Author Topic: Guochuan Lai  (Read 2349527 times)

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BB74

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Re: Guochuan Lai
« Reply #5900 on: May 24, 2019, 07:48:04 PM »
Disgruntled ex-employee.

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Re: Guochuan Lai
« Reply #5901 on: May 24, 2019, 07:49:07 PM »
Disgruntled ex-employee.


Indeed, but it's clear Jenkins is not fit to run our football club, Lepkowski's twitter thread seems accurate enough, and doesn't libel anyone.
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Re: Guochuan Lai
« Reply #5902 on: May 24, 2019, 07:51:03 PM »

Indeed, but it's clear Jenkins is not fit to run our football club, Lepkowski's twitter thread seems accurate enough, and doesn't libel anyone.

I think, had there been any financial wrong doing, the clubs accountants would have been duty bound to have identified it
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Re: Guochuan Lai
« Reply #5903 on: May 24, 2019, 08:34:36 PM »
The holding company had a loan from the football club of £3.7 million ish.

Interest on the loan means that the holding company now owes the football club £4.1 million and counting.

It's up to the football club to call in the loan (a loan that's getting more valuable year on year).

What would you do?.
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Re: Guochuan Lai
« Reply #5904 on: May 24, 2019, 08:36:14 PM »
Call it in if things are as bad as the board claim. If things are not bad don't call it in.
« Last Edit: May 24, 2019, 08:43:41 PM by gazberg »

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Re: Guochuan Lai
« Reply #5905 on: May 24, 2019, 09:00:04 PM »
The holding company had a loan from the football club of £3.7 million ish.

Interest on the loan means that the holding company now owes the football club £4.1 million and counting.

It's up to the football club to call in the loan (a loan that's getting more valuable year on year).

What would you do?.

This is the concerning part:

When one repayment is missed - as has happened - notice could be given demanding the whole loan back; a normal condition of repayment loans. But not this one? Strange.

« Last Edit: May 24, 2019, 09:47:22 PM by OldburyWBA »
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Re: Guochuan Lai
« Reply #5906 on: May 24, 2019, 09:22:13 PM »

This is the concerning part:



When one repayment is missed - as has happened - notice could be given demanding the whole loan back; a normal condition of repayment loans. But not this one? Strange.

I think the operative words are “could be”
« Last Edit: May 24, 2019, 09:47:46 PM by OldburyWBA »
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Re: Guochuan Lai
« Reply #5907 on: May 24, 2019, 10:50:24 PM »
Boss the company I am running for you could really do with that cash we loaned to your other company,

Not at the moment

But boss we really need that cash please

I told you not now

But, .........silence ........ok then boss, see you next year then !!!!
« Last Edit: May 25, 2019, 10:19:27 AM by Albionic »
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Re: Guochuan Lai
« Reply #5908 on: May 25, 2019, 12:15:38 AM »
Lai out before we end up ala Bolton, Coventry etc.

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Re: Guochuan Lai
« Reply #5909 on: May 25, 2019, 01:00:28 AM »
don't forget the players who were already on the books and the contracts they received, still gob smacked that HRK got a contract worth £50,000.00 plus a week.

If HRK is worth £50,000 a week then my left nut is definitely guaranteed at least 20k a week. One of the worst players I've seen play for us in he past 20 years.
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Re: Guochuan Lai
« Reply #5910 on: May 25, 2019, 07:54:09 AM »
The loan repayment will be of more value to us if/when our parachute payments stop. It's a considerable amount of cash when compared to a championship club's annual income, so will most likely be recalled when club really need it.

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Re: Guochuan Lai
« Reply #5911 on: May 25, 2019, 08:24:33 AM »
This is the concerning part:

When one repayment is missed - as has happened - notice could be given demanding the whole loan back; a normal condition of repayment loans. But not this one? Strange.

There's no mention of this in Matt Wilson's article in the E&S, the only mention I've seen of this is from Lepkowski's twitter account.
Not saying there's nothing in it, just depends which journo is better informed.
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Re: Guochuan Lai
« Reply #5912 on: May 25, 2019, 08:58:20 AM »
I genuinely hate the man.

1 - has no football knowledge
2- doesn’t really look like he knows how to run a club
3 - brought us as a business investment to improve his own portfolio in his own country, hoping that this club would just run itself

For me the moment that put the nail in the coffin was the home leg of the playoffs. Arguably our biggest game for years ( defiantly the biggest under his ownership) and he couldn’t be bothered to come watch.

I have zero faith in him and want him out my club.
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Re: Guochuan Lai
« Reply #5913 on: May 25, 2019, 09:17:53 AM »
He’s not going to sell at a massive loss so I guess we are stuck with a non caring, non attending, owner who won’t put money into club.


