacomo Russo, Chairman said "I am pleased to have been able to provide financial support for Watford at a time of difficult cash flow while operational issues were addressed and look forward to agreeing the basis of the company's longer term financing with the other major shareholders shortly. I would
also like to thank my co-directors for their continued support".
The Board is still confident that longer term finance can be raised and is currently considering all fundraising options including the potential issue of new equity to the Company's key shareholders. It is currently anticipated that significant funding will need to be put in place before the year end
and, as a result, discussions with these key shareholders are ongoing. If no agreement can be reached then the Company will have to seek alternative sources of financing.
Related Party Loans
The Company's working capital requirements have been assisted over the course of the last nine months by Valley Grown Salads ("VGS") which agreed to delay repayment of a short term loan of approximately GBP1.82 million, which (as previously announced) was made available to the Company's subsidiary, Watford Association Football Club Limited (the "Club") in January 2009 (the "January Loan") and was originally due to be repaid in four equal instalments from monies due from The Football Association Premier League Limited ("the FAPL") the last instalment being due on 31 July 2009. These instalments were made available to
the Club with the agreement of VGS when received from the FAPL. Further short term funding of GBP0.65 million was provided by Giacomo Russo at the end of July 2009 (the "July Loan") and a further GBP1.25 million was provided in August 2009 by Giacomo Russo (the "August Loan").
The Company has today agreed that the January Loan, the July Loan plus a previously loaned amount of GBP0.16 million, totalling approximately GBP2.63 million, will be consolidated into a single loan from VGS and will be due for repayment within twelve months of the agreement date and will accrue interest
until that time at an interest rate of LIBOR plus 3.5 per cent. per annum, payable on maturity, although the Company has the option to repay the loan at any time. VGS has also been granted security over the Vicarage Road Stadium, by way of a debenture ranking behind the existing secured creditors, in respect of
this consolidated loan. The security is subject to the finalisation of appropriate documentation. The August Loan of GBP1.25 million from Giacomo Russo is repayable in three instalments over the next twelve months on receipt of the
proceeds of player transfers agreed in August and will accrue interest at a rate of 7 per cent per annum.
The extension of the repayment terms of the January Loan and provision of both the July Loan and the August Loan are deemed to be related party transactions under the AIM Rules for Companies. The independent directors of the Company in
respect of these loans (that is, excluding Vincenzo and Giacomo Russo who jointly control VGS) consider, having consulted with Strand Partners Limited, that the terms of the loans are fair and reasonable insofar as the Company's shareholders are concerned.
A further announcement in respect of the Company's funding position will be made in due course.
Giacomo Russo, Chairman said "I am pleased to have been able to provide financial support for Watford at a time of difficult cash flow while operational issues were addressed and look forward to agreeing the basis of the company's longer term financing with the other major shareholders shortly. I would
also like to thank my co-directors for their continued support".
