There is a clear sense of deja vu at Everton this summer.
Twelve months on from the collapse of MSP Sports Capital’s investment deal, the club remain in a state of limbo — up for sale and seeking new ownership, and with majority shareholder Farhad Moshiri plotting a way out.
There is an irony here. That MSP investment deal, which would have seen the American group take a minority stake in Everton, only collapsed after an objection from one of the existing creditors, Rights and Media Funding (RMF).
RMF’s argument was that the proposed investment would have barely touched the sides given the new stadium project and sizeable debts already accrued — a fair point in the circumstances. But had they known then what they know now, the outcome may well have been different.
All that and the subsequent long flirtation with 777 have done is kick the can further down the road and increase the sense of urgency, with Everton accruing an extra £200million ($254m) in debt this season from the Miami-based group. With 777’s loans used for everyday working capital and new stadium costs, the need for something else soon is clear.
If there is one positive from the steady disintegration of the 777 bid, it has at least focused minds at Everton as to what had to happen next. While they were unable to formally enter into talks with prospective new buyers as long as 777’s share purchase agreement was in place, they were aware of significant interest from elsewhere.
Talks with prospective new parties have now reached an advanced stage, to the point where there are at least three offers for Moshiri to consider.
Even last week, there was a sense that we were moving much closer to a resolution. The long-predicted collapse of 777’s share purchase agreement had brought new suitors to the table, with a bid from Everton-supporting businessmen Andy Bell and George Downing the early front-runner.
At that stage, there was a hope that a new party — most likely Bell and Downing — would enter into a period of exclusivity with Moshiri and his advisors by the end of the week, or, most likely, by the start of this one.
It is on Moshiri to grant exclusivity to a bidder (Ian MacNicol/Getty Images)
To the surprise of, well, no one familiar with Moshiri’s dealings, the goalposts have shifted.
New bids have muddied the waters.
Late on Friday, a consortium headed by British-Armenian businessman Vatche Manoukian formally submitted what they are describing as an all-equity offer to Moshiri. Their pitch, which they believe was well received by the Everton owner, pointedly promised not to load more debt onto a heavily leveraged club.
Other specifics are still thin on the ground, but those acting on behalf of Manoukian say the consortium is made up of high-net-worth individuals from London, Australia and the Saudi royal family.
Nephew of an Armenian entertainment and property tycoon, Manoukian is a partner in global technology investment firm IMS Digital Ventures, the vehicle through which the bid has been submitted. He is the figurehead of the group, with funding said to come from the Ayer family office in Australia and an as-yet-unnamed Saudi prince.
The bid is believed to be in the region of £400million, but how that breaks down and whether Moshiri is paid for his shares is still to be disclosed.
Those acting on behalf of Manoukian’s consortium say he sees potential in Everton; an opportunity to resuscitate a sleeping giant and tap into the momentum created by the new stadium project.
They have made positive noises about the job done by the management, including manager Sean Dyche and director of football Kevin Thelwell, in maintaining Premier League status in challenging conditions and say they have spoken to existing creditors about a deal.
Everton’s new stadium is helping attract interest in the club (Peter Byrne/PA Images via Getty Images)
Moshiri is scrutinising that, and the other offers, before granting exclusivity to one bidder.
Other parties have shown interest in Everton. Crystal Palace part-owner John Textor explored an offer and engaged in talks with Moshiri, but is unlikely to be able to sell his shareholding in Palace quickly enough to enter the bidding.
Dan Friedkin, the American owner of Roma in Italy and Cannes in France, tentatively looked into a deal. At this stage, neither of the two seem likely to move forward.
Bell and Downing are believed to have financing in place for a deal. Together, they are estimated to have a combined wealth of around £900m, with Bell the founder of insurance firm AJ Bell, while Downing has made his money in property.
Season ticket holders at Goodison, the pair have put in around £50m of their own money to help towards new stadium costs.
Their bid, which aims to safeguard the future of the club, is a mix of new equity and a £350million loan secured on the new stadium that would refinance — and write down — Everton’s existing debts to more manageable levels. Alongside Moshiri’s shareholder loans of around £450m, which he is highly unlikely to ever get back, Everton owe more than £200m to RMF, £158m to MSP and £200m to 777, with the latter’s debt position now assumed by insurance firm A-CAP.
To proceed, a takeover proposal would need to find a solution there and have the support of Everton’s creditors. So while Moshiri will have a major say in what comes next, so will other stakeholders.
One key aim for any new incumbents would be to reduce the interest paid on Everton’s debts from around 10 per cent.
Bell and Downing’s loan would almost certainly be provided by merchant bank BDT & MSD Partners, which was originally set up to invest American IT billionaire Michael Dell’s wealth. MSD, on behalf of Dell’s family office, has lent to a number of English clubs, including Burnley, Derby County, Southampton and West Ham United. With 777 out of the picture, they have made it known they would be open to providing financing to a potential new owner of Everton.
While considered highly unlikely, an injection of capital from Dell’s private reserves has not yet been completely discounted. Bell and Downing are open to other investors joining their bid and have received interest, while a partnership with another interested group has not been ruled out.
Confusingly, the third bid is from Bell and Downing’s former partners, MSP Sports Capital, as the New York-based fund has put together a new group with a view to taking full control.
Dyche is said to have impressed the Manoukian bid (Chris Brunskill/Fantasista/Getty Images)
Details remain thin on the ground, but this bid is believed to be a complex mix of equity and debt.
MSP have supplied £158m in loans to the club, with the repayment deadline subsequently extended several times when it became clear the original April 15 cut-off would not be met. MSP’s collateral is the club subsidiary that owns Everton’s new stadium at Bramley-Moore Dock and they have warrants for 51 per cent of Moshiri’s shares.
With bids submitted, it is now decision time for Moshiri and the creditors. The next step, once bids have been properly scrutinised, is to enter into a period of exclusivity with a preferred bidder, who will then get access to the data room for a period of due diligence. That prospective buyer would be subject to the same checks as 777 and would need to pass the Premier League’s Owners’ and Directors’ Test. Even after an agreement is reached swiftly, the rest of the process is unlikely to be concluded quickly.
In the case of the Manoukian bid, one hurdle may well be the amount of time needed to scrutinise all of the individuals involved and the source of funding.
On Monday, the Everton Fan Advisory Board published an open letter containing a series of questions for prospective bidders. The Athletic has since been told that the Bell/Downing and Manoukian groups are keen to engage with fans and will outline further details of their plans should they be granted exclusivity.
In the meantime, Everton have to plot a way through. They say they had put contingency plans in place in case the 777 deal collapsed and are clear — on the football and stadium operations side — as to what must come next. Thelwell has said player sales will be needed this summer to balance the books.
If the past 12 months have taught us anything, it is that this is a fluid, unpredictable process with many twists and turns. How this develops is still unclear, particularly with Moshiri at the helm and having a decisive say.
These have been challenging times for all associated with the club and while there is still a way to go before Everton can look forward to a potentially bright future, the picture at least looks rosier than it has done for some time.
(Top photo: Alex Livesey/Getty Images)