Thursday, July 24, 2014

Sale could take till September?

Some of you have asked why it is taking so long for the sale to go through. After all, the process of finding an owner started in December 2013. It took six months to finally announce Lim as the bid winner. And here we are, almost 2 months later with the sale incomplete. First they promised mid July, then at the end of July, then mid-August, and Salvo's last statement said things could go to September before being finalized (let's hope not). Here are the details.

There are two main issues, one with Bankia and another with three other banks (Porchinos/Porxinos case).

Bankia

Lim, Valencia CF and Bankia have been in talks ever since Lim was declared winner of the bid. The talks covered refinancing of the debt, methods of payment and the guarantees. The first two are agreed upon, but the last one is the issue. The last time I wrote about this I explained about Newcoval wanting money (86 million) from Valencia CF (click here to read it). Since Bankia owns 50% of Newcoval, Valencia CF wanted Bankia to insert a guarantee that they will not support any court or legal action by Newcoval. Normally, that would be straight forward, however, Bankia keep sending statement that dance around the issue, they simply summarize what is going on but are providing no guarantees for one reason or another. This was really frustrating for Lim and Valencia CF who don't know why Bankia is delaying the sale. All of that is paired with long delays by Bankia in exchanging information as well as sending documents in Castillan (Spanish spoken in northern and central Spain) to Lim. The obvious problem is that Castillan is not familiar to Lim or Singapore in general. It is a common practice to make all international agreements in English. That is the standard, yet Bankia despite being aware of this, don't seem to care. The final thing would be the time difference between Spain and Singapore which frustrated Lim and cause him to send some of his legal team to Spain. There is a deadline of August 15 for negotiations on this, and Valencia CF need to work on those guarantees before then. Previously, Salvo accused Bankia of trying to "torpedo the process". In his most recent statement Salvo called the situation "intolerable" and "unethical" and demanded respect from Bankia.

Porchinos/Porxinos Case

This is another case of the actions of former management coming back to haunt Valencia CF. Sometime during the time of Juan Soler (2004-2008), an agricultural land was bought - Porchinos/Porxinos - in the hope that it could be urbanized into a new sporting facility (i.e relocated Paterna complex there) as well as some 2400 houses - the project was called PAI. It appears that Valencia CF had an agreement with three banks - Caixabank, BBVA, and Ceiss - to finance the operation. The deal was around 60 million euros. However, construction was cancelled after it was over-ruled by the Supreme Court which sited environmental concerns. They are now holding the land and demanding 100 million euros in compensation. Salvo has been trying to reason with them in saying that when Lim takes over there is a chance to continue the project. I guess the banks aren't buying it till now despite Salvo saying that their meeting accomplished a lot. Any agreement to continue the project still has to be subjected to Court approval which takes time.

Optimism

Despite all this, there is some optimism in Valencia CF. The signings of Rodrigo and Andre Gomes has convinced people without doubt that the end is near. After all, September is a possibility not for certain. You might ask where did all these problems come from? Previous management, and people getting greedy. Why now? I think that some of these people saw that big money is coming into the club, so they're trying to make the most of every mistake ever made to make money.

Any thoughts?

P.S. I couldn't find any clear articles in English, all of the sources were Spanish and even with online translation it was difficult to understand all the jargon and terms. I hope this clarified the situation enough.


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