Hearts fans can bank on strength in numbers

The administrators of Hearts are beginning the process of evaluating the three offers they received for the business last Friday and establishing what talks will be required to lead to a preferred bidder being appointing.

Supporters of the Tynecastle club will favour the proposal made by Foundation of Hearts, a coalition of fan groups which seeks to ultimately transfer ownership to them. That remains, in theory and in practice, the most credible bid, but there are several issues to overcome.

Administrators BDO will discuss the merits of the bids – the others are from a consortium between Peebles businessman Bob Jamieson and the American financiers Club 9 Sports, and Angelo Massone, the former Livingston owner – with the administrators of Ukio Bankas. The bank owns 29% of HMFC plc, but also has security over Tynecastle, and early indications were that they considered £4m to £5m to be the market value for the stadium, meaning any offer would need to match that amount.

Herald Sport understands reports yesterday detailing the value of the three prospective bids are broadly accurate. The FoH bid contained £2m for the CVA, funded by Edinburgh businesses, and a further £3.75m for working capital, funded by almost 6000 supporters who have currently signed up to monthly direct debits. The HMFC Ltd bid – by Jamieson and Club 9 – includes £1.8m for the CVA and £3.2m in working capital, with Jamieson having already revealed their plan involves selling Tynecastle and moving to a new home. Massone's offer is £4m, although it is believed he did not hold any discussions with BDO prior to making his offer and so had not looked at the books.

It could take up to a month for a preferred bidder to be identified, not least because UBIG, who own 50% of the shares, are in limbo while they wait to be placed into administration. Herald Sport understands BDO will try to determine whether or not they can discuss the bids with the current UBIG directors, but also that political pressure is being applied to try to speed up the insolvency process in Lithuania. It is also hoped that the UAB Valnetas, administrators of Ukio Bankas, are also appointed to control UBIG, which would simplify matters.

For a Company Voluntary Arrangement to be agreed, UBIG and Ukio Bankas both have to vote in favour, and so accept the offer made by the preferred bidder. As it stands, though, the offers in their current form are unlikely to be accepted.

There are several nuances to be considered. While Tynecastle may be worth in the region of £4m on the open market, if Ukio Bankas were to decide to reject the CVA and sell the ground, any buyer would need to be confident about gaining planning permission from Edinburgh City Council. There will also be further political pressure applied, and some in Lithuania will be wary about being seen to be involved in liquidating Hearts. The rights of the creditors of Ukio Bankas and UBIG must also be served, but the indications so far have been that there is a willingness to secure an outcome that keeps Hearts and Tynecastle as a package.

The FoH board opted not to accept an offer of assistance from Gordon McKie, the former chief executive of the Scottish Rugby Union, whose backers were prepared to put up the money to fund the CVA offer in return for a partnership agreement in which FoH would provide working capital. FoH may yet have to come up with more funds, although they remain in the strongest bargaining position. Firstly, they have the backing of the fans, as well as the local business community, and the funds as they stand are all in place.

Club 9 Sports failed in previous bids for Sheffield Wednesday and Tranmere Rovers, while the substance of Massone's bid is considered to be in question. The Scottish Football Association changed their rules so that the emphasis on ascertaining the suitability of buyers falls on the sellers – in this case BDO – rather than the governing body, so the administrators must decide whether or not the bidders are fit and proper. Massone was the owner of Livingston when the East Lothian club entered administration in 2009. Proof of funds will filter out the serious bidders, but clauses and terms of the offers will also need to be ironed out.

Hearts have sold more than 3000 season tickets since BDO were appointed, generating enough money to see them through the opening three or four months of the season. By then, the administrators hope to have secured the club's future. The new owner would receive a company with a clean balance sheet, apart from £500,000 in football debts, although there would need to be enough working capital to fund it through to next summer, when season ticket money for the following season begins to be gathered.

However, BDO now at least have the beginnings of something to work with. The offers need to be assessed, verified and then negotiated before further progress can be made. That keeps FoH at the forefront, even though there are still issues to be addressed, and they remain the most likely to succeed.

Taken from the Herald