BSH: TTA Extend £25million Loan

Birmingham Sports Holdings today announced to the Stock Exchange of Hong Kong that Trillion Trophy Asia have extended a HK$250million loan facility for a further two years. The loan was due to elapse on December 21, 2018 but both parties have agreed to extend the facility and its loan repayment period.

Hong Kong Stock Exchange

The text of the announcement can be read here.

No details have been given of how much of the facility is in use at the present moment in time.

However, documents filed last month showed that BSH owed HK$66.197million to a shareholder as of October 31.

It would be easy to infer that the loan mentioned in that documentation is the same loan facility.

What does this mean for Blues?

The big thing this loan implies is that TTA are not going anywhere for two years.

I’ve made reference previously that TTA are likely to stick around for a while as conditions laid upon TTA owner Paul Suen Cho Hung by the Stock exchange of Hong Kong had not been met.

The fact that TTA are willing to continue to loan BSH money implies that they are in no rush to get their money back and pull out of the business.

It could also be inferred that the holding company still need this large loan facility (roughly £25.2million) as a means of cashflow. With the documentation mentioned above showing a sharp increase in the amount of borrowing the company has undertaken, it’s not great that they’ve extended a loan facility further.

However, until the club accounts come out it’s impossible to say with any accuracy how much the club is reliant on this cash.

The club accounts are due out by December 31.

Are there any wider implications?

One respondent on Twitter gave the insightful view that this could be a way of showing the EFL that there is financial stability behind the club/holding company and it’s not reliant on borrowing money from third party companies.

I definitely think there may be something in this; after all, it shows that the guy whose name is above the door still has an interest in the club.

It shows that there is money still being made available should it be needed with the implication that the club will have no problems meeting its financial obligations.

However, I think that this also has implications in Hong Kong.

Suen made the Cantonese press this week in Hong Kong after proceedings were commenced against him along with five other former directors of CMBC Capital Holdings Ltd (stock code 1141, formerly known as Mission Capital) by the Securities and Futures Commission (SFC).

The document published by the SFC alleged that the directors named had recklessly or negligently failed to disclose information that they should have to the stock market.

The full documentation of those allegations can be found here.

For those who are interested, HK stock market expert David Webb wrote something about what is alleged at the time it was happening. His findings can be found here.

Suen has vehemently denied the accusations.  As a Non-executive director of EPI Holdings (stock code 689), the allegations forced the company to confirm by announcement to the stock exchange on Wednesday that Suen was seeking legal advice.

It’s reasonable to assume that if the SFC are investigating Suen for this breach then they will be looking at his other dealings too.

Therefore, in my opinion it would be prudent for Suen to show he is operating his other listed companies properly – which would include confirmation that he is still funding BSH.

There is no date set as of yet for the hearing of the Market Misconduct Tribunal.

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