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Financial Integrity, Football

Why did Co-op Bank in 2009 need extra security on the Celtic loan facilities?

Feb 2002 Interim Results Debt

The paragraph above is the first appearance of Celtic PLC’s £36 million loan facility which matches with the Co-operative bank facility details. Note:There is also another loan facility there too which is partly drawn down. The paragraph appears in the 7th February 2002 Interim Results (6 monthly results until 31st December 2001). http://www.investegate.co.uk/celtic-plc–ccp-/rns/interim-results—replacement/200202071840291720R/

During 2001, when the Co-operative Bank loan was taken out by Celtic, the bank wanted security and it took a mortgage on Celtic Park, as can be seen in the outstanding mortgage:

Celtic park mortgage

Something happened in 2009 such that The Co-operative Bank required of Celtic more security and two further mortgages were created over the Westhorn land gifted by Glasgow City Council(GCC) and the Celtic Triangle which also including land from the GCC:

Westhorn mortgageCeltic triangle mortgage

Remember The Co-operative Bank facilities for the debt and overdraft interest rates are based on slim margins above the Libor base rate. What happened in 2009 to the Libor base rate

Libor graph 2009

The Libor base rate dropped like a stone. The Co-operative Bank realising that the Celtic loan facility was given at too generous terms and not covering it’s risks made a margin call and requested additional security. Hence the purchase of the Westhorn land by Celtic for the measly £675,000 from the GCC. With the £34 million Co-operative Bank facility now secured against Celtic Park, Westhorn and the Triangle one can only guess at the attributed valuation in the mortgage of the Westhorn land but it’s a lot more than £675,000 and easily Gerry Braiden’s quoted figure of £5 million. Note: All the mortgages are against the land value only – the cost of the Celtic Park stadium is irrelevant.

If Celtic could not stump up this extra security, The Co-operative Bank would have reduced the drawn down amount until it was satisfied with it’s risks. It would have asked for some repayment like it did in 2001 in the previous post. https://footballtaxhavens.wordpress.com/2013/12/03/did-celtic-directors-mislead-shareholders-and-stock-exchange-in-2001-to-repay-co-op-bank-debt/

It would appear that Glasgow City Council saved Celtic having to repay some of the Co-operative Bank loans which would have restricted their operations severely as well as giving away a taxpayer asset cheaply.

©footballtaxhavens.wordpress.com 2013 CC-by icon

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Discussion

4 thoughts on “Why did Co-op Bank in 2009 need extra security on the Celtic loan facilities?

  1. The carefully orchestrated manner of all these moves reveal a position where Celtic and Glasgow City Council are operating as one organisation to the exclusion of the interests of all other parties

    Posted by Bill | December 4, 2013, 1:16 pm
  2. Brilliant, keep digging please

    Posted by jim fraser | December 4, 2013, 10:58 pm
  3. Could it be not is all well at the stadium ell midden,

    Posted by John Ferguson | December 9, 2013, 11:01 am
  4. O it looks like they’re fucked hehehe

    Posted by Harry | March 11, 2014, 6:57 pm

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