Vincent Tan’s unfulfilled promises

” Keith Morgan on Vincent Tan’s unfulfilled promises ”

The unfulfilled promises of Vincent Tan on converting club debt into equity.

The Trust again raised the issue of converting debt into equity in its open letter yesterday to club owner, Vincent Tan. Board member Keith Morgan, who is a football finance expert, looks back on some of the promises made by the owner of Cardiff City and his executives that have yet to be fulfilled.

In a BBC Wales interview July 18, 2013, when Mr Tan was awarded his honorary degree from University of South Wales, he stated clearly that he was “days away” from a settlement with Langston and that if the deal could be done he would “convert ALL my loans to equity”. In the same interview, he said, he was owed £120m at that time so he promised to convert at least such a total (not the later £50m).

That is also a bit of a mystery as in the May 31, 2013, audited accounts it shows Mr Tan as being owed £66m in loans and £6m in shares , so a total of £72m , not the £120m he claims he was owed just 7 weeks later.

On January 12, 2014 Sky Sports News quotes club chairman Mehmet Dalman as saying “I don’t think club supporters should be worried”. “We want to get rid of the debt by converting to equity” and “that means Vincent Tan will own this club 98% and it will have no debt”.

In the meeting with fans’ representativees on March 20, 2014, (reported by WalesOnline) Mr Tan himself said he would be converting once the Malky dispute had been settled.

On May 11, 2014, Mr Tan quotes “the club owes me maybe £120m and I put in £140m or £150m. Maybe I will convert £50m and leave £100m debt”. Contradicts previous full conversion promises and also only the May 2014 accounts when released will show what he was owed when he said this.

In a WalesOnline article by Steve Tucker dated May 15, 2014 he lists quotes by the club and by Mr Tan himself promising a full debt to equity conversion. Mr Tan had recently moved the goalposts saying that he might now only convert £50m of the £150m that he claimed he was owed.

NOTE: As far back as a meeting of shareholders held in July 2011 there was a resolution passed from Mr Tan and his fellow Malaysian investors to convert £5.1m of loans into shares. It never happened. In April, 2014, accountant Keith Morgan explained the difference between debt and equity which we reproduce below for the information of fans.


Many people have raised the issue of Vincent Tan`s continued delay in carrying out his promise , made publicly on several occasions , to convert all of the loans he has made to the football club into shares and to make the club debt free. Some fans are of the view that it makes no difference on the basis that “he only owes the money to himself” now that he holds a significant majority of shares in the club`s parent company. However, unfortunately, this is simply not the case. As long as Vincent Tan continues to be a creditor of the company then it gives him two significant powers.

1) To control the board of directors by appointing the majority of the holding company board – Malaysian employees of his who can simply outvote the UK directors – even though Vincent Tan is not officially a director himself (although under UK insolvency law , should the company enter a formal insolvency, he would be regarded as one because of that control he exerts).

2) More importantly, he can demand his money back at any time as it is not a term loan to be repaid over a period of time, but is repayable on demand like an overdraft. There appears to be a wide disparity between Vincent Tan`s own claims that he is owed £70m to £80m by the club and the claims of the Chairman Mehmet Dalman that Vincent Tan has put in up to £140m. Whichever figure is correct. the club simply does not have the money to repay it even with a sell-off of a lot of players and Vincent Tan taking all the end of season Sky TV payment plus next season`s first instalment of “parachute” payment. (The football authorities may not allow this to happen anyway if they believe the club may fold financially as a result and hold on to the money until the position is clear). If Vincent Tan honours his promise to convert all debt into shares, then he is no longer owed any money and can make no demand for repayment from the club. His outlet for recovering his money would then be a sale of his shares to a new investor. Two other routes are NOT available to him in the foreseeable future.

1) A float on a Stock Exchange, either in the UK or Singapore or Malaysia. The club simply does not qualify for such a float due to its record of financial losses and lack of growth potential ( a relegation would half the club`s income while as it would have to finish well up the Premier League on a consistent basis to significantly improve this season` income level). The inability of the club to follow this route was confirmed by the Chairman at a recent meeting with supporters` representatives.

2) Paying himself back with big share dividends each year. This would be a breach of UK law as companies are only able to do so out of cumulative profits – i.e. all of the £millions of losses from past years would have to be cleared first. The recently amended budgeted profit for the current season is about £12m even playing at the top level with all the Sky income that entails, so it would take ages for this to happen. So Vincent Tan sticking to his promise to convert all his debt into shares does make a difference to the club`s financial stability – a very big difference. I am sure that most fans hope that he will honour that promise as soon as practicable as it was first promised to be done when the Langston debt was settled, which happened several months ago.