New Peter Kenyon £300m offer to buy Newcastle United report – Only £80m raised and rest from loans
Thursday night brought an exclusive saying Peter Kenyon was heading up a new Newcastle United takeover attempt.
It was The Mail who broke the story first, saying that it is a £300m offer that has been made and that Mike Ashley is going to give his decision within 10 days, which takes us to the 6 October 2019, the day Newcastle play Man Utd at St James Park.
The offer is to pay £125m up front and then the other £175m over three years and in that time Mike Ashley would keep his Sports Direct advertising at St James Park etc and receive 3% interest until the final payment is made.
Whilst Peter Kenyon is the recognisable name/figurehead, he is working with GACP Sports, who are a hedge fund that coordinated the purchase of Bordeaux for £66m in 2018.
The ownership split of Bordeaux is actually 14% GACP and 86% King Street Capital Management.
King Street Capital Management is a global investment management company founded in 1995 which manages approximately $19 billion of investments. Their investments are said to include public equity and fixed income markets globally with a focus in distressed companies, equity, bonds, foreign exchange.
We are only two days short of when we first heard (29 September 2018) about Peter Kenyon interest in buying Newcastle United. A very similar story of him being the figurehead and in place to run the club if the supposed bid was successful, with the money to buy the club hoped to be raised by investors pulled together by an investment manage group.
The last desperate attempt to get it done was in January, when it was revealed that a brochure had been sent out to investors, offering them a stake in the NUFC takeover from as little as £1m, to try and raise the rest of the purchase price.
Another brochure is at the heart of this latest Peter Kenyon buyout attempt.
The brochure was sent out in June of this year, when Rafa Benitez was still manager, trying to drive interest from investors.
After the initial breaking news from The Mail last night, the other newspapers have swiftly followed.
It had been revealed that the ‘anticipated closing date’ that was included in the NUFC takeover prospectus was 27 September 2019, which of course is today.
However, another exclusive has reported that Peter Kenyon and GACP Sports have only managed to raise £80m of the £300m purchase price from investors and that the rest of the cash – £220m of the purchase price and then another £50m they are pledging to put in towards ‘operational costs’, will have to be funded by bank loans.
This exclusive comes from The Sun, who whilst not the most popular newspaper for many, tends to have been more on the ball than most when it comes to Mike Ashley’s past (supposed) attempts at selling the club.
This would be quite a normal way for hedge funds/investment companies such as these to operate, using a combination of money raised and loans to complete the purchase of a ‘distressed’ company, or at least one that is termed to be ‘undervalued’ in Newcastle’s case.
The basis of this claimed bid to buy the club is that Newcastle United could have far higher revenues than at present, even without Champions League football.
In their brochure, Peter Kenyon and friends put it across as a five year plan (then presumably sell and exit) to investors, with their financial estimates based on Newcastle growing as a club on and off the pitch with some investment in the squad but not massive amounts of spending, with then projected league finishes of seventh in the fourth (2022/23) and fifth (2023/24) seasons.
For the 2019-20 campaign, Kenyon and friends were projecting spending of £75m for new players, with £35m the following season and £40m for each of the following campaigns.
The basis of the takeover working would be that far more cash can be brought in each season by Mike Ashley leaving, re-engaging with fans…with two obvious ways of increased revenue being when deals run out at the end of this season. The brochure projecting that NUFC can get three times the £5.5m FUN88 are said to be paying for shirt sponsorship and twice the £6m a year Puma are paying for the kit deal.
The Sun says that GACP Sports and Peter Kenyon are: ‘Promising great returns for investors as part of an ownership structure for Newcastle that would include companies in the Cayman Islands, Jersey and the US tax haven of Delaware.’
That is of course how the hedge funds/investment management companies would sell any such takeover of a company, investors obviously want to know how they will make money from it.
This is their business, take over a company, run it in a better way and increase its profits/value, then have a planned sale/exit target (five years?).
If you believe the previous Amanda Staveley and Peter Kenyon takeover attempts had any substance then they would have been a similar scenario.
The Bin Zayed Group one gave potentially hope of something longer-term/different but who knows what happened there or whether it had any substance.
The one thing that doesn’t change is Mike Ashley being a willing seller, or at least not so far.
Over 12 years since he promised to sell the club and the fact he hasn’t kept that promise as yet, tells you he has simply refused to sell the club, or refused to sell it at it’s market price, the two thing effectively the same.
The vast majority of other major English clubs have seen control change in that 12 years so clearly no reason why Newcastle shouldn’t have been sold.
The conundrum is though…
If and it is a big IF, Mike Ashley is willing to sell now, why would nobody else want to buy it?
If this Peter Kenyon bid can see all kinds of ways Newcastle United can quickly be made more profitable and competitive, why would other potential buyers let a hedge fund/investment group buy it for £300m now, watch them build it up, then buy it off them for say £500m in five years time…because that would obviously be the plan if this bid has any legs, build NUFC’s value up and then sell at a profit for all those who invested.
To add to the scepticism/cynicism, if this takeover was successful as has being outlined above, then whilst NUFC revenues might rise, 3% interest will have to be paid to Mike Ashley, if he keeps his various advertising at the club that can’t be sold in the next three years, whilst of course the massive bank loans will need to see their interest serviced.
One day we will see the back of Mike Ashley but difficult to believe that this is the scenario which will deliver it, IF he is indeed willing to sell anyway.
Yet again as well, how do they address the fact to investors, that they could take over Newcastle United mid-season and within months find the club in the Championship and the value of their investment instantly at least halved or worse?
As always, more questions than answers.
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