BIH: TTA to Loan More Money

Birmingham International Holdings today announced to the stock exchange that an agreement has been reached with majority shareholder Trillion Trophy Asia for a HK$250million (approx £26million) loan facility.

Hong Kong Stock Exchange

The announcement can be viewed in full here.

Great – is this more money for Gianfranco Zola to spend?

Short answer is no. The announcement makes it clear that following the completion of all the things needed for TTA to formally take control, there has been a period of review to understand where the business is at, and to formulate “appropriate business plans and strategies”.

BIH have confirmed that they will continue to develop the football side of things – indeed, they have already raised a significant sum of money to do this with the subscription agreements prior to the relisting. However, it is prudent for the company to have more than one revenue stream and as such

 …the Company is identifying business opportunities in the business including sports, sports education, culture as well as online games and entertainment

What does that mean?

For one thing, it means new offices.

In line with the Company’s expansion plan, the Company plans to expand its office space and recruit new staff in Hong Kong and reserve additional funding to meet its operational needs.

This doesn’t actually surprise me. Having actually been inside BIH’s corporate HQ in the Wing On Centre in Sheung Wan, I can tell you now it was tiny – befitting a company that didn’t really do anything in Hong Kong.

However, if the company are to build on business in Hong Kong and mainland China, they will need some proper office space and proper office staff.

This is important for Blues too – if BIH can make money in Hong Kong/China it means a) they’re not reliant on BCFC for profit and b) they might be in a position to channel more money into the club itself. This has to be seen as a win-win.

Hold on, didn’t Carson go on about business opportunities in China?

He did – and this is what we have to watch for.

While BIH in the Carson era did make various announcements about other projects, not one went through. From speaking to BIH insiders in Hong Kong, I can say that various projects were put to Carson but he nixed each and every one of them.

I have more faith in Paul Suen as a businessman to actually complete deals – after all, this man is a serial investor in Hong Kong listed companies. That being said, I’m conscious with these new mainland faces on the board that they have to pull their weight and not be a rubber stamp to satisfy HKSE regulations. I’m interested to see what they bring to the party and the direction the company will take.

How much will it cost?

The agreement will be in place until 31 December 2018, and will attract an interest rate of 4.5% per annum. The important thing to note is that it’s not an agreement whereby the company takes a shedload of cash all in one go; it’s a facility like an overdraft which is there if they need it.

The way I see it is the company is now in a position to chase an opportunity should an attractive one arise, because the cash is there ready and waiting.

Likewise, it’s important to note that repayment will be money, not shares. This is important too, because it means BIH will be in hock to TTA and won’t be able to buy them off with a bunch more shares in itself. That being said, I doubt Paul Suen would loan money to the business having already put a fair bit in if he didn’t think he was going to get it back.

The conclusion

No, it’s not a mega-spending spree in January – but it is another sign BIH will be run as a proper business – and that is good news for BCFC in the long-term.

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