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Re: Guochuan Lai
« Reply #5914 on: May 25, 2019, 09:19:46 AM »
Was a lot worse and doom and gloom at villa last year, then multi billionaires came out of nowhere to pay off debts and put money in. Hoping there’s more of them about soon for us!
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Re: Guochuan Lai
« Reply #5915 on: May 25, 2019, 09:22:54 AM »
I would like to preface my comments on this matter with a few observations about Chris Lepkowski. Firstly I don't recall him raising these sort of issues in 2014 when he was paid by the Birmingham Mail to write about the club. If they stink now they stunk then and unlike me (sorry I missed this) it is his profession rather than a hobby albeit an all consuming one.

Obviously he was subsequently employed by the club and if I were as cynical as some I might suggest the two facts are not entirely unconnected. His employment at the club lasted about a year and plainly ended in some acrimony. Now he has become the cheerleader of a group of fans on twitter that in general do not believe the club does anything right pretty much ever. I do not want any truck with them because they are so cynical it sucks any joy out of supporting the club. I honestly don't know why they bother.

That said, this is wrong. I am not going to criticise Lai for this I am laying it fairly and squarely at Peace's and Jenkins door. I am absolutely certain under UK company law nobody did anything illegal. As the controlling shareholder providing the arrangement did not push the club into insolvency he probably has the legal right to do this and the board who are appointed by him are going to comply. However the board still has a duty to protect the financial position of the club and the rights of the minority shareholders.

Where the arrangement is ethically questionable is the loan was a means of leaveraging a greater share of a planned future sale and as such favoured Peace ahead of the minority shareholders. My understanding is that the loan was used by Peace to up his shareholding from 75% to the 88% he eventually sold to Lai. If the 88% was sold at the reported £200m then the 13% was worth nearly £30m or more than 7 times the loan and accrued interest. I would question how that protected the rights of the minority shareholders although it would be argued that Peace carried the risk of relegation and no sale.

This brings me on to the terms of the loan itself.

Firstly it is not completely unheard of for a commercial loan to accrue interest which is not be paid off in instalments but be settled at a future date or on demand. Part of the Glazers financing for the purchase of Man United was funded this way but because it attracted high rates of interest they were one of the key factors in Man United's ballooning debt. Given that in the 5 years since loan was taken out the debt has only risen from £3.7m to £4.1m the interest rate implied by this is a little over2% which is pretty generous.

Secondly the loan is repayable on demand which on the face of it is pretty brutal until one considers the relationship between the entity doing the demanding and the individual being asked to settle. Jenkins needed to insert a second clause that would trigger repayment at the point that Peace sold his stake in the club. It should not have passed onto the new owner.

The £4m might very well have been squandered by the new board along with a £40m cash balance but that is besides the point the loan should have been settled at the point of sale or the board should have demanded settlement (although this was unlikely to happen).

Finally this brings me onto the current situation. We are using bank finance to manage our cash flow which no doubt accrues intrest at a higher rate than 2%. It might be wise to call the loan in. However we are still in the same position in that the person that controls the club owes the club money so he is never going to demand payment.

The other point that is critical to understand Lai does not owe the club money personally because while he is the major shareholder of Yunyi Guokai (Shanghai) Sports Development Limited of which he owns 55% and the remainder being owned by Palm 25% and other investors 20%. It does not have any other assets besides the 88% shareholding in the club. We in effect owe £4.1m to ourselves.

The other major bone of contention is why is Lai not putting more money into the club. There are lots of reasons. The first and most basic is that he has no intention of doing so never had and that is the end of the matter, with or without interference from the Chinese government. If you wanted to do that then you absolutely do not set up a corporate structure that looks like that and you buy out the minority shareholders. So you are at liberty to create more equity without consulting the other shareholders and without diluting their holdings within the club. It is beneficeit dictator model. Nobody really cares whether or not Lai attends the games like most Man City fans don't care that Mansour bin Zayed Al Nahyan does not provided that someone competent is running the club locally and the owner keeps signing the cheques. 

Jenkins got the terms of the loan wrong and Peace got the scent of profit in his nosterils and frankly after that everything needs to be said about this has been said.  All the other decisions flow from this basic dynamic. To change the ownership we need a buyer with deep pockets there is no sign of one nor is there likely to be.

Sorry but I honestly did not expect anything else.
« Last Edit: May 25, 2019, 09:27:25 AM by Standaman »
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Re: Guochuan Lai
« Reply #5916 on: May 25, 2019, 10:01:23 AM »
Thanks Stan , great summary.

I certainly feel that those at the top think we are are more  guilable than we are.  for most of us,  Its more a case of knowing what they're up to but can't do much about it and want to support our club regardless. Hopefully there are changes eventually which means they can make their money whilst producing a successful club/team. thats the best any football fan can hope for these days.

