West Brom take out new loan for additional funding to support cashflow
Albion have secured additional funds from United States private equity firm MSD Holdings to tie the club over until a takeover is complete.
The club's parent company, Guochuan Lai's West Bromwich Albion Group, borrowed £20million from the lender last Christmas time at an interest rate of around 14 per cent.
That was taken over a four-year repayment period and secured against club assets such as their historic home of The Hawthorns, the Walsall training ground and other properties. The four-year term has not been extended.
The new loan figure has not been disclosed, but it is understood to be significantly lower than the initial sum as Lai remains in discussions for a full sale of the club for £35m plus in the region of £20m-25m debt, which are thought to be progressing.
The latest advance is required to support the club's general business operations and cashflow. It has been drawn down and is in club accounts.
Further borrowing also increases Albion's debt.
How much of the original £20m has been spent and remains is unknown but it is believed Albion have moved to secure future cashflow before the first loan had drained entirely. The club have been operating on no investment from above, while controlling shareholder Lai actively took money from Albion, £5m to his Wisdom Smart firm, in March 2021. The figure, nearly three years later, is still not closer to being repaid.
Albion said in a statement chairman Lai, who has owned around 88 per cent of the club since 2016, "continues to engage with parties interested in purchasing a majority shareholding in West Bromwich Albion."
The club's new ownership will then be at liberty to deal with the MSD loan and repayment however they see fit.
The Express & Star understands the loan will have no bearing on the club's January business, which remains the same, in that Albion will still look to lower the squad's wage bill.
The club did not sell the required number of players during the summer to sufficiently lower the squad salary to a more manageable figure. Dara O'Shea's sale and the £7m fee was significant but only four senior players were out of contract and departed. Outward loans of Karlan Grant and Taylor Gardner-Hickman were made at least partly with reducing wages in mind.
The club are not in a position where a feared 'fire sale' is required in the new year.
Though they remain in a situation where, should offers of suitable value be received for any players, they will be considered.
A new 'landmark financial distribution' deal in the works between Premier League and EFL clubs, which was voted on by top flight clubs at a stakeholders meeting last week, will see £915m distributed to EFL clubs over a six-year period. It will see an immediate handout of £88m to EFL members in the first year, rising to £190m by its final year (2028/29).
It is understood, though, part of the deal requires clubs to reduce their squad salary to turnover to 70 per cent, which will spark a new way of operating for many clubs. Albion have players, well into double-figures, in their senior first-team squad out of contract next summer, which is timely regardless of new owners in place.
Albion's latest accounts showed salary to turnover well in excess of 100 per cent and that unsustainable model is where the club have been looking to reduce, while Lai's talks over a sale has been ongoing.
