DLA Piper acts for Ann Budge on takeover of Hearts of Midlothian

DLA Piper’s restructuring team has acted for Edinburgh businesswoman Ann Budge on her takeover of Hearts of Midlothian.

The deal, which will save the club from administration, saw the team led by partners Graeme Henry and Richard Obank advise Bidco, the special purpose vehicle set up for the acquisition.

Morisons (Scotland) acted for the administrators, Bryan Jackson and Trevor Birch of BDO. CMS acted for the Foundation of Hearts, the fan club that has been raising contributions from the supporters and is chaired by Ian Murray MP.

The deal involved the acquisition of the 79 per cent shareholding held by BUAB Ukio Banko Investicine Grupe (in Lithuanian bankruptcy proceedings) and also the release of security held over Tynecastle Stadium held by BAB Ukio Bankas (also in Lithuanian bankruptcy proceedings).

Added to this was the need to negotiate a funding and loan participation arrangement with the foundation, which, subject to satisfaction of various conditions, will enable the foundation to become the majority shareholder of the football club in five years’ time. In the meantime, the foundation is required to provide working capital to the football club to enable it to keep trading and discharge the loan put in place by Bidco to the football club.

The acquisition of the 79 per cent shareholding by Bidco from UBIG means that Bidco is obliged to make a mandatory cash offer for the remaining Hearts shares not already owned by Bidco pursuant to Rule 9 of the code.

The club’s appointed administrators from BDO will remain in office for the purpose of fulfilling the obligations of the board of the football club for the purposes of the code. It is anticipated that the BDO administrators will remain in office until 19 June and then vacate office, meaning that the football club will emerge successfully from administration, thus completing the rescue.

The board of the football club has been completely changed and arrangements are in place between the Bidco, Ann Budge and the BDO administrators for the ongoing management of the business pending the exit from office of the BDO administrators.

The team also included John Gallon, Victoria Rhodes, Charlotte Sharples and Victoria Egan in corporate, Faith James and Gillian Buchanan in restructuring, David Morton in finance and Edwin Truesdale and Emma Peverill in real estate.

Deloitte acted as CF adviser to Bidco; BDO acted as CF adviser to the administrators.