Everton takeover: 777 Partners saga faces pivotal week as MSP Sports Capital deadline nears

The Everton takeover saga that has been rumbling on since September could have some clarity as early as this week.

Miami-based investment firm 777 Partners struck a deal to acquire Farhad Moshiri’s 94.1% shareholding in the football club some seven months ago and have provided around £180m in working capital to the football club since then, even though they have yet to receive approval for the acquisition from the Premier League.

777 Partners, who own a number of other football clubs including the likes of Genoa and Standard Liege, have come under intense scrutiny since they were revealed as Moshiri’s preference to acquire the club, with a string of legal cases in the US, some relating to failure to pay significant debts, adding to the material that the Premier League needed to digest before making a decision.

Last month it was revealed by Bloomberg that the Premier League was ‘minded’ to approve 777 Partners as Everton owners, but only on the proviso that a number of caveats were met by the prospective owners.

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Investigative website Josimar, which has followed the trials and tribulations of the 777 deal closely for several months, detailed the conditions that had to be met, reporting that 777 loans to the club had to be converted into equity, funds were required in an escrow account to meet financial obligations for the remainder of the season, proof of funding for stadium completion arrived, and a £158m loan was repaid to MSP Sports Capital. The ECHO has since independently had confirmation from 777 sources that the criteria were correct.

MSP had been in talks early last year to acquire a minority stake in Everton. That deal, however, collapsed back in May 2023 due to an agreement being unable to be reached with an existing lender, Rights and Media Funding Limited. It ended with MSP not taking the planned stake and having any operational control, although a loan payment, which was initially reported as £100m but believed to be significantly higher, arrived to aid the continued burden of stadium construction costs.

The security agent for the loan was Blythe Capital, an Ormskirk-based firm owned by Everton fan Andrew Bell, the founder and former chief of the successful AJ Bell investment firm.

Through the agent, MSP had security over the loan via the stadium. 777 Partners, on the other hand, have lent money to the club through junior debt, meaning that they would be at the back of the queue for repayment should the club fall into difficulty. Everton lenders RMF, MSP, and Metro Bank would all be ahead of them in that regard.

The ECHO understands that there is a repayment date of Monday for the loan to MSP Sports Capital, with it being one of the conditions that 777 Partners need to fulfill.

The two parties are understood to be in dialogue over a resolution, but with the clock ticking and 777 wanting to reach a swift conclusion to the matter now that they know the conditions they have to meet, it is expected that this week will be pivotal in determining whether or not they will be the new owners of Everton before April is out.

Should the loan not be repaid then MSP would have the option to convert the debt into equity in the stadium.

Another capital commitment will be required to maintain the funding for the stadium build, as well as meet payroll obligations, by the time May arrives, and 777 don’t want to provide such capital indefinitely, meaning that a decision will likely be made either way.

Last month, state regulators in two US states, Utah and South Carolina, made moves to put pressure on five insurance companies to reduce their exposure to 777.

The five insurers and reinsurers in question belong to the A-CAP group, run by Kenneth King, an associate of 777 co-founder Josh Wander, and at the end of the year held assets totaling $ 11.5 billion. Of that, $ 2.9 billion was invested in 777-related entities. According to data in the regulatory memo seen by the Financial Times, who were the first to report the issue, A-CAP's investments in 777-related businesses exceeded the $ 1.8 billion mark at the end of 2023. These investments have caught regulators' attention and raised concerns due to the regulatory limits on single-issuer exposure, which A-CAP’s allocations are alleged to have exceeded.

In a statement provided to the ECHO, 777 Partners stated: “A-CAP is one of a number of lenders to 777 Partners and its 60 portfolio companies. As is standard practice in the industry, 777 is bound by confidentiality regarding the specifics of its loan activity.

“As it relates to the proposed acquisition of Everton FC, 777 Partners is confident in its ability to fund both the transaction and the Club’s three-year business plan, the details of which it has provided to the Premier League as part of its ongoing process of regulatory approval.”

Potentially on the hook for more than £300m in order to meet the Premier League’s requirements, assuming the MSP loan is paid off, means that 777 will have to lean on their funding sources to a considerable extent in order to acquire the Toffees, who suffered a further two-point penalty for breaches of the Premier League’s profit and sustainability rules (PSR) on Monday.

Now that particular situation has been resolved, the next is to determine who has their hands on the wheel of the club in the future, and there is a considerable amount of work to be done in a short period of time to see this saga reach its conclusion. It could be a matter of days.