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Re: Guochuan Lai
« Reply #5917 on: May 25, 2019, 10:05:38 AM »
"Where the arrangement is ethically questionable is the loan was a means of leveraging a greater share of a planned future sale and as such favoured Peace ahead of the minority shareholders. My understanding is that the loan was used by Peace to up his shareholding from 75% to the 88% he eventually sold to Lai. If the 88% was sold at the reported £200m then the 13% was worth nearly £30m or more than 7 times the loan and accrued interest. I would question how that protected the rights of the minority shareholders although it would be argued that Peace carried the risk of relegation and no sale."

So Peace got a loan out of the club to buy more shares in the club to increase his shareholding and therefore his ability to hand over complete control to Lai. 

Couple of questions given that my brain is enfeebled in the aftermath of last night's dinner party:

So was getting 88% so much more attractive to Lai than 75%?  Either would give him control.

Would having the extra 13% have gotten Peace more per share than the 75%?

Take your point about the sale netting more than the loan - smart. 

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Re: Guochuan Lai
« Reply #5918 on: May 25, 2019, 10:13:17 AM »
"Where the arrangement is ethically questionable is the loan was a means of leveraging a greater share of a planned future sale and as such favoured Peace ahead of the minority shareholders. My understanding is that the loan was used by Peace to up his shareholding from 75% to the 88% he eventually sold to Lai. If the 88% was sold at the reported £200m then the 13% was worth nearly £30m or more than 7 times the loan and accrued interest. I would question how that protected the rights of the minority shareholders although it would be argued that Peace carried the risk of relegation and no sale."

So Peace got a loan out of the club to buy more shares in the club to increase his shareholding and therefore his ability to hand over complete control to Lai. 

Couple of questions given that my brain is enfeebled in the aftermath of last night's dinner party:

So was getting 88% so much more attractive to Lai than 75%?  Either would give him control.

Would having the extra 13% have gotten Peace more per share than the 75%?


Take your point about the sale netting more than the loan - smart. 

My father used to say that you either get a good steward who is a bit crooked or an honest steward who is incompetent.  And I thought him cynical.

Members of this forum who are familiar with financial law & acquisitions would know the reasons, but, as I recall, Peace needed to obtain an ownership threshold of more than 80% in order to sell the business without the permission of the other shareholders.
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Re: Guochuan Lai
« Reply #5919 on: May 25, 2019, 10:20:28 AM »
I would like to preface my comments on this matter with a few observations about Chris Lepkowski. Firstly I don't recall him raising these sort of issues in 2014 when he was paid by the Birmingham Mail to write about the club. If they stink now they stunk then and unlike me (sorry I missed this) it is his profession rather than a hobby albeit an all consuming one.

Obviously he was subsequently employed by the club and if I were as cynical as some I might suggest the two facts are not entirely unconnected. His employment at the club lasted about a year and plainly ended in some acrimony. Now he has become the cheerleader of a group of fans on twitter that in general do not believe the club does anything right pretty much ever. I do not want any truck with them because they are so cynical it sucks any joy out of supporting the club. I honestly don't know why they bother.

That said, this is wrong. I am not going to criticise Lai for this I am laying it fairly and squarely at Peace's and Jenkins door. I am absolutely certain under UK company law nobody did anything illegal. As the controlling shareholder providing the arrangement did not push the club into insolvency he probably has the legal right to do this and the board who are appointed by him are going to comply. However the board still has a duty to protect the financial position of the club and the rights of the minority shareholders.

Where the arrangement is ethically questionable is the loan was a means of leaveraging a greater share of a planned future sale and as such favoured Peace ahead of the minority shareholders. My understanding is that the loan was used by Peace to up his shareholding from 75% to the 88% he eventually sold to Lai. If the 88% was sold at the reported £200m then the 13% was worth nearly £30m or more than 7 times the loan and accrued interest. I would question how that protected the rights of the minority shareholders although it would be argued that Peace carried the risk of relegation and no sale.

This brings me on to the terms of the loan itself.

Firstly it is not completely unheard of for a commercial loan to accrue interest which is not be paid off in instalments but be settled at a future date or on demand. Part of the Glazers financing for the purchase of Man United was funded this way but because it attracted high rates of interest they were one of the key factors in Man United's ballooning debt. Given that in the 5 years since loan was taken out the debt has only risen from £3.7m to £4.1m the interest rate implied by this is a little over2% which is pretty generous.

Secondly the loan is repayable on demand which on the face of it is pretty brutal until one considers the relationship between the entity doing the demanding and the individual being asked to settle. Jenkins needed to insert a second clause that would trigger repayment at the point that Peace sold his stake in the club. It should not have passed onto the new owner.

