Farhad Moshiri has agreed to convert his £451m loan to Everton into shares if the club has not been sold by the time new Premier League regulations on shareholder loans come into force.
The Everton owner has committed to waiving the huge debt on completion of his planned sale to the Friedkin Group, and will convert it to equity if it appears that will not happen before 11 January. From that date shareholder loans will become subject to a fair market value test by the league after last week’s vote on associated party transaction rules to which opposition was led by Manchester City.
Based on the Bank of England’s current interest rate of 4.75%, Everton would need to pay £21.3m to cover Moshiri’s loan, which would put them at risk of another breach of profitability and sustainability rules (PSR).
Moshiri is understood to have made the undertaking before last week’s vote, when Everton switched sides and voted with the league’s executive to endorse the new regulations. The proposed amendments were passed by 16 votes to four.
Everton and Moshiri declined to comment but sources with knowledge of the sales process confirmed there would be no shareholder debt after it is completed.
The Premier League is in the latter stages of due diligence on the Friedkin Group’s proposed takeover. Both parties are hopeful the deal will be approved next month, but the nature and volume of Everton’s debts beyond the loan from Moshiri make it a complex transaction.
The league’s rule change in treating shareholder loans as associated party transactions for PSR purposes has brought another potential complication. The £451m owed to Bluesky Capital, an Isle of Man-based company controlled by Moshiri, is treated as equity in Everton’s accounts but this will not be permitted by the Premier League from 11 January.
Clubs can retain existing loans on their current terms – ie without paying interest – but they will be treated as APT’s so interest will be added for PSR calculations.
Everton were docked a total of eight points by two independent commissions for PSR breaches last season after being charged by the Premier League. As a result the club must file this year’s accounts to the league three months early by 31 December so that any further charges can be dealt with during the season, but the club is confident of being compliant.
If a takeover by the Friedkin Group, which owns Roma, is approved by the Premier League it will end years of uncertainty over the ownership of Everton. The club’s finances have been stretched since one of their main backers, Alisher Usmamov, was placed under sanctions by the UK government in March 2022 over his links to Vladimir Putin.
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Everton severed ties with Usmanov’s companies USM Holdings, MegaFon and Yota, who were paying tens of millions of pounds a year in sponsorship, and Moshiri began a protracted search for a buyer. The British-Iranian businessman has granted exclusivity to five buyers over the past two years. The Friedkin Group’s interest in Everton has oscillated and it withdrew from the planned purchase in July before returning in September.
The Friedkin Group has invested £200m in Everton after paying back loans to MSP Sports Capital and the local businessmen George Downing and Andy Bell last summer. Although the Bluesky Capital loan will be removed the new owner will inherit £225m of debt owed to the Cheshire-based company Rights and Media Funding and £200m to insurance firm A-Cap.
Under Moshiri Everton have clashed with the Premier League on a variety of issues including PSR, APT’s and multi-club ownership. The Friedkin Group has made attempts to improve that relationship.
Source: theguardian.com
