Inverness Caledonian Thistle's interim chairman has penned an open letter sent to shareholders with a major update on the club's financial position.
Insolvency remains a distinct possibility, but administration could be avoided if £200,000 is raised to keep the club afloat before the middle of this month. A crowdfunded will be organised in an attempt to raise the cash required.
A loss of £1.2m was made during the 2023/24 season, and it's projected that the deficit will remain at the same figure for this season.
It reads in full: Dear shareholders, As interim Chairman of the club and with the support of all the Board Directors, I am writing to all shareholders to advise and update you on the troubled financial position of the club currently.
"We are acutely conscious of the fact that as shareholders, you are the owners of the club and require and expect to be kept regularly informed as to the health of the business, and the more so just now, given additional financial struggles, following relegation to Division 1 last May. I do hope that you will have observed that we have given greater focus on openness and transparency over the last few months as we, as directors, strive to tackle these financial challenges.
"Actions in August and September
"By August of this year, it became clear to the Board that the Club’s financial position, which had been precarious for some years in all honesty, had become perilous. The 2023 accounts lodged late at Companies House revealed a loss of nearly £600k for the 2022/2023 season and as the auditors were preparing to commence the audit for season 2023/2024, where the anticipated loss is expected to rise to £1.2m, serious question marks were highlighted, regarding the club’s solvency and ability to continue to trade.
"Strenuous attempts had been made by the Board to attract an inward investor and we did seriously consider an approach from 77 Ventures (Ketan Makwana), on which there has been much public comment. However, we suspended these discussions when it became clear that the gap between buyer expectations and seller ability to deliver was unlikely ever to be bridged. We remain open to consider any other credible offer of investment, even at this late stage.
"At that point, and following meetings with many of the major shareholders who we considered might be able to assist the club and be willing to “ride (again) to the rescue”, the Board accepted a generous proposal from Alan Savage of Orion, who alone came forward and offered to undertake 2 key tasks:
"1) to act as a business Consultant to the club, in order to carry out an urgent, intensive forensic appraisal and report (after 6 weeks) on the club’s financial position. Alan scrutinised the day to day running of the club, the financial projections, held discussions with current directors and staff, met with former directors with substantial loans outstanding, spoke with trade creditors and assessed what could be done to fast track an increase in commercial revenue and generally encourage more support and engagement from the club’s key stakeholders.
"2) against the current perilous financial backdrop, and to provide time for this financial analysis to take place in an orderly way, he also offered a substantial financial lifeline to the club, affording it temporary solvency status, to allow us to continue to trade. To date that support from Alan has reached £350,000.
"It goes without saying and the Board wish to place on record that we are all hugely grateful to Alan for having made these 2 commitments.
"The club now has the benefit of his detailed report and conclusions, which we wish to share with you all and have summarised this below.
"Conclusions from the Financial Appraisal
" - Loss of £1.2m for the 2023/2024 season
" - Predicted loss in the current season of £1.2m based on current projections. This does not account for additional expenditure that will also have to be incurred in restructuring the club as a first division business.
" - Trade creditors (including HMRC) stood at £600,000 early in August. This includes monies due for a contract with the kit supplier, where the club is committed to a spend of £125,000 per season for the next 3 seasons and a provision against litigation threatened by the club’s former CEO that could, if the club’s case was unsuccessful, cost £170,000 +.
" - Former Directors Loans currently stand at £3.425 million, which would cause the Balance sheet to stand at negative £3.8 million by May 2025.
" - A huge injection of cash is urgently required in the short term to keep the Club afloat. The amount that is estimated to be required to get to the end of this season (in terms of cash requirement, potential claims and backlog creditors) is in the region of £1.4 – £1.6 million. This figure assumes a second place finish in the league and excludes the sum of £350k already paid into the club by Alan Savage. In the past there have been numerous sources of this type of philanthropic support, whereas at present, despite efforts by the Board, it has thus far been Alan alone who has provided temporary funding to stave off insolvency.
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" - The latest cashflow projections predict that at least £200,000 will be needed by the end of October.
