SERGEJUS FEDOTOVAS today moved to placate Hearts fans concerned about the threat of administration.
The club’s Lithuanian director spoke exclusively to the Evening News, claiming that £15million owed to Ukio Bankas will not be instantly recalled after the bank was declared bankrupt and that there is no immediate danger for Hearts.
Senior Tynecastle officials will soon hold talks with Valnetas UAB – appointed as Ukio’s administrators last week after the bank was declared insolvent at a hearing in Kaunas – to negotiate a way forward.
Fedotovas will be heavily involved in those discussions and today explained why he is confident administration is not imminent at Tynecastle.
For those worried about cashflow during the close season, Fedotovas also revealed that the club’s business plan for the next few months should ensure enough money is available to see them through until the new campaign begins in August. The salary bill will reduce when some high-earning players depart at the end of the season, as will general operational costs, although more investment is still required going forward.
Ukio Bankas was officially declared bankrupt last week, leading to fears that the £15m owed by Hearts would be called in straight away. The bank has ten days from last Thursday to appeal the decision after debts of over £300m forced the Central Bank of Lithuania to suspend it from trading.
The Edinburgh club also owe £10m to parent company Ukio Bankas Investment Group (UBIG).
Fedotovas answered questions below from the Evening News in the wake of news that Ukio Bankas is to be liquidated:
Q What are Hearts’ plans for paying wages and bills during the summer months with no matches to generate income?
A “The wage bill will drop significantly in summer as much as business costs will go down in low season. We plan that enough cash will be available to take us to the start of the next season. The board is also working on varous investment options to bring more income and investment to the club.”
Q There are some suggestions that UBIG’s 79 per cent shareholding in Hearts has been transferred to Ukio Bankas. Can you tell us if this is true or false?
A “As far as we know it is false. The club had no indication this has happened.”
Q Do you know if the £15m debt Hearts owe Ukio Bankas will be recalled automatically?
A “£15m will not be called automatically. We plan to perform to the agreement and seek in co-operation with the administrator long-term future solutions. We believe that a sensible solution can be reached that satisfies the administrator and maintains the positive business momentum that the club has created.”
Q Do you have an indication of how long the liquidation of Ukio Bankas would take?
A “Ukio bankas is a relatively big business, it may take many months. The administrator will be in a position to advise once he gets hands on.”
Q Is it possible for Hearts to be sold to a new owner at the moment given Vladimir Romanov’s assets are frozen?
A “We believe certain possibilities exist given that all concerned parties will be in agreement.”
Q Bearing in mind the money owed by Hearts to UBIG and Ukio Bankas, what price would Mr Romanov be willing to accept to sell the club?
A “We are working on this at the moment, trying to establish the solution which will be best for Hearts.”
The concern for supporters is that Valnetas will not harbour anywhere near the level of emotional sentiment for Hearts that they do. To Lithuanian auditors, a Scottish football club heavily in debt to a failed Lithuanian bank means very little as they attempt to get best value for Ukio’s hundreds of creditors. Hearts’ fate now appears to rest on whether Fedotovas can convince Ukio’s adminstrators that Hearts is a viable business and not one worth forcing into administration by demanding the £15m.
Fans’ groups – led by the Edinburgh MP Ian Murray – are continuing their efforts to ultimately wrest control of the club from Vladimir Romanov, who controls UBIG. The Romanov rollercoaster has been the ride of this or any other lifetime but the man himself is unquestionably plummeting down a rather steep slope these days. Fans in Gorgie are eager he doesn’t end up taking their club with him.
Fedotovas and his fellow directors don’t believe he will. Hearts published their annual accounts on Saturday morning prior to the 3-0 defeat of St Mirren, revealing that they are £24.7m in debt (£10m to UBIG, £15m to Ukio). Turnover increased by almost £2m over the course of the year, mainly due to player sales. Staff are being paid on time, as are bills, and an agreement to pay £1.58m of tax debt to HMRC over the next three years began this month.
Officials at Tynecastle will point out to Valnetas administrators that they are surviving by themselves since UBIG stopped providing funding well over 12 months ago. They feel it would make no sense to recall the £15m while they are fulfiling the agreements put in place with Ukio and running as a viable business. Yet the debt around their shoulders remains the biggest concern because it is unsustainable by Hearts alone. More answers may be forthcoming on the 23rd of this month at the club’s annual general meeting, which Fedotovas is expected to attend.