Peterborough Financial Issues

Aritcle Athletic website about difficulties in agreeing how much should be paid to clear an outstanding loan made to the club.

https://theathletic.com/4727680/202...ministration-risk/?source=user_shared_article

By Matt Slater

Jul 29, 2023

A Canadian investment fund that claims it is owed £14.6million by a company that owns half of Peterborough United has mentioned the possibility of putting the League One club into administration.



Set up in Calgary in 2016, OKR Financial’s main business is lending money to technology start-ups. In 2018 its co-founders, Dr Jason Neale and Randy Thompson, bought a 50 per cent stake in the English club via a different Canadian firm, Kelgary Sports and Entertainment.



Neale and Thompson paid Peterborough chairman Darragh MacAnthony £2.5million for the shares and loaned the club another £3million, but their business relationship ended last year when OKR’s investors accused Neale of making unauthorised loans from OKR to Kelgary and other businesses.



Neale denies any wrongdoing but he was forced out of OKR and recovery agents were brought in to chase those loans. In November, OKR sent a demand to the club for repayment of its loan, which has been accruing compound interest at an annual rate of 18 per cent.
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A Canadian investment fund that claims it is owed £14.6million by a company that owns half of Peterborough United has mentioned the possibility of putting the League One club into administration.

Set up in Calgary in 2016, OKR Financial’s main business is lending money to technology start-ups. In 2018 its co-founders, Dr Jason Neale and Randy Thompson, bought a 50 per cent stake in the English club via a different Canadian firm, Kelgary Sports and Entertainment.

Neale and Thompson paid Peterborough chairman Darragh MacAnthony £2.5million for the shares and loaned the club another £3million, but their business relationship ended last year when OKR’s investors accused Neale of making unauthorised loans from OKR to Kelgary and other businesses.

Neale denies any wrongdoing but he was forced out of OKR and recovery agents were brought in to chase those loans. In November, OKR sent a demand to the club for repayment of its loan, which has been accruing compound interest at an annual rate of 18 per cent.

According to the club’s most recent set of accounts, which were filed at Companies House last month, OKR’s demand was for £7.16million. The club disputes this amount and the accounts reveal that the club has made a payment of £1.1million since last summer.

But the accounts also note that OKR’s loan is secured by a charge “on the company’s assets and the right to appoint an administrator in the event of a default”.

Earlier this year, OKR put the subsidiary that owns Peterborough United’s London Road stadium into receivership, and the club’s rent for playing at the venue now goes to the fund and local council, the latter as part of a repayment plan for historic rent arrears.

MacAnthony, who bought the club in 2006 at the age of 30 and still owns half of the shares, Neale and Thompson have said their dispute will not negatively impact the club and they are working on an amicable settlement.

But that is not happening quickly enough for OKR’s investors, some of whom have started their own legal action against the fund’s former management.

Last month, OKR seized Kelgary’s shares in Peterborough United when a Canadian court ruled that Kelgary owed the fund Can$24.7million (£14.6million). OKR is pursuing steps to have that ruling validated by a British court.

And now, in a quarterly report to OKR’s investors, Thompson has admitted the fund does not have enough cash to pay them a distribution for the fourth quarter in a row.

In regards to the litigation it has pursued to ensure “loans created by former management were repaid”, Thompson explained that progress has been made in some areas but not all.

“The football club and its related entities continue to work with our recovery team to structure a repayment plan,” he wrote.

“While this negotiation was expected to close in June with a first significant payment in July, final agreements are still being drafted at time of writing.

“The fund has put the stadium under a receivership order and we still have the ability to do the same with the club, if we should choose to take this route.”

When asked by The Athletic this week if this was an escalation in the dispute with the club, Thompson said: “The whole process has been gutting and disappointing for investors and fans alike.

“The fund knows how much it is owed and is asking the amount gets paid in full. The process of acknowledging that amount and executing on a plan forced the fund to go to the next step on the stadium.

“However, I think we all want this to be completed amicably and in a way that the investors are whole and PUFC supporters are left with a financially stable club.”

MacAnthony is understood to be confident that a deal can be done that will see him regain full control of the club and stadium company.

This does, however, raise the possibility that Peterborough will be expected to repay some of its other borrowings, as change-of-control covenants are typically attached to loans.

A Peterborough statement in response to The Athletic said: “The club strongly disputes the OKR debt position and after receiving legal advice and conducting further investigation takes the position that the debt reported in the financial statements is materially lower. We anticipate our next set of financial statements will demonstrate this. There is no danger of the club falling into administration.

“Whilst the club is in a position to repay any secured debt it is actively working with OKR to settle all issues which would include PUFC debt and secured debt with London Road Peterborough Properties Ltd, which would lead to the stadium company coming out of receivership. We are aware of a dispute between the owners of Kelgary Sports and Entertainment and OKR.

“To date, this has had no impact on the ownership of the club. Notwithstanding, the club is negotiating with all parties to resolve all matters as part of a global settlement agreement. Further, it should be noted that under the shareholders’ agreement, no share transfer can occur without existing shareholders being given the option to purchase.

“As with many clubs, the COVID-19 pandemic forced us to take expensive debt, and whilst it’s been a challenging time, we are confident that cooler heads will prevail, current very advanced negotiations will lead to a settlement in the coming weeks, and the club will emerge stronger and have a very successful 2023-2024 season.”

Founded in 1934, Peterborough have spent most of their existence in the bottom two divisions of the English Football League but have been promoted three times to the Championship under MacAnthony’s watch.

They almost did it for a fourth time last season, taking a 4-0 lead into the second leg of their play-off semi-final against Sheffield Wednesday, only to concede a 98th-minute equaliser on aggregate to force extra time at 4-4. They then went in front once more, only to concede another equaliser and lose on penalties.

The accounts for the 2021-22 season, a campaign that ended in relegation from the Championship, show that Peterborough United made a profit of almost £1m. This, however, followed three seasons of losses in League One, although two of those were affected by the pandemic.

More concerning though is the “material uncertainty” noted by the club’s auditor, who draws attention to the fact Peterborough United have net liabilities of over £12million and “the amount of funding required is uncertain and is dependant upon key assumptions” related to match-day income, player sales and transfer add-on payments.

Peterborough United have been successful at developing and selling talent in the past, most notably England and Brentford star Ivan Toney, and MacAnthony is hoping to repeat the trick with the club’s England U20 defender Ronnie Edwards. Half of any fee for Edwards would go to his former team Barnet.

 

Interesting. Surprised they haven’t sold Clarke-Harris for eleventy billion pounds and cleared down some of the debt.

 

Remember Peterboro are the model we must follow , they get everything right , never get ripped off , get top dollar for every player etc etc etc, however they never seem to get anywhere but remember we are tin pot & Peterboro are the bees knees .

 

This.

 

Objective Key Results indeed

 

Yep- wasn't it proven Darragh massively inflated the price they got for Toney?

 

I think so though not sure. He sure can spin a yarn though.

 

Wouldn’t lend their owner a pot to p@ss in, dodgy bloke.

 

Could be on their KNEES!

 

Ah yes, Peterborough and their 'high fees' which we must now assume are not wort the press release they are written on.

 

**** em'.

 

I can apologise on that behalf. I once said " they do keep players and sign experience".

It just shows everyone of these teams it eventually catches up on them without any success

 

Yeah, and we would have done at Wembley, if they hadn't messed up their Semi final so pathetically against the Fowls.

 

Indeed...what were you doing in ladies bogs?