Flashback two years: As reported on the blog at the time[
b]
July 2007 - QPR's Latest Financial "Situation" - Compilation of Responses From QPR's Director and Legal Counsel-
QPR's LEGAL COUNSEL & DIRECTOR, NICK DE MARCO
NICK DE MARCO RESPONSE TO QPR1st
UPDATED July 26: [/b]
"QPR were faced with a winding-up order in July. If the club had not found a substantial sum of money to pay off before 4 July, the club would have been put in administration.
"Faced with that risk and the need to pay various other debts and on-going costs, the club had no alternative than to seek a short-term bridging loan.
"Nobody was prepared to lend the club the sums required in time, apart from ABC. It's not a great agreement for QPR but it was a choice between that and administration. QPR are able to repay the loan now, in part from the proceeds of sale of Lee Cook." Daily Mail
"...Fans will be aware that QPR was faced with a winding up order from both the IR and VAT in July. If the Club had not found a substantial sum of money to pay off before 4 July, the Club would have been put in Administration. At that point administrators would have been appointed and the players would have been sold off for way below their market price. ABC would have reclaimed their loan and could have enforced the term of the agreement allowing them to sell the ground. The Club would have been left with no ground or players. This is something the Board was determined to avoid at any cost.
The Board has announced that it is seeking new investors. It is necessary for QPR's long term survival and progression that such new investors come in. There are currently promising discussions in this regard. The Board has also looked to re-finance the ABC loan. Despite positive noises from some, nobody has yet agreed to take it on on better terms.
Faced with the risk of administration if a substantial sum was not paid to the taxman, the need to pay various other debts and of course on-going costs, the Club had no alternative than to seek a short term bridging loan. Nobody was prepared to lend the Club the sums required in time, apart from ABC who were themselves concerned that they might not be able to recover the debt owed to them by the Club if it went into administration.
That is why a variation of the loan agreement with ABC was negotiated. It's not a great agreement for QPR, but it was a choice between that and administration and the disastrous consequences that would have followed. QPR is able to repay the loan now, in part from the proceeds of sale of Lee Cook. Fans will recognise that when we have no new investment the only source of revenue is selling players or going into debt. The Board has attempted to avoid either of these options as far as possible, but at times it is necessary to keep the Club going which has to be the first priority. In any event, the Board believes the Cook deal is a good one for the Club.
It is also true that the club must find a replacement for the ABC loan in the next year. We are confident that we will do that, and financially it is necessary to do anyway. The advantage is that QPR will now be able to get out of the ABC loan earlier than the full 10 years once an alternative lender has been put in place. The on-going discussions with new investors obviously take this into account.
It is hoped that some new investment deal will be agreed in the next few weeks, otherwise an alternative loan provider from ABC will be agreed. It is not possible to go into detail about this at this stage because to do so may jeopardise those discussions.
I know fans understand that the main problem here is that the Club came out of administration with far greater debts than it went into it. The initial ABC loan agreement has cast a very long shadow over QPR. From the day that agreement was made, ABC effectively had the right to sell the ground. In essence, the initial loan agreement sold the ground to ABC for £10 million with interest, and only if that money was paid back to ABC would the ground be QPR's again. That has been the major difficulty facing the Board at QPR since, under both the Chairmanships of Bill Power and Gianni Paladini.
The Club has to pay its debts to survive, and we have to attract new investors now that the investment from the Monaco investors (which has kept the Club going for 4 years) has come to an end. Until the new investors come in, I am sure fans will agree that the main objective must be to avoid administration at all costs.
I realise that I might not have been able to answer all your questions in one email, and some people will inevitably describe this response as "spin", but I thought it better to give you a response as soon as possible. We hope to able able to report a lot more over the next couple of weeks or so. I know it's also time we had another fans consultative meeting and I am sure people will want a discussion of this then.
In the meantime, we have avoided administration and have secured the Club's short term future. All the Board's attention is now turned to the discussions which will hopefully resolve the long term future, over the next few weeks. QPR1st
NICK DE MARCO'S Follow-up RESPONSE TO QPR1stClarification from QPR on the "option to purchase"
"...Although I was not involved in the drawing up of the agreements with ABC, I have seen those agreements. I can categorically confirm that the “option” you speak of only arises after the repayment date of the original loan (of £10 million) has past, and only if the debt has not been repaid as of that date. The “option period” only arises after that date. This is very clear in the express terms of all the signed documentation. ABC have no option at present. QPR still has to find an alternative lender to replace the ABC loan, but so long as it does that before the expiry of the loan then the option does not arise...."
QPR1st
NICK DE MARCO'S RESPONSE TO LSA
"...It ought to be obvious why the details were not gone into at that stage. We all know the club has continued financial difficulties, but if it was announced that we needed £1.3million by the end of August or faced defaulting on a loan, do you think there would be any chance of getting more than the £1.5million Fulham bid upfront for Lee Cook? I can tell you there would be no chance at all. So by the news coming out a couple of weeks later we may have brought in an extra one million and are in a better position to sort out the financial mess. I am sure you would all agree that makes sense, and there are times when certain things have to remain completely confidential for the benefit of the Club. It remains the case, as was said at that meeting, that the only long term solution is brining in new investors and that is what we are spending all out time trying to agree....
LSA
NICK DE MARCO, QUOTED IN BEN KOSKY, KILBURN TIMES
Ben Kosky/Kilburn Times - Cook move prevents cash crisis
"Lee Cook's departure to Fulham has effectively staved off the threat of QPR being forced into administration for a second time.
Rangers increased their debt to the ABC corporation by £1.3m at the start of the month to avoid a potentially disastrous winding-up order from the Inland Revenue.
But the sale of Cook, which netted the club £2.5m up front, will enable them to repay the second loan - even though 15 per cent of the fee goes to the winger's former club Watford.
The Rs could eventually receive as much as an extra £2m from Fulham, dependent on how many appearances Cook makes for them and their success over the next four years.
QPR director Nick de Marco explained that the club had no choice but to turn to ABC, who effectively hold an option to sell Loftus Road under the terms of their original £10m loan in 2002.
He told the Times: "No-one else can lend us money with the ground as security because of the existing arrangement with ABC, so it was either borrowing from them or administration.
"As a result, the chances of administration are now not as great as they might have been a few weeks ago.
"We felt that to get £2.5m up front with no conditions attached is a good deal for someone who hasn't been tested in the Premiership - much better than we got from Watford for Danny Shittu."
He added that the board will continue discussions with potential investors, with a view to refinancing the remaining ABC loan, and hope to make an announcement in the next few weeks....
Kilburn Times
qprreport.blogspot.com/2007/07/qprs-latest-financial-situation.html
