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SBD Global/July 31, 2013/Finance

Scottish Premier League Hearts Administrators BDO In Liquidation Battle

The "hard negotiating" has begun to determine whether Scottish Premier League Heart of Midlothian "can continue to exist in its current form," according to Barry Anderson of the SCOTSMAN. All three offers for the Edinburgh club "have been rejected," and one bidder, HMFC Ltd., "is out of the running." Foundation of Hearts Dir Angelo Massone "must now increase their offers or potentially see Hearts liquidated." That "is the warning from Valnetas UAB, administrators for Ukio Bankas, after they knocked back the tabled bids." Valnetas has instructed Hearts’ administrators BDO "to re-negotiate with the Foundation and Massone’s company," Five Stars Football Ltd., as the bargaining to see whether Hearts can emerge from administration "enters a crucial phase." The initial rebuffs "are not entirely unexpected given rejecting a first offer is common practice during negotiations." Valnetas officials "have privately indicated" that a sum of £5M ($7.6M) could be enough for a CVA -- "the only means by which Hearts can exit administration." That would "also need approval from those in charge of the insolvency process at the club’s parent company, Ukio Bankas Investment Group (UBIG)." Massone’s offer remains around the £4M ($6M) mark. The Foundation’s bid "was significantly increased from the initial" £2M ($3M), plus £3.75M ($5.7M) working capital, it put to BDO. However, its cash offer to gain control "remains less than Massone’s" (SCOTSMAN, 7/30).

BUSINESS AS USUAL: In Edinburgh, Stuart Bathgate reported BDO has "insisted that preserving the Tynecastle club as a going concern is in the best interests of both creditors and bidders." BDO administrator Bryan Jackson said, "We are continuing to work with the administrator of Ukio Bankas and the bidders to enable the club to exit administration as a going concern. However, it should not be forgotten that it is the duty of the administrator of Ukio Bankas to achieve the best financial result for the bank’s creditors, and he will act to ensure that this happens." While the mention of liquidation "inevitably caused considerable worry for many Hearts fans," the Foundation adopted a "business as usual" attitude. They pointed out that the possibility of liquidation "had existed since the club went into liquidation last month, and recognised that Valnetas were duty bound to do what they could to maximise the return for Ukio" (SCOTSMAN, 7/30).
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