Be Careful What You Wish For (45 page)

I asked Harris if this was the real deal and he was adamant it
was
. In fact he suggested we met in the Hero Fund’s office with one of their principals, Damian Roberts, on Tuesday to sign off the term sheet. The relief I felt was incredible and it looked as if I had just pulled out the proverbial rabbit.

Around this time I had developed a prolapsed disc and was having a series of epidurals in an attempt to avoid back surgery. So when I met Damian Roberts and received the signed term sheet I declined the opportunity to go for a drink to celebrate their first ever deal in football as I had a hospital appointment. I departed clutching the signed term sheet feeling infinitely more relaxed. I was told the money would be available by the end of October or beginning of November and went off to wait for the formal contract and the money, and wait is what I got to do: I waited and waited!

In November I decided to let the bank appoint Deloitte’s, and specifically Lee Manning, to come in and see what the state of play was as well as look at any solutions to ensure the business was able to go forward. I had known Lee for many years. He had undertaken other work for me in the past when he was at a firm called Kroll Buchler Phillips. There he was with David Buchler, the Spurs director and the person I had introduced Mark Goldberg to as a potential administrator some ten years ago. I rated Lee and trusted him.

When Agilo, or more to the point their increasingly erratic principal Brajovic, found out I had allowed the bank in I got my first taste of this man’s true character. He went absolutely berserk. He was raging about being the secured creditor and claimed that the bank was in a better position than he was by being allowed in. What he failed to understand was that the relationship with the bank was strong, and Manning knew football well and could quite possibly bring the bank onside to support me, which might mean paying Agilo their money. I sought to placate Brajovic with that
in
mind but by now the previously cordial and work-together mentality was gone.

The vile threats began and never really stopped for three months. He wanted to call in this four-year loan that was sixteen months old, fully up to date and earning a huge yield!

An unlikely casualty of the financial crisis was Paul Kemsley. His business Rock Investments, one that he frequently bragged was so successful and had a £500 million line of credit with HBOS, failed and was placed into administration. Now I have to admit I didn’t shed a single tear for him. What I did was stop paying the rent to try and aid our cash flow, requested a new deal as the one I had done with Kemsley was done under duress and, as this asset was in a company that was in administration, I started to negotiate with the administrators for a vastly reduced purchase price and rent on the lease while it applied.

Lloyds Bank had been forced to buy HBOS, which meant that the actual owners of the stadium in funding terms were now Lloyds, the club’s bankers. This was fabulous news as Lloyds wouldn’t want to be difficult with Palace, primarily because of their relationship with me, but also no bank wants any adverse publicity surrounding a football club.

This situation, which I had inadvertently engineered and then suffered from at the hands of Kemsley, came full circle for me, with a huge opportunity to renegotiate the whole lease and better still finally get a realistic price for the stadium. This position for Palace was to prove of paramount importance and provide another nail in my coffin!

It had now been brought to my attention that Agilo, as well as putting a ‘full court press’ on me, were actually seeking to sell the debt to anyone they could. I had tried to find commercial ways to satisfy them. The Hero Fund was still in play, or so I thought, and
I
also tried to discount future TV revenues to help cash flow and pay down some of Palace’s debt to Agilo. After a series of fraught meetings with Brajovic he announced that he might be selling the debt to Ron Noades, which for me was like lighting a blue touch paper.

If Noades bought the debt he would, to some degree, have control over the club and me. It enraged me, although I knew at the time it was an unlikely scenario as it would have meant that he would have to put his hand in his pocket, something he was not prone to doing. But as information filtered through to me I became conscious of the fact that there were people – and some of them on the list of individuals I had asked Alexander to approach – who were plotting to take advantage of the situation. This was disturbing to say the least. In the discussions with Brajovic he told me that unless I paid down their loan pretty quickly Agilo would come after my personal guarantees. My response was I had committed so much money to Palace in the last twelve months, as well as being battered in every other area, my personal liquidity was questionable, and so he may do as he pleased on that front! Wouldn’t it be better for him that we resolved his problem of wanting a loan repaid three years early? That suggestion brought to an end any rapport I had with him and he decided to unleash everything he had to get what he wanted.

