Hearts: Ukio Bankas agreement paves way to CVA

Hearts could be set to leave administration. Picture: Lisa Ferguson
Hearts could be set to leave administration. Picture: Lisa Ferguson
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A DAY that started with the meeting in which shareholders of Hearts’ largest creditor finally approved the sale of their shares to Ann Budge’s Bidco company has been described as the “second most important” in the Tynecastle club’s modern history.

With both time and funds running out, yesterday’s news from Lithuania confirming the share transfer by Ukio Bankas was met with a mixture of relief and delight. The next step is for the sale and purchase agreement to be completed. According to Ian Murray, MP and Foundation of Hearts chairman, the day when the paperwork for this is completed will stand as the most important in the club’s modern history since it will formally signal the end of administration.

Murray conceded that there are “still creases to iron out” before the Company Voluntary Arrangement can be delivered, most of them involving obligatory legal requirements. A ten-day cooling-off period must now be observed before the sale and purchase agreement can be signed.

There are also other formal legal processes that must be completed corresponding to the transferring of shares under corporate law. However, the once very real prospect of liquidation has been averted. Prospective owner Budge is now closer than ever to completing her

£2.5 million takeover of Hearts. The millionaire IT specialist has fronted the cash for Bidco, the company set to take over the running of the club.

Vaidotas Vysniauskas, spokesman for Ukio Bankas’s administrators, yesterday commented: “The creditors committee of Ukio bank have approved it [the sale of shares] today.”

He added: “It is a final step from Ukio bank, fortunately.” Ukio Bankas held a 29.5 per cent stake in Hearts as well as security on their Tynecastle home.

This critical agreement follows the deal to take possession of majority shareholder Ubig’s stake in the club earlier this month. It now leaves the way open for Hearts to exit administration, with Murray hopeful that this could be concluded by the end of the season.

Given the complexities, the formal exit might not happen until June, although Murray acknowledged that speed was of the essence in order to begin signing and re-signing negotiations with players ahead of next season’s campaign in the Championship.

“I think we said in November that it would be a five-stage process,” he said. “Today probably takes us to stage four-and-a-half. There is still a sale and purchase agreement to be completed, which is obviously the formal contract. But if I was to put it into context: today is the second most important day in Hearts’ modern history, the most important day being when the contract is actually signed and is heading on a flight from Lithuania to Edinburgh.”

He added: “There is still the ten-day cooling-off period which takes us to 28 April. The sale and purchase agreement has been worked on for some time – it is not going to start today. It has been talked about for some time. Hopefully that process will now speed up.”

Budge was quick to voice her thanks to the supporters for their backing. “This is the beginning of a new era for Heart of Midlothian Football Club,” she said. “I would personally like to express my gratitude to the fans for their support and I am confident that together we can rebuild Heart of Midlothian FC to once again become one of the greatest clubs in the country.

“I am very much looking forward to the beginning of this new chapter in the club’s history. We are not across the line just yet but this is a very positive step and we are almost there.

Murray also underlined his appreciation of the fans, who have kept the club running via monthly contributions to the FoH courtesy of a direct debit scheme implemented last year. He also praised the efforts of Bryan Jackson, of Hearts administrators BDO. While Jackson was in Lithuania earlier this month for the vital Ubig meeting, he was not in the country yesterday, preferring to keep things as low profile as possible in case of further disappointment. There was little notice that the meeting was even taking place, meaning Hearts fans were treated to a pleasant surprise yesterday morning.

“Let’s give credit where credit is due to BDO and to the Lithuanian lawyers and administrators for getting this done,” stressed Murray.

“But none of this would be here without 8,500 supporters who are backing the Foundation of Hearts, and the tens of thousands who continue to go through the turnstiles despite the circumstances this year.

“Without the support it simply would not have happened because we would not have the foundation to build anything on.

“The fans have rallied as we know they always do – let’s not forget that £1m was taken off them for the share issue just before Christmas in 2012. It is not as if it was something that had not been done before. Resources are stretched but they continued to back us, and that is why we are able to have this conversation.”

Fraser Wishart, PFA Scotland chief executive, also welcomed the news yesterday. “It’s a relief, absolutely,” the former Hearts player said. “First and foremost I’m delighted for everyone involved with Hearts.

“There were concerns. In recent weeks, from the conversations I’ve had with Bryan [Jackson], you could tell that he was concerned over this last hurdle.

“To be honest, there was no benefit to any other creditors for the club to be liquidated. We were relying on creditors from another country and they’ve done the right thing in my eyes and helped Hearts survive.

“We have been in contact with the players throughout all of this,” he added. “We will go out and see them whenever they want. You don’t want it to be overkill. We wanted to let them focus on their football. But we stay in touch with the experienced players.”

Not all Hearts’ debts will be cleared on their exit from administration. The club must still pay a “football debt” that is estimated to be around £500,000. Wishart will have a part to play in these negotiations.

“There is a bit of work still to be done on our side,” he said. “There is some money owed to players who are still there – wages from the time prior to administration.

“There is also money due to guys like John Sutton and Andrew Driver, which is classed as football debt. That will be taken care of. We did the lead-up work for that. It was contained within the CVA and it’s now a case of speaking to the new owners when they get the keys.”