A Canadian investment fund that claims it is owed £14.6million by a company that owns half of Peterborough United has mentioned the possibility of putting the League One club into administration. This could be a negotiating ploy rather than a serious threat.
Set up in Calgary in 2016, OKR Financial’s main business is
lending money to technology start-ups. In 2018 its co-founders, Dr Jason Neale
and Randy Thompson, bought a 50 per cent stake in the English club via a
different Canadian firm, Kelgary Sports and Entertainment.
Neale and Thompson paid Peterborough chairman Darragh
MacAnthony £2.5million for the shares and loaned the club another £3million,
but their business relationship ended last year when OKR’s investors accused
Neale of making unauthorised loans from OKR to Kelgary and other businesses.
Neale denies any wrongdoing but he was forced out of OKR and
recovery agents were brought in to chase those loans. In November, OKR sent a
demand to the club for repayment of its loan, which has been accruing compound
interest at an annual rate of 18 per cent.
According to the club’s most recent set of accounts, which
were filed at Companies House last month, OKR’s demand was for £7.16million.
The club disputes this amount and the accounts reveal that the club has made a
payment of £1.1million since last summer.
But the accounts also note that OKR’s loan is secured by a
charge “on the company’s assets and the right to appoint an administrator in
the event of a default”.
Earlier this year, OKR put the subsidiary that owns
Peterborough United’s London Road stadium into receivership, and the club’s
rent for playing at the venue now goes to the fund and local council, the
latter as part of a repayment plan for historic rent arrears.
MacAnthony, who bought the club in 2006 at the age of 30 and
still owns half of the shares, Neale and Thompson have said their dispute will
not negatively impact the club and they are working on an amicable settlement.
But that is not happening quickly enough for OKR’s
investors, some of whom have started their own legal action against the fund’s
former management.
Last month, OKR seized Kelgary’s shares in Peterborough
United when a Canadian court ruled that Kelgary owed the fund Can$24.7million
(£14.6million). OKR is pursuing steps to have that ruling validated by a
British court.
And now, in a quarterly report to OKR’s investors, Thompson
has admitted the fund does not have enough cash to pay them a distribution for
the fourth quarter in a row.
In regards to the litigation it has pursued to ensure “loans
created by former management were repaid”, Thompson explained that progress has
been made in some areas but not all.
“The football club and its related entities continue to work
with our recovery team to structure a repayment plan,” he wrote.
“While this negotiation was expected to close in June with a
first significant payment in July, final agreements are still being drafted at
time of writing.
“The fund has put the stadium under a receivership order and
we still have the ability to do the same with the club, if we should choose to
take this route.”
When asked by The Athletic this week if
this was an escalation in the dispute with the club, Thompson said: “The whole
process has been gutting and disappointing for investors and fans alike.
‘No danger of
administration’
A Peterborough statement in response to The Athletic said:
“The club strongly disputes the OKR debt position and after receiving legal
advice and conducting further investigation takes the position that the debt
reported in the financial statements is materially lower. We anticipate our
next set of financial statements will demonstrate this. There is no danger of
the club falling into administration.
The accounts for the 2021-22 season, a campaign that ended
in relegation from the Championship, show that Peterborough United made a
profit of almost £1m. This, however, followed three seasons of losses in League
One, although two of those were affected by the pandemic.
More concerning though is the “material uncertainty” noted
by the club’s auditor, who draws attention to the fact Peterborough United have
net liabilities of over £12million and “the amount of funding required is
uncertain and is dependant upon key assumptions” related to match-day income,
player sales and transfer add-on payments.
Peterborough United have been successful at developing and
selling talent in the past, most notably England and Brentford star Ivan
Toney, and MacAnthony is hoping to repeat the trick with the club’s England U20
defender Ronnie Edwards. Half of any fee for Edwards would go to his former
team Barnet.
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