' VINCENT TAN DEBT TO EQUITY ' - by Keith Morgan

Thursday 1st May 2014.

Received via CCST email


' VINCENT TAN DEBT OR EQUITY ' – WHAT DOES IT MATTER TO CARDIFF CITY?

Many people have raised the issue of Vincent Tan`s continued delay in carrying out his promise, made publicly on several occasions, to convert all of the loans he has made to the football club into shares and to make the club debt free.

Some fans are of the view that it makes no difference on the basis that “he only owes the money to himself” now that he holds a significant majority of shares in the club`s parent company. However, unfortunately, this is simply not the case.

As long as Vincent Tan continues to be a creditor of the company then it gives him two significant powers.

1) To control the board of directors by appointing the majority of the holding company board – Malaysian employees of his who can simply outvote the UK directors – even though Vincent Tan is not officially a director himself (although under UK insolvency law , should the company enter a formal insolvency, he would be regarded as one because of that control he exerts).

2) More importantly, he can demand his money back at any time as it is not a term loan to be repaid over a period of time, but is repayable on demand like an overdraft. There appears to be a wide disparity between Vincent Tan`s own claims that he is owed £70m to £80m by the club and the claims of the Chairman Mehmet Dalman that Vincent Tan has put in up to £140m.

Whichever figure is correct. the club simply does not have the money to repay it even with a sell-off of a lot of players and Vincent Tan taking all the end of season Sky TV payment plus next season`s first instalment of “parachute” payment. (The football authorities may not allow this to happen anyway if they believe the club may fold financially as a result and hold on to the money until the position is clear).

If Vincent Tan honours his promise to convert all debt into shares, then he is no longer owed any money and can make no demand for repayment from the club. His outlet for recovering his money would then be a sale of his shares to a new investor. Two other routes are NOT available to him in the foreseeable future.
1) A float on a Stock Exchange, either in the UK or Singapore or Malaysia. The club simply does not qualify for such a float due to its record of financial losses and lack of growth potential ( a relegation would half the club`s income while it would have to finish well up the Premier League on a consistent basis to significantly improve this season`s income level). The inability of the club to follow this route was confirmed by the Chairman at a recent meeting with supporters` representatives.

2) Paying himself back with big share dividends each year. This would be a breach of UK law as companies are only able to do so out of cumulative profits – i.e. all of the £millions of losses from past years would have to be cleared first. The recently amended budgeted profit for the current season is about £12m even playing at the top level with all the Sky income that entails, so it would take ages for this to happen.

So Vincent Tan sticking to his promise to convert all his debt into shares DOES make a difference to the club`s financial stability – a very big difference. I am sure that most fans hope that he will honour that promise as soon as practicable as it was first promised to be done when the Langston debt was settled, which happened several months ago.

Gavin/Keith

Sincere thanks for that VERY enlightening post/comment

It certainly answers a lot of questions and clarifies matters for me (and hopefully the majority of supporters)

Hopefully, Vincent Tan will honour his 'promise' of debt-to-equity, as it would make such a huge difference to the club; and by default its loyal supporters, the city of Cardiff itself and its surrounding areas too

I can see within that statement (possibly loss of 'control'?) why Tan is maybe "holding back" whilst certain issues are sorted, but I think a clear statement from him (Tan) would be very timely come the end of this season, once we know our fate for next season

Thanks again, guys

Sven

Is there anything that could force Tans hand to actually carry out the debt to equity conversion, or is the club stuck in this position until Tan decides whether he will or not.

If there are so many benefits to Tan not to convert, i just cannot see why he ever would, as he can then just hold the club to ransom?

If everyone agrees that this is the case then being as this topic rears it head every now and then ,could this be made a sticky till the situation changes. that would save a new thread when someone who has,nt read this thread starting a new one in the future.

Very intresting. Clarifies a lot of points that folk have been wondering about including myself.

Gavin/Keith

Sincere thanks for that VERY enlightening post/comment

It certainly answers a lot of questions and clarifies matters for me (and hopefully the majority of supporters)

Hopefully, Vincent Tan will honour his 'promise' of debt-to-equity, as it would make such a huge difference to the club; and by default its loyal supporters, the city of Cardiff itself and its surrounding areas too

I can see within that statement (possibly loss of 'control'?) why Tan is maybe "holding back" whilst certain issues are sorted, but I think a clear statement from him (Tan) would be very timely come the end of this season, once we know our fate for next season

Thanks again, guys

Sven

To echo that, thanks both for the explanation.

