CQN: Celtic Quick News

I have a Heads of Terms document for the sale and leaseback of Ibrox, Murray Park and the Albion Car Park.

The purchase price for all three assets is £7.285m.  In addition to this there is a £6.9m loan provision with 15% interest payable monthly (£985.5k annually).  Initial rent for all three properties is £1.8m.  The 20-year lease provides for upwards-only reviews every five years by either 2% p.a. or RPI, whatever is greater (so assuming RPI is less than 2% each year, after five years, rent would be £1.987m).

Annual costs for rent and interest would be £2.835m.  Current season ticket sales are reported to be approximately 36,000 with a standard adult price of £286, income net of vat will be around £8.5m.

Although the top line figure for both sale and loan is £13.835, “the initial payment will be less 3 years rent [£5.4m] to compensate for the lack of guarantee covering the rental payments”, so monies paid would be £8.435m as the first three years rent is deducted from the total.

Crucially, rent is to be securitised against ticket receipts and the new landlord is to be granted “first charge on the season tickets”, so, just as Craig Whyte planned with Rangers, Sports Direct FC would collect ticket money before passing it on to the security holder.

If the buyer attains planning permission for residential properties at Murray Park, a provision releases the seller from having to repay the £6.55m loan and cancels future interest payments.  This speculative clause would release the club from punitive interest repayments but would require them to find a reasonably priced ash park to train on.  Perhaps the Albion Car and Training Park.

“The tenant” will be able to buyback the stadium.  In year one the price would be £10m (they would still owe the £6.55m loan).  The set price increases by 12% p.a. for 10 years, so the year-10 price would be £27.7m.  Thereafter “price will revert to Market Value but will not be less than £20m”.  The market value of Celtic Park is around £50m.  There is no buyback provision for Murray Park or the Albion Car Park.

The deal is on the table but will not be signed before the share issue, or if “the tenant” wins the Euromillions Jackpot (that’s not a euphemism for Champions League money, I mean the actual lottery), or finds some magic beans.

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