Paddingtonwolf
Flaming Galah
- Joined
- Oct 30, 2009
- Messages
- 77,947
- Reaction score
- 8,239
Buyer uses debt leverage to buy club. Guarantees the debt to the creditor. Makes loans to the club to makes sure cash reserves are suitably topped up. As consideration for his generous loan, the club takes the responsibility for the debt used to buy it. Next, he converts the loan he made to more equity. The debt can neatly pass from buyer to the club in that transaction. Note the cash reserves are still big at this point, so now he issues a huge dividend back to himself which gets the money loaned back and diminishes the cash reserves back to basically bugger all.
Net result, the debt passes to the club, and the buyer now owns the asset and has no debt to the creditor, and is at worst cash neutral. As long as the club is worth more than the debt used to buy it at some future point, he sells and creams off his profit, and that assumes he can't find some muppet willing to buy the club and take the debt on, in which case he would be even more in clover.
That isn't the way it's working with Wolves, but that is a way a bunch of shysters can quickly fuck a club up the rear.
Net result, the debt passes to the club, and the buyer now owns the asset and has no debt to the creditor, and is at worst cash neutral. As long as the club is worth more than the debt used to buy it at some future point, he sells and creams off his profit, and that assumes he can't find some muppet willing to buy the club and take the debt on, in which case he would be even more in clover.
That isn't the way it's working with Wolves, but that is a way a bunch of shysters can quickly fuck a club up the rear.