Sven, great point too if it is about control; it would then make sense in terms of waiting for any contentious issues to be settled (i.e. Langstone and now Malky/Moody)! Hope it gives all the nay sayers some food for thought!

I wouldnt extend the 'Overdraft facility' watching this lot, instead demand all of his money by selling to new investors. Whether Tan is courting other "Suitors" is another matter?? With the Sky Money due and the Parachute Payments due from the Premier League-if a Sale is to happen then it needs to be done quickly! But I think Tan kinds of has a soft spot for Cardiff City! and we will see him next season

"As long as Vincent Tan continues to be a creditor of the company then it gives him two significant powers.
1) To control the board of directors by appointing the majority of the holding company board – Malaysian employees of his who can simply outvote the UK directors – even though Vincent Tan is not officially a director himself (although under UK insolvency law , should the company enter a formal insolvency, he would be regarded as one because of that control he exerts)."

To me this is just symantics, Tan maybe the major creditor and not a Director, but the fact is that he has put in £100 million of his own money, pointless bleating about things, the board have been only too happy to take his money in loans or in any other form.

Keith

Good explanation.

One point - legally does he not control the Board appointments as a major shareholder anyway, rather than as a creditor? The debt to equity conversion will only strengthen, not weaken, that position.

The other good point you make is that, by his obvious involvement in the management of the club, he is acting as a 'shadow' director and his conduct would be examined if the company went into administration.

Am I right in thinking that any of the money made off TV rights or the selling of players doesn't have to used to pay off the debts?.

Tan can simply take that money, then demand the loan repayment at a later date?.

Am I right in thinking that any of the money made off TV rights or the selling of players doesn't have to used to pay off the debts?.

Tan can simply take that money, then demand the loan repayment at a later date?.

i seriously doubt it, he cant just pocket the money himself

Am I right in thinking that any of the money made off TV rights or the selling of players doesn't have to used to pay off the debts?.

Tan can simply take that money, then demand the loan repayment at a later date?.

I think there's a rule/law or something that parachute payments go to the club rather than the owner, stopping the owner from leaving with the earnings

Gavin/Keith

Sincere thanks for that VERY enlightening post/comment

It certainly answers a lot of questions and clarifies matters for me (and hopefully the majority of supporters)

Hopefully, Vincent Tan will honour his 'promise' of debt-to-equity, as it would make such a huge difference to the club; and by default its loyal supporters, the city of Cardiff itself and its surrounding areas too

I can see within that statement (possibly loss of 'control'?) why Tan is maybe "holding back" whilst certain issues are sorted, but I think a clear statement from him (Tan) would be very timely come the end of this season, once we know our fate for next season

Thanks again, guys

Sven

Thanks Gavin/Keith

Chris, This shows without a doubt Vincent Tan needs to honour his word, which is now nearly 2 years ago and change the debt to equity and remember this, the debt is nearly all his anyway, weve gone from a £30 odd mill debt to £130 mill approx debt in 2 years

Also there always seems to be some reason why he is holding back, I was at the meeting nearly 2 yrs ago and the promise made was, if the fans accepted his despicable rebrand summer 2012, then Tan would invest £100 Mill, well so far he has only lent us it, we need Tan to honour his word.

Each day that passes without the debt turning to equity makes me more and more worried.

Gavin/Keith

Sincere thanks for that VERY enlightening post/comment

It certainly answers a lot of questions and clarifies matters for me (and hopefully the majority of supporters)

Hopefully, Vincent Tan will honour his 'promise' of debt-to-equity, as it would make such a huge difference to the club; and by default its loyal supporters, the city of Cardiff itself and its surrounding areas too

I can see within that statement (possibly loss of 'control'?) why Tan is maybe "holding back" whilst certain issues are sorted, but I think a clear statement from him (Tan) would be very timely come the end of this season, once we know our fate for next season

Thanks again, guys

Sven

Thanks Gavin/Keith

Chris, This shows without a doubt Vincent Tan needs to honour his word, which is now nearly 2 years ago and change the debt to equity and remember this, the debt is nearly all his anyway, weve gone from a £30 odd mill debt to £130 mill approx debt in 2 years

Also there always seems to be some reason why he is holding back, I was at the meeting nearly 2 yrs ago and the promise made was, if the fans accepted his despicable rebrand summer 2012, then Tan would invest £100 Mill, well so far he has only lent us it, we need Tan to honour his word.

