Everton takeover: 777 Partners extension request explained as critical £158m deadline nears

Prospective Everton owners 777 Partners are to formally request an extension to a deadline where they have to pay a major club creditor as part of the Premier League’s conditions of approval.

The Miami-based investment firm agreed to purchase Farhad Moshiri’s 94.1 per cent stake in the club back in September. But seven months on the deal has still not been ratified by the Premier League via its owners and directors test.

777 Partners, which owns a number of football teams across the globe including Genoa and Standard Liege, has provided some £180million in funding for working capital to Everton to ensure the construction of the club’s new stadium at Bramley Moore Dock could continue, as well as payroll obligations be met. However, a deal that they had hoped would be concluded before the end of 2023 now faces rumbling on into May 2024.

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Last month the Premier League informed 777 that they would be granted approval if they could meet four criteria: those conditions were 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.

MSP Sports Capital was in talks early last year with Moshiri over a £150m convertible debt deal, where they would provide capital with the option to convert it into 25% equity at a later date. But that deal never materialised as planned as another major creditor, Rights and Media Funding Limited, objected to the dilution of the security that they had on their loans, and that the £150m didn’t go far enough to solve Everton’s problems for what was being given away.

Instead, MSP provided what was reported at the time to be £100m to the club to help meet construction costs, but that sum is believed to be more than £150m now. There is a deadline of Monday for that sum to be paid up or MSP, via the security agent Blythe Capital, can take up the option to take control of the club due to having security on Blue Heaven Holdings Limited, Moshiri’s holding company which owns Everton.

Having been informed of the Premier League’s conditional approval on March 18, sources close to 777 Partners claim that ‘significant progress’ has been made in meeting three of the four conditions, and that the expectation was that those could be met before this week was out.

The sticking point is that the three weeks between being informed and the loan maturity is not deemed a sufficient amount of time for 777 to be able to secure the funding it requires to clear that debt and acquire the club, with the US firm asking MSP Sports Capital for additional time to complete, although that will likely run into May if approved.

Earlier this week, MSP, it is understood via sources, were reluctant to provide additional time for the loan to be repaid, although the appeal of taking control of the club and being the new owners is questionable given the requirement to take operational control, steady the ship and complete the stadium build. They could hold the club and find another willing buyer, but with the mounting debt issue at the club and continued uncertainty over which division the club will be playing in next season, it isn’t a compelling asset to sell at present until clarity is received.

MSP may find that the best way to extricate themselves from the Everton situation is to provide additional time, even if it is reluctantly, although there would be a financial upside to taking control given that they would effectively have paid £150m for control of the club when last year that sum was deemed worthy of 25%.

But the additional debt that has been accrued through 777 Partners' continued financial support through interest-bearing loans may change the situation, as is a looming need for another injection of capital to meet another big bill from stadium construction company Laing O’Rourke.

777 has previously said that they wouldn’t be funding working capital indefinitely. But with clarity over the conditions of approval that must be met now received, there is a sense that they would be the ones on the hook for the next requirement for capital, something that MSP likely wouldn’t want to incur. There are few financing options available at present for the club other than 777’s funding.

The ability to get a deal done will revolve around the relationship between MSP and 777, which sources describe as having been strained in the past. MSP may hold 777’s feet to the fire and demand a repayment of the loan via the terms set out, or it could allow the request for an extension to complete. With the option to take control (albeit likely only a short-term fix) on the table still, there are options in play, but for Everton the continued uncertainty has become par for the course over another troubled season.