'No risk of administration' insist Posh

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.