Each day that passes without the debt turning to equity makes me more and more worried.

If Sven is correct the story perfectly explains why he is holding back

Been waiting for tan to honour his word for ages fact is if he doent the langston debt and trouble it caused the club would be nothing compared to tans debt of over 100 mill worrying times big time

Been waiting for tan to honour his word for ages fact is if he doent the langston debt and trouble it caused the club would be nothing compared to tans debt of over 100 mill worrying times big time

True, but we should have no reason o doubt has he has done everything else he has promised

Can anyone confirm whetehr one of holdbacks is Isaacs not selling shares or is this a myth ?

Been waiting for tan to honour his word for ages fact is if he doent the langston debt and trouble it caused the club would be nothing compared to tans debt of over 100 mill worrying times big time

True, but we should have no reason o doubt has he has done everything else he has promised

He said he wouldn't change the badge or the kit.

Been waiting for tan to honour his word for ages fact is if he doent the langston debt and trouble it caused the club would be nothing compared to tans debt of over 100 mill worrying times big time

True, but we should have no reason o doubt has he has done everything else he has promised

He said he wouldn't change the badge or the kit.

He said he wouldn't change it and that he would not invest because of some uproar. However, sections of the fanbase said, not its quit ok go ahead and change it so he did. That's not lying that's changing your mind based on a further understanding of the situation.

Can anyone confirm whetehr one of holdbacks is Isaacs not selling shares or is this a myth ?

Mike
Its 100% a myth and some shit stirring with it.

Been waiting for tan to honour his word for ages fact is if he doent the langston debt and trouble it caused the club would be nothing compared to tans debt of over 100 mill worrying times big time

True, but we should have no reason o doubt has he has done everything else he has promised

He said he wouldn't change the badge or the kit.

He said he wouldn't change it and that he would not invest because of some uproar. However, sections of the fanbase said, not its quit ok go ahead and change it so he did. That's not lying that's changing your mind based on a further understanding of the situation.

No that is lying.

99% of the fans said no the rebrand.

Can anyone confirm whetehr one of holdbacks is Isaacs not selling shares or is this a myth ?

Mike
Its 100% a myth and some shit stirring with it.

Cheers mate

Been waiting for tan to honour his word for ages fact is if he doent the langston debt and trouble it caused the club would be nothing compared to tans debt of over 100 mill worrying times big time

I have no respect for Tan, No one should be allowed to strip an identity(100 years old) from a football club, imagine if we went to another country and did that to their club.
Tan has no respect for us and yes a minority went along with him, many also did it for the promise of a debt free club, personally within minutes of digesting what the blackmail was, I realised NO, I will never like or accept it and will try and fight for our pride and identity back.

Our club is in a worse state than before Tan took it over, a club without an identity,a Championship club, a divided club and a club with a debt of £130 mill approx

Been waiting for tan to honour his word for ages fact is if he doent the langston debt and trouble it caused the club would be nothing compared to tans debt of over 100 mill worrying times big time

I have no respect for Tan, No one should be allowed to strip an identity(100 years old) from a football club, imagine if we went to another country and did that to their club.
Tan has no respect for us and yes a minority went along with him, many also did it for the promise of a debt free club, personally within minutes of digesting what the blackmail was, I realised no, I will never like or accept it and will try and fight for our pride and identity back.

Our club is in a worse state than before Tan took it over, a club without an identity,a Championship club, a divided club and a club with a debt of £130 mill approx

i thought he was only misinformed the other week?

Been waiting for tan to honour his word for ages fact is if he doent the langston debt and trouble it caused the club would be nothing compared to tans debt of over 100 mill worrying times big time

I have no respect for Tan, No one should be allowed to strip an identity(100 years old) from a football club, imagine if we went to another country and did that to their club.
Tan has no respect for us and yes a minority went along with him, many also did it for the promise of a debt free club, personally within minutes of digesting what the blackmail was, I realised no, I will never like or accept it and will try and fight for our pride and identity back.

Our club is in a worse state than before Tan took it over, a club without an identity,a Championship club, a divided club and a club with a debt of £130 mill approx

i thought he was only misinformed the other week?

Nat, stay of my posts, I have told you to stop stalking me and I would never mention u again

Am I right in thinking that any of the money made off TV rights or the selling of players doesn't have to used to pay off the debts?.

