Farhad Moshiri has agreed to convert his £451m loan to Everton into shares if the club is not sold at the new time. first division Regulations on shareholder loans come into force.
Everton's owner has promised to forgive the huge debt once his contract ends. planned sale to Friedkin groupand will convert it to equity if it looks like that won't happen before January 11. Starting that date, loans to shareholders will be subject to a fair market value test by the league after last week. vote on associated party transaction rules to which the opposition was led by Manchester City.
Based on the current Bank of England interest rate of 4.75%, Everton they would have to pay £21.3m to cover Moshiri's loan, putting them at risk of another breach of profitability and sustainability standards (PSR).
Moshiri is understood to have made the commitment ahead of last week's vote, when Everton switched sides and voted with the league executive to back the new regulations. The proposed amendments were approved by 16 votes to four.
Everton and Moshiri declined to comment, but sources with knowledge of the sale process confirmed there would be no shareholder debt once it is completed.
The Premier League is in the final stages of due diligence on the proposed acquisition of the Friedkin Group. Both sides are hopeful the deal will be approved next month, but the nature and volume of Everton's debts and other debts beyond Moshiri's loan make it a complex transaction.
The league's rule change treating shareholder loans as associated party transactions for PSR purposes has brought another potential complication. The £451m owed to Bluesky Capital, an Isle of Man-based company controlled by Moshiri, is treated as equity in Everton's accounts, but the Premier League will not allow this from January 11.
Clubs can retain existing loans on their current terms, i.e. without paying interest, but they will be treated as APT, so interest will be added for PSR calculations.
Everton was deducted a total of eight points by two separate commissions for PSR breaches last season after being charged by the Premier League. As a result, the club must submit this year's accounts to the league three months in advance, by December 31, to allow for any additional charges during the season, but the club is confident of complying.
If the Premier League approves a takeover by the Friedkin Group, which owns Roma, it will end years of uncertainty over Everton's ownership. The club's finances have been hit since one of its main sponsors, Alisher Usmamov, was sanctioned by the UK government in March 2022 for his links to Vladimir Putin.
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Everton severed relations with Usmanov's companies, USM Holdings, MegaFon and Yota, which paid tens of millions of pounds a year in sponsorship, and Moshiri began a long search for a buyer. The British-Iranian businessman has granted exclusivity to five buyers in the last two years. The Friedkin Group's interest in Everton has fluctuated and withdrew from the planned purchase in July before returning in September.
The Freidkin Group has invested £200m in Everton after repaying loans to MSP Sports Capital and local businessmen George Downing and Andy Bell last summer. Although the Bluesky Capital loan will be removed, the new owner will inherit £225m of debt with Cheshire-based Rights and Media Funding and £200m with insurance company A-Cap.
Under Moshiri, Everton have clashed with the Premier League over a variety of issues, including the PSR, the APT and the ownership of several clubs. The Friedkin Group has tried to improve that relationship.