Incredibly, after all the hard work to get them into play, the Hero Fund deal stalled without any reasonable explanation. They went into hiding, refused to return phone calls and gave lame excuses to explain away the delays. A term sheet that had been signed in October, with the likelihood of monies available in two weeks, now turned into nothing over the weeks of November and early December. All this was going on while Brajovic and Agilo were threatening to put the club into administration on a
daily
basis, and as a secured creditor they had the leverage to do that.

Agilo changed offices and summoned me to a pointless meeting where they issued further threats. I recognised the address for some reason and when I arrived I realised why. They were renting a serviced office in the same building as the Hero Fund, in fact, directly above them. Given the Hero Fund were now back-pedalling from the deal they had offered to me, was this a horrible coincidence or was there more to it than that? I still haven’t worked that out.

In mid-December, some eight weeks after signing the term sheet, I had a heated and very bad-tempered meeting with the Hero Fund, their two principals Damian Roberts and Nick Hely-Hutchinson, and Keith Harris, where they backtracked from what they had said in the term sheet and to me. They needed to get more funding and wanted to do more due diligence on Palace. They had signed a term sheet subject to contract, not due diligence, and by signing that agreement they had acknowledged they had done the due diligence. I knew, as I sat there listening to what I can only describe as utter bullshit, there was no deal with these guys. I had spent time getting them in play, put more of my money into Palace on the basis of my agreement with them, and they were not going to come through!

After Deloitte’s had been in they produced a report of a relatively well-run club in commercial aspects but one that needed funding to get out of its current predicament. They noted the club had the asset value in the playing squad to do this and given the new incomes coming in the future in the season 2010–11 and after the cost reductions, would be in even better condition. The club had debts of circa £30 million but £23 million-plus was to me, £4.3 million to Agilo and the other £3 million-odd was HMRC, other
creditors
and football clubs on transfer deals where the money was not due in some cases for eighteen months. So in real terms the club’s finances were far from disastrous, primarily because I had just kept on funding it; we had just lost cash flow and had a secured creditor change his agenda.

The immediate short-term issue was with HMRC. They had decided to issue a petition to wind up Palace that was due to be heard on 28 January 2010 for around £1.2 million. This could be easily cleared up with a small player transfer in January but the overwhelming problem was Agilo. Where Lee Manning and Deloitte’s were going with this report was to explore the potential of Lloyds Bank stepping in now that they had the stadium to provide funding to pay Agilo their money.

In December I engaged Denton Wilde Sapte, ironically the lawyers who had acted for the administrators of Crystal Palace and in whose offices I had arrived nearly ten years earlier to buy the club. I wanted them to help with the legal aspects of the pressure that Agilo were applying and to ensure I was acting appropriately, given the legal position with the Inland Revenue and Agilo, and to try and protect my other directors from any allegations of wrong-doing around the trading of the company.

Lee Manning came to a meeting with Agilo to try and work out a solution to their loan. The idea was to allow me to get to January and pay both the Revenue and Agilo as much as possible through player transfers in the window. In the meeting he got to see Brajovic in action, who from the first whistle was hostile and incredibly aggressive. He stated in no uncertain terms he was not interested in the well-being of the club; he was not interested in solutions or working together. ‘I will get our money; this is the business I am in. I will do it whatever I have to and am not interested in any more fucking discussions.’

The hostility from Brajovic was pretty jarring even for someone as experienced as Manning and he immediately saw that we were not dealing with someone with a rational perspective to resolve an issue. This was someone whose constant threat was administration, someone who was hell-bent on doing something even if it meant he was cutting his nose off to spite his face. It had become personal for him. The language he used was what it was, and while I am certainly no shrinking violet this was not what Deloitte’s had expected, even though I had warned them of Brajovic’s temperament. I listened to him threaten and rant and tried to hold my temper. After leaving this meeting, which frankly was just a forum for Brajovic to vent his spleen, we tried to work up a solution.

