Confidential Clause in Lease Deal

One item not made clear in yesterday's news about the return of the Edgar Street leases to the club and the settling of the £1m plus debt was just how much Hereford United have had to pay out to the Richardsons.

The first statement released by the club was agreed word for word with the Richardsons.

Bulls News now understands that the deal is covered by a confidential agreement between the two parties not to disclose any financial details.

However there are some clues which suggest the club may have paid out around £100,000, perhaps a little more, to settle matters. If this amount is anywhere near correct then it represents an excellent deal.

In the statements released yesterday chairman David Keyte said that the club was now debt-free.

For the first time in years the club is free of debt and we can now move forward off the pitch to develop the club

Currently the Bulls are thought to have around £700k in the bank so Keyte's words that the club can now move forward suggests that the balance will not have dropped too far by settling with the Richardsons.

In any case it was widely believed that the Richardsons 'obtained' the debt for nowhere near its £1M plus value some years ago after a Chelverton company got into trouble. In an article originally written for www.hu-fc.co.uk it was suggested that the Richardson had purchased the debt from the Chelverton receivers and had also received some tax relief on the deal. The evidence for this view was obtained by looking at the company accounts of Formsole, which was taken over by Carillion and the Richardsons. Formsole was the company which held the first lease on Edgar Street.

Originally two companies made money available to Hereford United. One was the BS group and the other Formsole which was a Chelverton company. After a couple of years the BS Group decided to sell their "loan" to Chelverton at an amount just over book value. Book value often means less than true value so this could suggest than Chelverton took over the BS share for less than the £500,000 loaned to the club.

Later when part of the Chelverton Group got into trouble it is feasible that the current owners of Formsole bought the Chelverton stake for next to nothing from the liquidators. So it is quite likely that Formsole, now owned by Carillion and Richardson, would not be exposed to anything like a million pound debt from Hereford.

On top of that Formsole have used a tax rule to "obtain" a tax credit from the loans of about £355,544 from the Inland Revenue.

Therefore it is possible that the companies owners may have managed to "get back" quite a good percentage of the £1 million loans.

Had the Richardson tried the cash the £1m debt on the open market it is thought unlikely they would have received much more than 5% of its worth.

The leases are separate from the debt but again the Richardsons may not have been in the driving seat as they had previously agreed not to demand the payment or increase the interest.

And with Hereford United in a stronger position than for perhaps the best part of twenty years there was little chance the Richardsons would ever have been able to build on the site notwithstanding the sporting covenant which is thought to cover the area.

So it looks as though David Keyte and Tim Russon have brokered an excellent deal for Hereford United. Something Graham Turner failed to achieve.

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