Farhad Moshiri has committed to converting his loans to shares by January 11, even if takeover deal hasn’t happened by then
Everton owner Farhad Moshiri will convert loans to the football club into shares ahead of new Premier League rules in the event of a takeover deal rumbling on into January. The expectation remains that The Friedkin Group (TFG) will complete the deal before the end of 2024.
As first reported by The Guardian, Moshiri, who has been looking to sell the Toffees for some two years and has seen failed attempts by the likes of the long-doomed 777 Partners come and go, struck a deal with Houston-based TFG, founded and run by US billionaire Dan Friedkin, back in September.
TFG are currently in the process of going through the necessary channels to gain regulatory approval from the Premier League, the Football Association and the Financial Conduct Authority, with sources having informed the ECHO earlier this week that nothing had changed to shake the confidence that a mid-December timeline for completion could be achieved.
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Moshiri has been unwilling to part with anymore of his wealth since initially agreeing to sell the club to 777 Partners in September 2023, and TFG will be stepping in to provide working capital to aid a likely period of low cash, as well as ensuring the fit-out of the new stadium at Bramley-Moore Dock is funded to completion ahead of the start of next season.
The Guardian reported on Thursday that Moshiri had committed to converting his £451m in loans to the football club into equity, something that had been anticipated from the start, but that he would be willing to do that by January 11 if the TFG deal had not reached completion by that point.
The reason for the move was related to the new associated party transaction amendments which have now been voted through by the Premier League following a legal challenge by Manchester City.
City argued that shareholder loans should count towards APT via the fair market value test, which means interest-free loans from owners would instead have the Bank of England’s base interest rate attached for assessment purposes. In Everton’s case that could result in a liability of more than £21m for the football club with the BoE interest rate currently at 4.75%, and that could have been problematic from a Profit and Sustainability Rules position.
But in committing to convert his loans to the club into shares before the deadline, even if the TFG deal hasn’t come to a successful conclusion by January 11, the club would be shielded from incurring such a cost burden.
The expectation from sources close to the deal is that it may well be a moot point, with Moshiri having committed to make that move some time ago, and confidence remaining high that regulatory approval will arrive within the initial timeframe that the potential new US owners had been working towards.