The £4m might very well have been squandered by the new board along with a £40m cash balance but that is besides the point the loan should have been settled at the point of sale or the board should have demanded settlement (although this was unlikely to happen).

Finally this brings me onto the current situation. We are using bank finance to manage our cash flow which no doubt accrues intrest at a higher rate than 2%. It might be wise to call the loan in. However we are still in the same position in that the person that controls the club owes the club money so he is never going to demand payment.

The other point that is critical to understand Lai does not owe the club money personally because while he is the major shareholder of Yunyi Guokai (Shanghai) Sports Development Limited of which he owns 55% and the remainder being owned by Palm 25% and other investors 20%. It does not have any other assets besides the 88% shareholding in the club. We in effect owe £4.1m to ourselves.

The other major bone of contention is why is Lai not putting more money into the club. There are lots of reasons. The first and most basic is that he has no intention of doing so never had and that is the end of the matter, with or without interference from the Chinese government. If you wanted to do that then you absolutely do not set up a corporate structure that looks like that and you buy out the minority shareholders. So you are at liberty to create more equity without consulting the other shareholders and without diluting their holdings within the club. It is beneficeit dictator model. Nobody really cares whether or not Lai attends the games like most Man City fans don't care that Mansour bin Zayed Al Nahyan does not provided that someone competent is running the club locally and the owner keeps signing the cheques. 

Jenkins got the terms of the loan wrong and Peace got the scent of profit in his nosterils and frankly after that everything needs to be said about this has been said.  All the other decisions flow from this basic dynamic. To change the ownership we need a buyer with deep pockets there is no sign of one nor is there likely to be.

Sorry but I honestly did not expect anything else.

We don’t “owe money to ourselves”.  The Shareholders and the Company owning the club are two distinct parties, even more so when 12% is owned by third parties.

I cannot see how this transaction protects the interests of the minority shareholders under company law. Having said that, the balance sheet has not been diminished.  A cash asset has been replaced with a loan asset for the same amount.  Only if the loan is never able to be reissued will the 12% shareholders suffer any damage.

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Re: Guochuan Lai
« Reply #5920 on: May 25, 2019, 10:37:01 AM »
We don’t “owe money to ourselves”.  The Shareholders and the Company owning the club are two distinct parties, even more so when 12% is owned by third parties.

I cannot see how this transaction protects the interests of the minority shareholders under company law. Having said that, the balance sheet has not been diminished.  A cash asset has been replaced with a loan asset for the same amount.  Only if the loan is never able to be reissued will the 12% shareholders suffer any damage.

In law that is completely correct. However in practice the entity that controls the creditor is also the debtor there is no other trigger to repay the debt other than the demand of the creditor which won't be forthcoming while debtor controls the creditor.

There is no technical loss to the minority shareholders unless the loan defaults which unless the club demands settlement won't happen.

 The bigger issue is that Peace and Jenkins were aware of the possibility of a lucrative trade sale and the former increased his share holding and therefore exploited his position as the major shareholder. The fact that the sale took 2 years to materialise is possibly the only defence.
« Last Edit: May 25, 2019, 10:39:19 AM by Standaman »
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Re: Guochuan Lai
« Reply #5921 on: May 25, 2019, 11:26:39 AM »
He’s not going to sell at a massive loss so I guess we are stuck with a non caring, non attending, owner who won’t put money into club.


Great

The longer it goes on the value of the club will drop.

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Re: Guochuan Lai
« Reply #5922 on: May 25, 2019, 01:16:07 PM »
There's no mention of this in Matt Wilson's article in the E&S, the only mention I've seen of this is from Lepkowski's twitter account.
Not saying there's nothing in it, just depends which journo is better informed.

You also have to bare in mind that Matt Wilson works with the club on a daily basis so does not want to upset anyone, Chris Lepkowski has no reason to be concerned about that and despite claims that he is a disgruntled employee (none of us know why he left or the circumstances around it by the way) he will also have a good knowledge over what has gone on at the club especially around the time he was either working as a journo or working at the club.
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Re: Guochuan Lai
« Reply #5923 on: May 25, 2019, 01:50:35 PM »
JP sold us to no investment GL for £175m and didn't even have the decency to pay back the £4m loan he took out of the club to increase his shareholding which made him an extra circa £25m by increasing his shareholding up to 88%, says a lot about the man. To make matters worse FOSUN had been looking at us but didn't want to pay a premium for a PL club and bought them lot for £75m instead. JP hoovering up as much money for himself as possible will define our club for decades. As a fan base we have every right to be furious about this.
« Last Edit: May 25, 2019, 01:52:17 PM by baggie82 »

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Re: Guochuan Lai
« Reply #5924 on: May 25, 2019, 01:55:52 PM »
I would imagine most football club owners look at JP in awe, as he must be the only owner of any football club to have actually made himself any money, never mind the fortune he made.