If you recall as a child of perhaps the 60’s or 70’s many an hour would be spent putting together jigsaws. Occasionally pieces from different sets might get mixed up. Sometimes, the box lid with the picture of the completed puzzle would go missing or be damaged making the task of completing the puzzle even more difficult.
So it is with Everton, no one has ever been sure of exactly how many pieces make up the completed puzzle, nor what it might look like, because with Everton, the pieces can change making the final picture different from how perhaps you imagined it when you first started.
Several pieces though have started to drop into place. Whilst 777 seem as far away as ever in gaining approval, other pieces of information are starting to add clarity to the picture.
What is clear is that Moshiri’s disastrous tenure at Everton is about to draw to a close, and is unlikely to be on the terms he might have originally wished for.
The MSP loan
At the end of May 2023, MSP Sports Capital provided Everton with a much needed loan to assist with the payments to Laing O’Rourke for the works on the new stadium at Bramley-Moore Dock. On the 23rd May 2023 a new charge appeared on the Everton Stadium Development Company’s listing at Companies House. This charge was in favour of a company called Blythe Capital. Blythe Capital is owned by life long Evertonian and successful businessman Andy Bell (and his wife). Blythe acted, indeed still acts, as the security agent for a loan made by MSP to Everton Stadium Development Company.
MSP is an investment management company run by two managing partners, Jeff Moorad and Jahm Najafi. It is a private equity investor and invests in a number of different sports related opportunities. They put together a small group of investors (13) as limited partners and raised US$165 million (SEC filing here) Included in the ranks of the limited partners is Andy Bell, George Downing and Farhad Moshiri himself. It is thought Moshiri contributed £20 million via the MSP partnership. The original purpose of the loan, initially reported at £100 million but likely to be more than £140 million was to provide funding for the stadium and in return receive a 25% stake in Everton Football Club.
Subsequently, on 23 August, 2023, The Athletic’s Matt Slater reported that the original deal converting the loan into equity had fallen through as a result of objections by one of Everton’s creditors, Rights and Media Funding.
Nevertheless the loan had been paid, and in fact already been spent – as first reported on this site, here.
As part of MSP’s security arrangements, it has long been known, but not reported upon, that Blythe Capital had a charge not only on the leasehold land containing the Bramley-Moore Stadium , (as seen here on Companies House) but also on the company used by Moshiri to hold his 94.1% shareholding in Everton – the somewhat ironically named Blue Heaven Holdings, an Isle of Man Company. The latter charge, using the jigsaw analogy was considered to be perhaps a rogue piece. The assumption was that the MSP loan, no longer being converted to equity, would be repaid by Moshiri (unlikely) or an incoming new owner of Everton Football Club (most likely).
The Isle of Man company registry does not provide company documents for free, however, for the benefit of readers, the document can be read for free below:
Blythe Capital – Blue Heaven Holdings charge document
The critical section of the document is on page 9, naming the security securing the charge, and the naming of the relevant company on page 1
Page 9:
6.9 Share Capital
The Shares represent not less than 50% plus one Ordinary share of the entire issued share capital of the Company.Page 1:
Company means EVERTON FOOTBALL CLUB COMPANY, LIMITED, a company
incorporated in England and Wales (registered number 00036624), whose registered office
is at Goodison Park, Goodison Road, Liverpool, L4 4EL
The ability to call in the charge is controlled by the loan agreement between Blythe Capital and the Everton Stadium Development Company. Unfortunately this is not a public document, so the terms of the loan agreement (including one assumes the repayment date) are not known. To a degree, the trail runs cold here which is perhaps why this important document has not warranted much attention.
That is, until now. Simon Goodley reported the charge in the Guardian on 29th March 2024.
The Premier League conditions attached to “minded to approve”
More than 6 months after the initial reporting of 777 Partner’s agreement with Farhad Moshiri, the Premier League updated both Everton Football Club and Farhad Moshiri on the requirements for 777 Partner’s to meet their qualified “minded to approve” conditions.
Within those conditions there is a specific reference to the repayment of the MSP Loan , namely:
(iii) Proof of funding to complete the new stadium, and repayment of MSP’s £158 million stadium loan by mid April.
This is the next piece of the jigsaw. It is not unreasonable to infer that the mid April date is not just an arbitrary date but is likely to relate to the unpublished conditions within the loan agreement between MSP and the Everton Stadium Development Company., ie the date by which MSP expect their loan to have been repaid.
If that is the case, what happens next?
If the loan is repaid then Blythe/MSP fall out of the equation. The assumption is that the loan will only be repaid if all of the other conditions imposed by the Premier League on 777 Partners are fulfilled.
However if not (as I anticipate) then not only do 777 Partners fail to meet the Premier League conditions, but Blythe acting as security agents for MSP have the right to acquire a controlling stake in Everton Football Club should they choose to do so.
In those circumstances MSP control Everton Football Club having 67,501 shares out of a total of 135,000 issued shares. Farhad Moshiri’s holding fall from 127,031 to 59,530 shares, ie he no longer controls Everton Football Club.
What happens then?
On the basis that the MSP loan is not repaid by mid-April (specific date unknown), and that MSP exercised their rights through Blythe Capital then they control the future of Everton. Moshiri still retains a significant stake but no longer controls.
The question is would MSP take up the option? Given that the club faces exactly the same challenges, heavily indebted (including 777 Partners now as creditors) would they do so? Part of the answer lies in what the loan agreement between Blythe and Everton Stadium Development Company contains.
If the agreement is that the acquisition of 67,501 shares settles the loans, is that a good deal? It values Everton in its current state at £316 million. That in itself, doesn’t solve Everton’s immediate cashflow problems, nor its medium or long term capital requirements. MSP as majority holders face all the issues Moshiri faces now, and would include 777 Partners as creditors, owed approximately £200 million – the terms of which are unknown.
In addition, MSP would require Premier League approval to acquire their majority stake. One assumes that similar conditions would apply regarding MSP providing proof of the additional funding required for the stadium, working capital and creditors. Unlike 777 Partners, it is fairly safe though to assume MSP would meet those requirements, should they wish to acquire that stake.
Interestingly such a deal would imply that Moshiri’s remaining stake in Everton (44.1%) would have a nominal value of £139 million, significantly more than the terms agreed with 777 Partners.
Uncertainties
It’s not certain that MSP through Blythe would take up their option should their loan not be repaid (for the reasons expressed above). Then we are back into the possibility of administration as I have spoken of before. In administration (and I stress again this is not my preferred option, just an option better than 777 Partners) MSP’s loan is entirely secure – on the basis that Everton come out of administration as a viable professional football club.
So, we are reaching the critical point – within two weeks give a day or two Moshiri may lose control to MSP. 777 supporters say he may lose control willingly to 777 Partners – I think not as I have said on numerous occasions. Administration remains on the table, in which case Moshiri loses control.
The one certainty is Moshiri loses control of Everton in the coming weeks – what the future holds beyond that though is still very much in the air. The jigsaw puzzle and what it finally looks like is still very far from complete.