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Wednesday, May 23, 2012

The Foundation, devoted to extend credit again to pay the interest

Eighteen months after the problem recurs. On 27th August, Valencia CF Foundation will pay nearly six million in interest on the loan he received in 2009. That loan, provided by Bancaja with the approval of the Valencian Finance Institute, allowed close the capital and the institution became majority shareholder of the Mestalla club. However, the Foundation lacks the capacity to generate income and can not get the sale blocks of shares, which again render it an escape forward, reprint of the outcome and lived in November 2010.
The solution then was Solomonic. To pay 4.5 million euros in interest generated in its first year on the loan, the Foundation has also called Bancaja, an extension thereof, and went from 75 to 81 million. Although there is still no official pronunciation, sources admitted yesterday to the institution PROVINCES than normal right now is to repeat the maneuver. That is, the Foundation chooses to borrow even more to change to survive.
That is the reality of shareholder of Valencia.
This is not an issue which is relevant only to a limited company sports. Recall that the Mestalla club Foundation Board includes in almost all major institutions Valencia.
Among them, Government, Provincial, City Hall, University of Valencia Polytechnic University, IVAM, Chamber of Commerce, Feria Valencia, RTVV or Federation of Music Societies.
The Foundation is an apparent dead end. Valencia can not legally inject money, although it was initially expected, and the agency is not empowered to take action on sale. Right now ruled out a new issue of securities, as happened last year and half. Nor would give time for such a move by August. Would ask for a pipeline to the CNMV (Comision Nacional del Mercado de Valores), a process that already would be impossible because of time constraints, but also should be subject to an advertising campaign to publicize the initiative to society .
No ability to move, the only solution is for them to pay back the money.
If so, the credit would have happened in three years of the initial 75 million to nearly 87, after two extensions desperate. However, not always adopt this solution as the deferment of payments has an expiration date. Next year may still be a maneuver of this kind, but in the following more serious problems start.
In August 2014 the Foundation will pay half the credit, some 43 million euros, and the following year, the other half to pay off the debt.
What if you can not? The amount of the loan is secured by the shares, so that if the Foundation is not able to return with money will be with their own titles, which would go to the Government, for being a guarantor, which means that the Valencian government would pass be master of Valencia. But this would become indebted to the Generalitat. The other way is that Bankia controlling the actions of the club and therefore the power of the entity Mestalla.
An absolutely bizarre end of the road.
The 'match ball' that keeps the Foundation tries to save parallelism that seeks to avoid Valencia, as reported yesterday that negotiations PROVINCES in another six months to extend credit of 250 million choking him, under the $ 200 million gave at the time Bancaja and the two contributions of 25 from the Banco de Valencia. With this move, the club president Manuel Llorente tries to get a cushion of time waiting for that concrete 'plan Bankia', announced in December but subject to a protocol of intent does not commit to anything. The application of these new six months, apart from affecting the economy of an entity that already pays 15 million a year in interest, denotes pessimism about to resume work on the new stadium in September.

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