Analysis of Everton’s £60m, 3 year facility with ICBC – updated 7th July to include charge information
July 5, 2017
This evening the Liverpool Echo broke news that Everton under the direction no doubt of Moshiri and Ryazanstev, have negotiated a £60 million credit facility for three years with ICBC Bank. ICBC is owned by a company called Central Huijin Investment which is owned by the Chinese Government. As such it is the world’s largest bank by total assets, and this is their first Premier League deal.
The credit facility is totally separate from the financing of the stadium, which hopefully will be announced in the near term. It is for working capital purposes – ie normal business expenses and player acquisitions. It confirms the comments made in late March that the stadium would not affect the ability of the club to compete in the transfer market this summer.
The key parts of the facility are as follows:
- 3 year, £60 million facility
- The facility will be for working capital purposes, not for the stadium
- The credit facility is secured against Premier League revenues firstly, and then other assets of the club.
- The loan terms will be at a much lower rate than previous lending arrangements through Vibrac and Rights and Media Funding.
Details of the charges can be found here:
It does raise interesting questions in terms of the SPV being created, more comments when those details are released.
This is a hugely significant development. It opens up Everton to to the capital markets of China at a time when there is huge political interest in football both in China but globally.
Significantly it differs from other injections of Chinese capital in the Premier League and elsewhere in that it is done through lending rather than the issue of shares, as per other clubs. It is consistent therefore with the wishes of Farhad Moshiri not to issue more shares in the club, diluting smaller shareholders in order to fund our ongoing expansion.
From a footballing perspective it also provides an explanation as to why there is no pressure to sell Lukaku or Barkley (assuming we wish to keep him) despite our incredible spending spree in the transfer market.
Now several Blues may be concerned that this is a high risk strategy,but in my opinion it is not. It demonstrates two things to me.
It is a return to the world of major institution funding for Everton, an avenue closed for a number of years in the recent past.
Firstly a major bank, the worlds largest bank has confidence in providing debt (albeit secured against future Premier League revenues) to the club and in particular the strategy put forward by Moshiri. The fact that it is a Chinese Bank speaks volumes for our reach, and the status of the club financially.
Secondly, it shows huge confidence by Moshiri and the board that we are going to drive revenues forwards to meet this obligation, and that we have significant investment opportunities be it players or otherwise in front of us.
I’m finding it difficult to overstate the significance of this, in terms of the facility, the vision to allow it, the partners concerned and the potential for the future. This is truly a moment when we can say good bye to the old Everton dealing in the murky back waters of the BVI.
This is ground breaking in every sense, and a further demonstration of the new world in which Everton operate. As innovators throughout our 139 year existence, we have broken new ground again.
Not only are we excelling in the transfer market, we are now mixing it in the capital markets without cost to shareholders. It is a hugely significant moment in our history and further demonstrates our direction of travel .