Usmanov Offers to Repay Arsenal Debt
Having seen Stan Kroenke increase his stake by two shares yesterday, our loveable Russian has once again entered the fray and gone straight to the heart of our problem. The massive debt mountain we have, but more particular the £135 million loan that is associated with the Highbury Square development.
The club is in talks with the banks to re-finance this loan which is due for repayment next April. At the moment the club does not have the funds to repay this loan as the housing market has stagnated and the sales of the flats at Highbury Square have turned into a trickle. The lack of funds will have an impact on Wenger’s transfer budget, despite the protestations of the board.
Alisher Usmanov has held out an olive branch (thorns removed) to the board. He has offered to make funds available to repay this loan. His rationale is that with this debt cloud looming over the club we will fall further behind our competitors. He has left it for the board to contact him and take him up on his offer.
It will be a bitter pill for the board to accept this offer from Usmanov especially as it will be an admission of defeat. The plan to redevelop Highbury was a sound financial plan at the time; nobody could have envisaged the world economic crisis. The board must swallow their pride and open discussions with Usmanov to ascertain what his terms are for repaying a massive loan. Certainly he will not be doing it for nothing.
The possible terms will be to issue convertible loan stock at nominal interest, say ½%, but allowing Usmanov the ability to convert the loan stock into shares in the club. This would allow him to increase his stake club, with the money that he would have paid outside shareholders going to the club and it can use it to reduce a big portion of the debt mountain.
For this to go ahead Stan Kroenke will also have to give his blessing, knowing that such an arrangement could see his 28.3% share in the club dwindle 25% to 21%.
This “offer” from Usmanov should not be dismissed by the board, they need to be big enough to look into the matter and see it as a way of introducing new capital into the club that will reduce the club’s debt and free up valuable resources for Arsene Wenger’s squad rebuilding this summer.
The board must act in the best interests of the club and not concern themselves about their own pride.