Inverness Caley Thistle need to raise £200,000 in two weeks to avoid administration and become insolvent - club to hold open meeting with fans on Monday night
Inverness Caledonian Thistle need to raise £200,000 in the next two weeks or they say administration will be inevitable.
Interim chairman Panos Thomas has reached out to shareholders in a letter stating the club need to raise the six-figure sum by Wednesday, October 16 or the club will become insolvent.
The club have sent out a letter to shareholders detailing the financial difficulties they are facing after it was exclusively revealed by the Inverness Courier yesterday talks have began about possible administration.
The club have confirmed they will be holding an open meeting of shareholders, fans and stakeholders at the Caledonian Stadium on Monday, October 7 at 7.30pm.
Thomas, along with consultant Alan Savage, who was appointed to conduct a financial appraisal of the club, will be at the meeting to answer questions regarding the League One outfit’s future.
The Inverness Courier has obtained a copy of the letter to shareholders, which has confirmed Caley Thistle intend to set up a crowdfunding page, where pledges of cash can be made to a Save ICT Fund.
The letter states “Unless the Appeal can raise £200,000 immediately, and certainly by Wednesday October 16, then administration is inevitable, because the club would be insolvent.”
The letter also says the club will need around £1.4 million to £1.6 million to get to the end of the season.
In the letter, Thomas is asking shareholders for any innovative ideas for raising substantial funding that may have been overlooked by the board.
Thomas is inviting people to attend the open meeting on Monday night where he says the club will answer questions frankly.
He wrote: “As interim chairman, please be assured that I will respond frankly to your questions, as will Alan Savage, whose financial appraisal has done so much to give clarity to the huge challenges facing us as a board.
“It is a matter of considerable regret that, as interim chairman, I have had to write to you in these terms.
“But you need to be fully aware of matters as they stand currently and with support of the board, shareholders, fans and stakeholders, rest assured, that we will continue to work assiduously and explore every avenue in an attempt to restore the club to a financial equilibrium that will ensure its future for years to come.”
Savage was appointed as a business consultant to carry out an appraisal and report on the club’s financial position. He has also supported the club with £350,000 of his own money to enable the club to stay solvent.
His conclusions from the financial appraisal included a loss of £1.2 million for the 2023/24 season.
Trade creditors (Including HMRC) stood at £600,000 early in August. This included monies for a contract with the kit supplier, where the club is committed to a spend of £125,000 per season for the next three seasons.
Former directors loans currently stand at £3.425 million, which would cause the balance sheet to stand at -£3.8 million by May.
The club says a huge injection of cash is urgently required in the short term to keep the club afloat, The amount that is estimated to be required to get to the end of the season is in the region of £1.4 million and £1.6 million
The club also hopes to benefit from a positive planning decision on the proposed battery farm at Fairways which was rejected by Highland Council in March. The application is being appealed with the Scottish Government.
The club held discussions with the SPFL last month to discuss its difficulties and has held discussions with football administrators.
Right now the club is in the pre-administration phase, but if it does appoint BDO as the administrator that would trigger a number of immediate actions including a points deduction and redundancies.
The document from BDO titled “Operation Kessock” is dated as Friday, September 27.
It outlines “Indicative Administration & Company Voluntary Arrangement (“CVA”) Timeline” – that is a method to rescue a company/club in deep debt by reaching agreement with creditors about repayment of all or part of its debts.
But it comes with a heavy price both on and off the field. If an administrator is appointed it would mean “immediate redundancies” not just of staff but potentially players too.
The SPFL would deduct 15 points this season and five points next season as well as placing the club licence under review - if Caley Thistle loses its licence then it would not be permitted to compete in professional football.
BDO projects three phases ranging from one to 12 weeks though it can be reasonably assumed that this is subject to change depending on what is discovered and what obligations need to be met.
The first phase is the pre-planning stage due to last between one and two weeks - this is approximately where the club is headed to at the moment.
It involves reviewing cash flow projections, agreeing a reduction in costs and liaising with football authorities like the Players Football Association (PFA). That is seen as “critical” because player redundancies are on the table so PFA support will be “vital to ensure fixtures can be completed”.
Then it would be a matter of preparing the administration cash flow forecasts to ensure funding requirements can be met to cover any trading shortfall and the costs of the administration.
A media communication strategy would need to be agreed and sales memorandum and non-disclosure agreements would be drafted as well as consideration of whether the Financial Conduct Authority (‘FCA’) needs to be notified prior to appointment.
Stage two would likely last from weeks three to eight and would see appointment of administrators leading to “immediate redundancies” and work to find a buyer starting in earnest.
There would be engagement with interested parties and then, to verify if any bids were viable, a data room would be set-up with the co-ordination of any due diligence work and ongoing dialogue with relevant authorities.
The closing date for bids would be issued and then a preferred bidder would be appointed followed by approval from football authorities that they are “fit and proper” to own a club.
The period of time for this to take place could also be extended depending on the interested parties. Finally a draft sale and purchase contract would be agreed and draft proposals to repay creditors.
The repayment proposals would be finalised with a meeting of creditors and shareholders and if approved then the company/club would exit administration.