Tan can simply take that money, then demand the loan repayment at a later date?.

Mario, Tan could sell of the players and take all the money due, just by calling the debt he made in.

Lucky Red my arse. Despicable Red.

Been waiting for tan to honour his word for ages fact is if he doent the langston debt and trouble it caused the club would be nothing compared to tans debt of over 100 mill worrying times big time

I have no respect for Tan, No one should be allowed to strip an identity(100 years old) from a football club, imagine if we went to another country and did that to their club.
Tan has no respect for us and yes a minority went along with him, many also did it for the promise of a debt free club, personally within minutes of digesting what the blackmail was, I realised no, I will never like or accept it and will try and fight for our pride and identity back.

Our club is in a worse state than before Tan took it over, a club without an identity,a Championship club, a divided club and a club with a debt of £130 mill approx

i thought he was only misinformed the other week?

Nat, stay of my posts, I have told you to stop stalking me and I would never mention u again

Answer the question. I've not had a go at you like you so often do to me.

Gavin/Keith

Sincere thanks for that VERY enlightening post/comment

It certainly answers a lot of questions and clarifies matters for me (and hopefully the majority of supporters)

Hopefully, Vincent Tan will honour his 'promise' of debt-to-equity, as it would make such a huge difference to the club; and by default its loyal supporters, the city of Cardiff itself and its surrounding areas too

I can see within that statement (possibly loss of 'control'?) why Tan is maybe "holding back" whilst certain issues are sorted, but I think a clear statement from him (Tan) would be very timely come the end of this season, once we know our fate for next season

Thanks again, guys

Sven

Thanks Gavin/Keith

Chris, This shows without a doubt Vincent Tan needs to honour his word, which is now nearly 2 years ago and change the debt to equity and remember this, the debt is nearly all his anyway, weve gone from a £30 odd mill debt to £130 mill approx debt in 2 years

Also there always seems to be some reason why he is holding back, I was at the meeting nearly 2 yrs ago and the promise made was, if the fans accepted his despicable rebrand summer 2012, then Tan would invest £100 Mill, well so far he has only lent us it, we need Tan to honour his word.

Each day that passes without the debt turning to equity makes me more and more worried.

Annis,
do you think there is a possibility that the shit aimed in Mr Tan's direction during this last few months may just influence him not to go ahead with the conversion?

This is brilliant thread - Thank you!

A couple of posts are suggesting that this explains why Tan has "held back" on converting the debt to equity. Sounds like he is waiting for that perfect moment, which will not now come if we go into the 2nd tier for at least another couple of years. After all, he hasn't seen fit to do it within our first year in the PL has he?

My honest opinion is that he has no intention of converting until he can get a profit and walk away whenever it suits him. He is hardly likely to get to that point within 2 or 3 years. Let's face it, he has us where he wants us for now.

The other side of this coin is that we should be able to apply fan power in the form of open protest. It is true tags the could walk and demand the repayment of all debts, but we don't have the cash so why would he do that??

Another post insists he merely changed his mind over the rumoured rebrand. But the rumours were true!! Also, he has now said Cardiff will always be red. Could he change his mind there too? NOT WITHOUT PRESSURE.


Thanks again for such a clear and succinct explanation.

This is brilliant thread - Thank you!

A couple of posts are suggesting that this explains why Tan has "held back" on converting the debt to equity. Sounds like he is waiting for that perfect moment, which will not now come if we go into the 2nd tier for at least another couple of years. After all, he hasn't seen fit to do it within our first year in the PL has he?

My honest opinion is that he has no intention of converting until he can get a profit and walk away whenever it suits him. He is hardly likely to get to that point within 2 or 3 years. Let's face it, he has us where he wants us for now.

The other side of this coin is that we should be able to apply fan power in the form of open protest. It is true tags the could walk and demand the repayment of all debts, but we don't have the cash so why would he do that??

Another post insists he merely changed his mind over the rumoured rebrand. But the rumours were true!! Also, he has now said Cardiff will always be red. Could he change his mind there too? NOT WITHOUT PRESSURE.


Thanks again for such a clear and succinct explanation.

What no one - including K Morgan and anyone else commenting on this matter - knows is how Mr Tan's corporate interests are structured in terms of tax, inter company loans, external debt and other factors and how Cardiff City fits into this. It is dangerous to make simple assumptions as to what his intentions might be and what his actual options are.