Hearts to reduce debt by £10m by selling shares to bank
Hearts manager Jim Jefferies answers to owner Vladimir Romanov
Hearts have announced that their bank plans to wipe another £10m off the football club's debt by converting money owed into shares.
The Scottish Premier League outfit are presently £35m in debt.
And the latest "debt-for-equity" plan, to be put before shareholders at an extraordinary meeting on 11 November, follows a similar move in 2008.
Lithuanian-based Ukio Banko Investicine Grupe would increase its total share to 98% should the plan be approved.
UBIG, of which Hearts owner Vladimir Romanov has a controlling interest, would be issued with 100,000,000 ordinary shares at 10p per ordinary share.
The directors of Hearts are also exploring what additional measures may be taken to further improve the financial situation of the company
Hearts say the latest plan will have the benefit of reducing interest payments by £500,000 per year.
And it will also "strengthen the financial position of Hearts in preparation for Uefa's pending regulations regarding the professional football clubs in Europe".
European football's governing body announced in May that, by 2014, clubs playing in its competitions would, over a three-year period, be expected to spend no more than they earn.
The Edinburgh club's chairman, Roman Romanov, Vladimir's son, said: "The directors of Hearts are pleased to inform shareholders that an agreement has now been reached with UBIG, conditional upon passing of the resolutions, to remove a further £10m of the current debt owed to UBIG by converting it into ordinary shares.
"As before, in 2008, when the company reached an agreement with UBIG to convert £12m of debt into equity, this will strengthen the company's capital position in keeping with UBIG's strategy for Hearts, whilst removing a considerable amount of the company's short-term liabilities."
The club claim that the "conversion plan accelerates the point at which Hearts may return to profitability".
UBIG currently owns directly, and controls indirectly via HoM 2005 - a company set up and owned 100% by UBIG - 44,605,409 ordinary shares, representing 95.07% of the existing ordinary shares.
"The debt-for-equity plan provides further evidence of UBIG's aim to continue to develop Hearts on and off field and, together with continued cost efficiencies, help the club reach profitability," add Hearts.
"The directors of Hearts are also exploring what additional measures may be taken to further improve the financial situation of the company."
This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.