By the end of December I had involved Lord Mawhinney as the Hero Fund had all but reneged on everything. He wrote a withering letter to them about their conduct and implored them to honour their deal. It was very pleasing to have such support from Brian; he of course may have felt a tinge of embarrassment as he had lobbied hard to get them into play. But it fell on deaf ears – they just came up with more lame excuses!

To avoid forcing the club into administration and to give me the time in January to raise the funds to pay them, Agilo demanded I sign over all my shareholder loans to them. This meant that if they did put the club into administration in the event that I failed to pay them, if the club were to be bought out via a CVA (company voluntary agreement) – the only way the club would exit administration and get Agilo their money – I couldn’t block said CVA. Given that I was the biggest creditor and could therefore block any deal I saw as unfair on unsecured creditors and that my shareholder loans would be a major obstacle to Agilo putting Palace into administration there was no logic to their demands. No rational person would threaten, let alone do it!

But I was not dealing with logic. Brajovic insisted he would put the club into administration if I didn’t sign these shareholder loans over to him. It would be signing my own death warrant with these people again unless I did it with some agreement in place that gave me at least the January transfer window to raise the funds. And there we reached an impasse. I was reluctantly prepared to sign over my shareholder loans, but only in exchange for a standstill agreement until the second week of February in order to give me time to sell players, get Lloyds involved or find some other funding!

There was of course the added problem of HMRC, and their petition to wind up was due to be heard on 28 January 2010, three days before the transfer window closed. If the Inland Revenue didn’t agree to step down the petition or defer it for a period of weeks, then the club would be wound up on that date. Of course, Agilo wouldn’t allow that to happen and would have pushed the club into administration before then as a secured creditor to protect their position.

As December wound down we desperately sought an agreement with Agilo and believed we were close to one. I would sign over my shareholder loans, again completely backing myself in exchange for a standstill agreement and also getting the Revenue to defer their petition to wind up. But on 23 December Brajovic announced he wanted to invoke a clause in the loan repayment called ‘make whole’, which involved paying them all the interest they would have earned if the loan ran its full term. Therefore they wanted another £900,000 on top of the outstanding balance. This was unbelievable. The agreement only provided for this if we voluntarily repaid early, not if they called the loan in. The flimsy truce broke down and I was told unless I signed up they would put the club into administration the next day!

Conventional wisdom from both Deloitte’s and Denton Wilde
Sapte
was that Brajovic would never do it and it was all bluff. If he did it was very unlikely Agilo, given I was the biggest creditor and the banks were secured by more of my money, would get their money repaid. But it didn’t stop Brajovic and Agilo’s legal advisers, DLA, again ironically people well known to me as they had represented me and commanded huge fees for the 121 court case, turning the screw, assuring us they would do it. It was a case of who blinked first. I didn’t, and late on Christmas Eve we received an email saying that it would be better for all parties to consider their positions and talk after the Christmas period.

No sooner had I breathed in than Christmas was over and I went to watch Crystal Palace at Selhurst Park on Boxing Day 2009. It would be the last home game I ever watched as chairman of the club, but I didn’t know it at the time. And there was no respite as Agilo and DLA were making more threats about administration and assuring me there would be no second chance if I didn’t sign over the shareholder loans. I stood my ground again. ‘Give us the standstill agreement,’ I said, ‘remove the ridiculous make-whole demand and I will do it.’

Rachel Anthony of Denton’s and Lee Manning desperately tried to make Agilo see sense. Trying to reach an accord, we had managed to agree the terms of the shareholder loan sign-over and the standstill agreement but they still insisted on this extra £900,000. On 30 December DLA advised us that their client would put the business into the hands of the receiver on New Year’s Eve if I didn’t give in to their demands. Once more I was playing Russian roulette and at the last minute once again Agilo backed down. For the first time in weeks Brajovic picked up the phone to me and spoke directly, saying the lawyers were getting us into a mess and we needed to work it out together. He, of course, was instructing his lawyers to act this way but we agreed
to
pick this up in the first days of the New Year. This second climbdown gave Brajovic further substance to Denton and Deloitte’s insistence that Brajovic wouldn’t make good on his threat to put the club into administration. They were guilty of sorely underestimating him.