West Brom may on collision course with EFL over £20million loan arrangements
West Brom could be on a “collision course” with EFL over the arrangements of their recent loan from MSD UK Holdings Ltd, according to The Liquidator.
The club announced on 28 December a four-year loan worth £20million, just prior to the latest failure of owner Guochan Lai to repay the the £5million he had pledged to return by New Year’s Eve [The Athletic, 31 December].
And a lack of clarity over the terms of the new borrowing raises questions about whether it complies with EFL rules about transfers of ownership, as raised by former BBC journalist Adrian Goldberg who runs the Liquidator Twitter account.
A thread on the account on Tuesday (10 January) said: “Re Changes to WBA Memorandum and Articles Of Association.
“These are changes following new EFL rules designed to prevent significant alteration in shareholdings at clubs – effectively to prevent ownership being changed without permission.
“So a good thing. But….
“At the same time, the recent Special Resolution passed by shareholders (effectively ‘Ken) also says that “notwithstanding” these new rules (ie in spite of them) WBA “may not decline to register any transfer of shares in the Company…to a secured party”.
In other words, regardless of what EFL says, if WBA has borrowed money and secured it against the assets of the club (eg stadium, training ground) and then defaults, shares MUST be transferred to the lender.
“Potentially sets WBA on collision course with EFL.
“To clarify: It may just be arse covering by WBA If they’ve already take[n] out a loan secured against the club, the don’t want to risk EFL getting in the way of an existing agreement.
“But what if the EFL object to that change in shareholding further down the line? That’s not clear.”
Concern
This sort of thing sounds incredibly dry and isn’t what Baggies fans want to be concerning themselves with, but could have major repercussions for the club.
If West Brom were default on this loan at some point, and the money has been secured against the Hawthorns for example, it appears there may be the possibility that ownership of the stadium would be lost.
Not only would it obviously be a bad thing in itself to be at risk of that, but if it contravenes the league’s rules then it leaves open the possibility that they hand down their own punishment.
Additionally, the lack of clarity which prevents fans from knowing one way or the other isn’t a positive situation, even if there is no risk.
The uncertainty off the pitch continues to detract from the excellent revival on it since Carlos Corberan was appointed, which should be giving Albion supporters a much-needed opportunity to enjoy being fans of the club.
The results and the football largely now do that after the drudgery of the Steve Bruce era, but nagging doubts that there could be big problems financially somewhere down the line puts a negative shine on everything at the Hawthorns.
In other West Brom news, a summer arrival has delighted one former Albion player with what he has done recently.