Debts cut as plan boosts Hearts

Hearts will wipe £10 million from club debt at an extraordinary general meeting of shareholders next month as parent company Ukio Bankas Investment Group propose another debt-for-equity swap.

The move, similar to the 12m swap in summer 2008, will reduce debt to an estimated figure of between 25m and 26m before this year's operating costs are taken into account. Significantly, it will also reduce interest payments by 500,000 a year.

Hearts' last annual accounts reported club debt at 34.78m and UBIG have been pleased with the efforts of Tynecastle officials in cutting day-to-day costs and the players' wage bill.

The company controls 95.07 per cent of Hearts' existing shares.

The EGM to formally propose the debt-for-equity scheme to shareholders will take place on Thursday, November 11 at Tynecastle. It will see UBIG further increase its share- holding in exchange for the 10m payment and, given the company's already vast control, it is certain to be voted through.

As well as offering further evidence of Vladimir Romanov's long-term commitment to Hearts, the reduction of debt will take the Edinburgh club a step closer to complying with UEFA's new financial fair play regulations.

This requires clubs to break even by the end of 2012 or face the prospect of being denied entry to European competition.

Romanov, the UBIG chairman, began a policy of cost-cutting three years ago when he declared that players would no longer receive exorbitant salaries at Hearts. This has seen several high-earners leave the club in recent seasons, most notably Mauricio Pinilla, Bruno Aguiar and Jose Goncalves.

Under the Russian's guidance and with the added financial stability brought by UBIG's backing, the club continues to move in the right direction towards long-term profitability. For the moment, they remain reliant on Romanov and UBIG until debt is completely cleared.