Club news


12 Mar 2014
The club has finally reached an agreement with the Spanish Treasury and is about to seal a deal with the banks. There are three keys to end the administration case of the club; one of them is an increase in the capital.

The deal with the creditors signed in January ended the administration case of Deportivo, but there was a bigger issue that needed a solution: to close the negotiations with the big creditors holding the major part of the debt. And it’s that the creditors’ meeting held in January was only to agree the terms to pay the not privileged debt.

Meanwhile, the privileged debt, calculated around the €100 million, needs to sign separate deals with the creditors. This debt is owed to the Tax Agency (€62 million) and banks Novagalicia and Sabadell-Gallego (€38 million).

For two months new president Tino Fernández negotiated and he found a big obstacle: the €21 million frozen in the bank account of the club. This money corresponds to past television rights sequestered by the Tax Agency (AEAT). The entity understands that this money should be used to reduce its debt, but the banks understood that they also had the right to receive part of the money as they had a legal right due to a mortgage.

The discussion of what to do with this money was the reason why the final deal was delayed in two months, butt on last week the club informed that it had already reached an agreement with the AEAT. The details weren’t revealed as the club prefers to close the negotiations with the banks before offering a press conference.

What happens is that some of the conditions with the AEAT might chance depending of what´s signed with the banks; it’s all related to the issue of the €21 million. And on Tuesday, business paper Economia Digital wrote an article reveling the three keys to unlock the situation.

In the article journalist Julián Rodríguez Moscoso informs that there was a meeting on Friday between the banks and the AEAT, and that the three parties already designed the solution based in three axes: an increase in the club’s capital, the deadline to pay the privileged debt and the distribution of the television rights.

First to all the distribution of the television rights, according to the source the AEAT will keep the €21 million that have been the centre of the conflict and also big part of the rights over the future television incomes, and as exchange the Spanish Treasury will later return the 50% to the banks.

At the same time the AEAT will give eight years to Deportivo in order to pay the €62 million of the privileged debt, which is the standard offered to the Spanish clubs. Former president Augusto César Lendoiro was requesting a longer deadline, but he never got a positive response.

At least new boss Tino Fernández got a concession as the deadline could be extended to nine or ten years if the club fails to clinch the promotion to Primera División. The reason for the delay is that the incomes at Liga BBVA are clearly bigger and Deportivo will have problems to face the debt in only eight years in case of being competing at Liga Adelante.

The final key is an increase of the club’s capital that will bring more security to the banks. The amount of the increase will be between the €6 and the €7 million. The idea is that the banks will subscribe the third part of this amount, which means an exchange of debt for shares.

The intention of the banks is not to take part of the club’s decisions, but to sell their part in the future and at the same time help the club to reduce the debt. However, paper Economia Digital points out that one of the banks, Novagalicia, is not totally convinced with this option.  For the moment the negotiations will continue and the club will only offer more information after all the details with the three creditors are closed.



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