Every word the Everton accounts say about £150m loan…

Every word the Everton accounts say about £150m loan and Premier League relegation 'scenario'

Everton face the prospect of having to repay a £150million loan should they be relegated from the Premier League.

On Friday evening the club made public its financial statements for the year ending June 2022. The accounts showed that the club recorded a turnover of £181m and a reported statutory loss of £44.7m, representing a £76m reduction on the loss of £121.3m for 2020/21.

However, the reduction arrived in a year when Everton made a £67.7m profit on player trading. Richarlison, Lucas Digne and James Rodriguez were among the sales during the year.

But the club’s accounts also contained an admission that should the Blues suffer relegation to the Championship, then they may be forced to repay a £150m loan. The loan, extended from £100m to £150m last season, is seemingly repayable in 2027, but relegation to the second-tier could lead to a potential immediate demand for the money.

The accounts state: "In assessing the appropriateness of the going concern assumption, the Directors have produced detailed cash flow forecasts based on two scenarios, being 1 - considered to be the most likely - the Club remaining in the Premier League or 2 - a severe but plausible downside -being relegation to the EFL Championship.

"In the event of the Club securing its Premier League status, the Board have assessed that there are sufficient facilities available to meet liabilities as they fall due. In a relegation scenario, the Club would review its costs base, trading strategy and defer other planned discretionary expenditure in the short term to offset any likely reductions in revenue.

“Whilst the club has been able to secure longer term funding facilities during the year end 30 June 2022, some of these facilities include a covenant that assumes the club will remain in the Premier League, therefore the Board have had to consider the scenario of relegation and the availability of these facilities in that scenario.

“The providers have indicated that they remain supportive to the group under each scenario. However, at the time of approval of the financial statements, there are no contractual commitments in place that would guarantee a waiver of the amounts payable in full or in part and therefore relegation would require a material repayment of debt as per the contract.”

Elsewhere in the accounts document, more details are provided: "Included in other loans at 30 June 2022 includes a five year facility totalling £150,000,000 (30 June 2021; £100,000,000) secured by a fixed and floating charge on the assets of the Club. This loan incurs interest at a market value rate."

In his initial 'Strategic Report' section, finance director Grant Ingles also confirmed: "The Club successfully secured an increase of £50m to the existing five year credit facility with Rights and Media in the current period, which has the same repayment profile as the original £100m facility taken out in the period ending 30 June 2021."

Farhad Moshiri, who owns 94.1 percent of Everton, increased his stake to that figure as part of a share issue that was confirmed in January 2022, with £100m worth of loans turned to equity. Then came a further injection of £97m. This year's accounts also confirm an additional £70m of financial support from majority sharehold owner. Club sources have described this money as 'shareholder investment' - and told the ECHO it would be up to Moshiri whether it is repaid to him down the line.

Under a section of the accounts headed 'Strategic Report — Principal risks and uncertainties', Everton’s directors say Moshiri has reiterated in a letter that his financial support will continue.

The accounts note, however, that 'this letter does not represent a legally binding commitment'. They add: “The directors acknowledge these uncertainties cast significant doubt on the entity’s ability to continue as a going concern.”

Sean Dyche’s side return to Premier League action tomorrow night when they welcome Tottenham Hotspur to Goodison Park. The Blues are currently one place and one point above the Premier League drop zone.

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