Everton takeover: 777 Partners in race to meet Premier League conditions as critical date nears

Everton takeover: 777 Partners in race to meet Premier League conditions as critical date nears

A conclusion of some sort will be reached in the coming days as Everton face looming deadline

777 Partners and its co-founder Josh Wander, centre, is still involved in a protracted effort to take over at Everton

777 Partners co-founder Josh Wander after the Premier League match at Goodison Park, Liverpool. Picture date: Monday February 19, 2024.

Almost seven months on from a deal being agreed between Farhad Moshiri and 777 Partners for the latter to acquire Everton, the coming days will likely see some sort of conclusion.

Miami-based investment firm 777 Partners had been waiting on approval from the Premier League to complete the takeover of the Toffees, providing some £180m in interest-bearing loans to the club to provide working capital to continue on the club’s new stadium at Bramley Moore Dock and for payroll obligations to be met.

777 Partners found themselves and some of their business interests placed under scrutiny after the move to acquire Everton, with reports emerging of a string of legal cases, some alleging non-payment of monies owed.

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Last month, with the Everton situation reaching a critical level, with debt mounting, the Premier League were ‘minded’ to approve 777 as new owners, but only if four conditions were met.

Those conditions were that 777 loans to the club had to be converted into equity; funds were required in an escrow account to meet financial obligations for the remainder of the season; proof of funding for stadium completion arrived; and a £158m loan was repaid to MSP Sports Capital.

All the conditions carry equal weight with the Premier League, and if any aren’t met then the deal cannot be approved.

Early last year, majority shareholder Moshiri had been in talks with New York-based firm MSP Sports Capital, a company founded and run by billionaire Jahm Najafi and former sports superagent Jeff Moorad, the man whom the Tom Cruise character in the eponymous film Jerry Maguire.

MSP had a track record of sports investing through stakes in the McLaren Formula One team and European clubs including FC Augsburg and Beveren, and they had been in talks with Moshiri over providing a £150m sum to the club through convertible debt, whereby they would be able to turn the debt into 25% equity at a later date.

That deal never happened, however, with an existing Everton lender, Rights and Media Funding Limited (RMF), opposing the deal due to its structure.

RMF, as Everton’s biggest creditor, had four charges on the club’s assets and had the right to object to another party coming in and diluting the security on those assets and potentially impacting RMF’s position in the event of insolvency. That led to the rejection of the MSP convertible debt deal.

But a loan arrived in May of last year for a reported £100m, although it has since been reported by multiple outlets as being significantly more than that at £158m. That money arrived and has since been spent on stadium construction costs.

But the loan was secured against Moshiri’s majority stakeholding in Everton through Blue Heaven Holdings Limited, and that money has to be repaid by Monday, April 15, or Moshiri defaults, the 777 deal collapses and MSP would potentially acquire the club.

The security agents for MSP are Blythe Capital, a firm founded by Everton fan and founder and former chief of the successful AJ Bell investment firm.

MSP loaned Everton the money expecting that Moshiri would have concluded a sale of the club in a swift time frame, but with the approval of 777 Partners having dragged on for so long the repayment of the MSP loan has loomed larger and larger.

Sources have told the ECHO that it is unlikely that 777 and MSP reach an agreement to extend the deadline, and this week has largely been centred around 777 finding the more than £300m it needs to satisfy the Premier League’s checklist in order to approve the deal.

Sources close to 777, who own a string of other football clubs including the likes of Genoa, Standard Liege, Hertha Berlin, Vasco da Gama, Red Star Paris, and Melbourne Victory, state that the group remains confident of achieving the outcome it set out to, and that the plan was to be ‘in the directors box’ as the new owners of the football club by the time that the Toffees face fellow relegation battlers Nottingham Forest a week on Sunday (April 21).

For some time there had been the sense that the can was being continually kicked down the road, but with the MSP loan deadline fast approaching, Everton in need of a capital injection again to start next month, and 777 unwilling to keep providing working capital indefinitely without some assurances from the Premier League, the next week will likely see a conclusion reached in some form.

If 777 doesn’t meet all of the conditions set out, including repayment of the MSP loan, then majority ownership of the club could pass to MSP, who would then have the task of cleaning up the asset and finding new buyers, which might not be a particularly appealing task, even if it may represent a chance to get a considerable return on the monies paid, given they were willing to part with £150m for 25% equity a year ago.

A similar situation occurred in Italy in 2022, when former AC Milan owner Li Yonghong could no longer fund the club and defaulted on loan repayments to American hedge fund Elliott Management.

Elliott, a firm run by Wall Street veteran Paul Singer, had no prior history in owning a sports team, nor did it plan to, but it cleaned up Milan as an asset before selling it to RedBird Capital Partners for $1.2bn.

The coming days are pivotal for Everton. They have significant cost obligations to meet, not least to Laing O’Rourke, the construction company attached to the stadium build. The club was able to fix the costs for the stadium to alleviate some financial risk and uncertainty, but if payments are not made then the deal for fixed costs expires, it is understood.

Moshiri is understood to have turned off the funding tap for the club some months back and it remains to be seen whether he has the appetite to return to propping up the club. With that in mind, 777 have the pole position to acquire the club, knowing the conditions that they have to meet. But finding such funding in a matter of days likely won’t be the easiest of tasks, but it is one that the US firm remains confident it can achieve.