Hearts administration: BDO in liquidation battle

Ukio Bankas' administrator has told BDO that the three offers for the Tynecastle club are unacceptable. Picture: SNS
Ukio Bankas' administrator has told BDO that the three offers for the Tynecastle club are unacceptable. Picture: SNS
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HEARTS administrators BDO have insisted that preserving the Tynecastle club as a going concern is in the best interests of both creditors and bidders.

BDO released their statement after Lithuanian firm Valnetas UAB, administrators of Ukio Bankas, threatened to liquidate Hearts if they did not receive better offers from the two groups which remain in the running to take over the club.

A third would-be owner of Hearts, former club sponsor Bob Jamieson’s HMFC Ltd, has been ruled out by Valnetas. That leaves the Foundation of Hearts, chaired by Edinburgh South MP Ian Murray, and Five Stars Football Limited, fronted by Angelo Massone. Both groups are expected to have further talks with BDO this week.

“We are continuing to work with the administrator of Ukio Bankas and the bidders to enable the club to exit administration as a going concern,” Bryan Jackson of BDO said. “However, it should not be forgotten that it is the duty of the administrator of Ukio Bankas to achieve the best financial result for the bank’s creditors, and he will act to ensure that this happens.

“Liquidation is always a possibility when a business is in administration, but we are confident that we can work with the bidders to produce an outcome that saves the club and provides an acceptable return to the creditors of Ukio Bankas. I believe that we are making progress towards a constructive solution and hopefully all parties will recognise that the best value will be realised by selling the club as a going concern.”

The Valnetas statement, released yesterday morning, was in the name of managing director Gintaras Adomonis. “I can repeat that we are doing everything we can to save the club functioning,” he said. “However, I am obliged to protect solely the interests of Ukio Bankas and its creditors.

“If no feasible offer with terms and conditions acceptable to Ukio Bankas creditors is achieved, Ukio Bankas will remain with the only solution - liquidation of Hearts of Midlothian Plc and enforcement of the standard security over Tynecastle stadium. I sincerely hope this is the way of things we still can avoid.”

Revised offers from the Foundation, Five Stars and HMFC were all submitted by BDO to Lithuania last week as part of the process of trying to achieve a CVA. Ukio own 29.9 per cent of the shares in Hearts, while Ubig – also previously control led by Kaunas-based businessman Vladimir Romanov – have 50 per cent. At least 75 per cent of the shareholders must agree a CVA proposal before it can be passed, but Ubig has yet to have an administrator appointed, and therefore nothing can happen with its shares at present.

While the mention of liquidation inevitably caused considerable worry for many Hearts fans yesterday, the Foundation adopted a ‘business as usual’ attitude. They pointed out that the possibility of liquidation had existed since the club went into liquidation last month, and recognised that Valnetas were duty bound to do what they could to maximise the return for Ukio.

“Our bid team, working on behalf of the Foundation of Hearts, continues to negotiate on the points of the bid submitted on our behalf to BDO,” Murray said.

“Meetings are scheduled for this week, and have been since our revised bid and proof of funding was submitted last Wednesday, as requested. It’s very much business as usual. We remain hopeful that we can demonstrate to the club’s creditors that our proposal provides the strongest return and carries the lowest risk, in short by far the best solution. This announcement from Lithuania does again, however, demonstrate the need for supporters to set up direct debits via foundationofhearts.org, if they can do so.”

Massone has yet to make any public comment on his reasons for bidding. His offer of cash up front is understood to be greater than the Foundation’s, but the Foundation has earmarked a considerable sum for working capital, whereas it is unclear if Massone has allocated any funds to be used after a successful takeover.

BDO predicted last week that either one or two bidders would shortly be ruled out of the running once Valnetas had had a chance to examine their offers and to assess the credibility of their funding. Valnetas did not explain why they had ruled HMFC Ltd out of the running, but according to Jamieson, BDO told a colleague of his that the offer was of “an unacceptable level”.

Jamieson had hoped to move Hearts to a new stadium, built with money sourced by American group Club 9 Sports. “One of my colleagues got an e-mail from BDO,” he said last night. “It was pretty vague, but part of it said the offer was of an unacceptable level.

“Our offer was £2.5 million for the CVA and £2.5m for running costs. I thought that was a fair bid.”