" - Battery Farm: the club still hopes to benefit from a positive planning decision on the proposed Battery Farm. Angus MacDonald, the local MP was contacted and he is going to ask the Reporter in Edinburgh to expedite his decision on the Battery Farm Planning Application that was rejected by HRC. If the Battery Farm went ahead, it has been anticipated that the Club would receive £3.4 million less expenses from the Battery Farm Company, the club’s shares in which had been bought by David Cameron, Allan Munro and Ross Morrison, in order to provide monies to run the club to the end of last season. This may provide a way out of the club’s financial difficulties.
"Land surrounding the Stadium extending to 7/8 acres approx. It had been hoped that this land might be re-conveyed to the club by the current leaseholders, Inverness Caledonian Thistle Properties Ltd. No deal has yet been struck though, although the club remains optimistic that a deal might still happen. If the lease of this land could be reconveyed to the club by ICTPL, it would better secure the club’s long-term future by ending the unease of having the 2 car parks subject to a 6 month break option, which could potentially see the club lose this vital land. It would also allow the club to use the remainder of the land to try to generate much needed commercial income, a fact which has been remarked upon by our auditors.
"Other actions which the Board have taken
"In the light of the current challenges for the club, the Board felt it necessary and procedurally correct to open discussions with the SPFL and we did so on Friday 20th September. Unsurprisingly, they had already had some awareness of our difficulties.
"Discussions with Scotland’s leading football administrator has also taken place, after which the Board determined that it was duty bound to investigate what the administration process would entail, if that was to be initiated in a final attempt to avoid liquidation of the club. Subsequent discussions have been opened with an Administrator experienced in dealing with Administrations for Scottish Football Clubs.
"Suggested next steps to save the club
"Whilst Alan Savage’s temporary financial lifeline has undoubtedly saved the club from insolvency in the last few months, now that he has reported in depth to the Board, it would be unrealistic to expect that lifeline to continue. A decision as to the future path of the club must be made in the next few weeks and certainly by end October at the latest.
"As a club Board, it is incumbent on us to formally report this to you, the shareholders, as we have done above, seek your views and any suggestions to save the club, that may not have come to the fore over the last few months, and then act appropriately, in accordance with our statutory duties as directors.
"What no Balance Sheet or financial analysis recognises, of course, is that the club’s most valuable asset is its fan base. They provide the life blood for the club and we recognised that we should also make further steps through the Supporters Trust and publicly, to appeal to them to help the club to survive.
"We need to accept the reality of the situation that with debt by May 2025 likely to be £1.4 – £1.6 million (to cover cash loss, potential claims and back log creditors) and a balance sheet standing at negative £3.8 million by the financial year end in May 2025, finding a credible buyer is highly aspirational.
"However, a former Chairman has expressed the opinion within the last week, that he feels confident that Administration could be avoided, if the Board reached out to former Directors and major Shareholders to see what amount of money could be raised quickly to save the Club. Whilst we have already done just that, and on more than one occasion, nonetheless, and in line with this request, the Board are reaching out once again, and by virtue of this letter, to all shareholders, to former Directors, fans and all Stakeholders, to ascertain if it is still possible to raise money of the levels indicated above.
"We are also proposing the following actions, recognising that time is of the essence:
"1) we intend to set up a Crowdfunding Page, where pledges of cash can be made to a ‘Save ICT Fund”.
"Unless the Appeal can raise £200k immediately, and certainly by Wednesday, 16th October, then Administration is inevitable, because the Club would be insolvent.
"2) any innovative ideas for raising substantial funding, that might have been overlooked by us as a Board, can be e mailed to us at panos.thomas@ictfc.co.uk
"3) We propose to have an open meeting of shareholders, fans and stakeholders in the Highlander Suite at the Club, at Stadium Road, to be held at 7.30pm on Monday, 7th October. We encourage as many as can attend to please come along and share your thoughts with us.
"As interim Chairman, please be assured that I will respond frankly to your questions, as will Alan Savage, whose Financial Appraisal has done so much to give clarity to the huge challenges facing us as a Board.
"Conclusion
"It is a matter of considerable regret that, as interim Chairman, I have had to write to you in these terms, but you need to be fully aware of matters as they stand currently and with support of the Board, shareholders, fans and stakeholders, rest assured that we will continue to work assiduously and explore every avenue in an attempt to restore the club to a financial equilibrium that will ensure its future for years to come.
"I hope to meet with as many of you as possible at the upcoming open meeting.
"With very best wishes, Panos Thomas, Interim Chairman."
