Friedkin Group £684m Everton move confirmed as new owners get to work

The shareholder loans of former Everton owner Farhad Moshiri have been converted into shares

One of The Friedkin Group’s (TFG) biggest early moves as new Everton owners has been confirmed by Companies House. The club has issued £684m worth of new shares following December’s takeover.

The move, which was dated December 18, a day before the takeover was officially announced, sees former owner Farhad Moshiri’s £451m worth of shareholder loans converted into shares, as had been the plan, as TFG make moves to strengthen the balance sheet at the club.

Additional funds raised from the allocation of new shares will create some fresh cash to clear some outstanding debts, while money will also find its way to completing the fit-out of the new 52,888-seater stadium at Bramley-Moore Dock, where Everton will take residence from the start of next season.

Moshiri’s plan had always been to convert his shareholder loans into shares. That is something that takes on greater significance from a financial control perspective given that Manchester City’s recent success in arguing that low-interest or zero-interest shareholder loans should not be exempt from associated party transaction rules. That will come into force from next season.

Everton’s financial struggles have been well documented in recent times, with heavy losses having seen the club twice punished for breaching the Premier League’s profit and sustainability rules (PSR).

But TFG’s major focus initially is to clean up the balance sheet and reduce debt, reducing the amount of interest that the club had been paying out.

Part of that plan is, as first reported by Bloomberg on Tuesday, to refinance the stadium debt, with the club having engaged New York-based banking giant JP Morgan Chase & Co. to seek out institutional investors as they look to raise £300m.

The Bloomberg report also claimed that JP Morgan have, separately, provided TFG and Everton with a loan of some £130m. TFG representatives declined to comment when approached by the ECHO.

With TFG focusing on the club being far more efficient financially, the reduction of a few percentage points in interest could end up saving the club between £5m and £10m per year, and for a club that has had to be mindful of every penny due to PSR concerns, such a development is an undeniable positive and an early sign of moves in the right direction for the club.