As noted yesterday, resignations were the order of the day at the Annual General Meeting this week but the back story has plunged Watford into possible administration and a 10 point deduction.
Early in 2009 the Russo Brothers, Jimmy & Vince, owners of Valley Grown Salad acquired a 30% interest in Watford Leisure Plc, the publicly traded owners of the Watford FC. Lord Michael Ashcroft & Graham Simpson control ~54% (Ashcroft & Simpson - didn't they write "Ain't No Mountain High Enough"?).
In the course of the year, Valley Grown Salad loaned the club £4.88 million, including a £1 operating loan in November, secured by the stadium, Vicarage Road. The club claims a need of £5.5 million additional by Tuesday to meet obligations. The Russos have offered to purchase the club outright and finance the entire £5.5 million.
Meanwhile, the Board has refused to address the offer and, under rumor of a vote by Ashcroft & Simpson to oust the Russos, they, along with business associate Robin Williams, resigned Tuesday and demanded immediate repayment of the £4.88 million loan. They have continued the offer to buy the club however.
The London Stock Exchange offshoot Alternative Investment Market (AIM) suspended trading of Watford Leisure Plc yesterday. The Russos extended the repayment deadline to today, but this morning the Ashcroft & Simpson-lead Board voted to support a £7.5 debt offering with conversion/warrant provisions by Fordwat, an Ashcroft-controlled entity, to pay off the loans and raise operating capital, but the offer still turns on the Russos' extension of the debt deadline as the offering would not be completed in time to raise the needed cash to repay the loans.
If the deadline is not extended or the Board does not accept the Russos' offer to buy the club, both unlikely scenarios, the club will enter administration (similar to Chapter 11 bankruptcy in the states) today and be assessed a ten point deduction in the standings, a move that will see them just outside the relegation zone.
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