The filing confirmed that Birmingham City Football Club PLC (company number 27318) has allotted 11million shares in itself at a price of £0.50 to Birmingham City PLC (company number 3304408) in respect of a debt.
This filing can be found on the Companies House website here.
What does this mean? Who are these companies?
Before I explain what this means, it’s important to understand who these two companies are.
Birmingham City Football Club PLC is the company that runs the club; in essence the club itself.
Birmingham City PLC (BC PLC) is the UK parent of the club. This was set up by in 1997 when David Sullivan, David Gold et al floated the club on the stock exchange. Rather than put the club itself on the exchange, they created a UK parent and floated that instead.
BC PLC owns 100% of the football club. In turn, Birmingham Sports Holdings (BSH) owns around 96.54% of BC PLC.
What the football club has done is to create 11million extra shares in itself and give them to the UK parent BC PLC in exchange for wiping of £5.5million of debt to the UK parent company.
This means instead of owning 1,505,676 shares out of 1,505,676 shares in BCFC, BC PLC now owns 12,505,676 shares out of 12,505,676.
Hold on a minute, that doesn’t seem to make sense
That is because on the face of it, it doesn’t.
BC PLC have not increased their shareholding as it’s impossible to go above 100%.
What they have done however, is written off £5.5million of debt.
This is important because while in real terms I doubt a penny has moved between bank accounts, I believe it will help the figures for next season look much better.
Furthermore, this kind of equity for debt swap is allowed to reduce losses for Profit and Sustainability (P&S) calculations – up to £8million.
I have to be honest and say I don’t exactly know how this mechanism works, but having spoken to people who are familiar with this type of transaction I can confirm this was done for P&S purposes and will help Blues be in a better position.
When do we know more about the decision from the disciplinary panel?
Sadly, we won’t.
The EFL have made it clear that they will not make any announcement about when the hearing is or even who is on the panel.
The first we will know about it will be once the hearing has been concluded.
The BCFC accounts released in December confirmed that the Club believed the hearing would be next month.
I would be very surprised if the hearing is delayed any further as I do not believe the EFL will want it to drag into next season.