Peter Lim commits himself to Goldman Sachs to avoid Valencia choke in short term | Relief

Now it’s official. Valencia Football Club has closed. agreement to refinance its debt with financial bank Goldman Sachs and thus received loan of 186 million euros allowing him to get the oxygen he has needed for years.

The club itself issued a statement exposing this new reality: “Valencia has achieved one of the most important milestones in its 105-year history: a complete transformation of its capital structure. In recent months the Club has been busy developing and executing two complex and large-scale financial transactions: a long-term corporate credit facility of €121 million; short-term bridge loan of 65 million euros.”

In addition to this loan, the company agrees another loan of 70 million euros for Nuevo Mestalla, since he has about 160 million euros left to pay, and with CVC money he only reaches 80 million euros, and from the sale of the Atitlán tertiary building only 30 million, so he needs more. Now it’s important to understand Why did Peter Lim want the club he owned to get into such financial mess?

Let’s start with the fact that Valencia Given the debt he had, he was insolvent in the short term.every year the Mestalla company It started its balance sheet with -20 million euros. Because his short-term debt exceeded the short-term income he had, “every year we raise the blinds to open up Valencia, we start with 20 million in the red,” said Inma Ibáñez, the club’s finance director.

Thanks to this loan, Valencia will no longer have this is a short term suffocationalthough it will continue to remain a club in debt, especially in reality, but long-term. Debt to Goldman Sachs It will have to be returned after 12 years.but if the financial fund agreed to provide such a loan, it was based on two premises: the main thing is that in the application Valencia explained that from 2026 its extraordinary profit from the stadium would increase from 5 million to 30 million thanks to the New Law. Mestalla. Second, although it may be hard to believe, is the security provided by a company like Valencia, owned by Peter Lim. Over the 10 years of its existence, the club has never missed payments to previous creditors. (however, for this he had to sell “even the hangers” in the main team).

While we understand the relief that this agreement represents in the short term, we must also understand the other benefits that it brings to Mestalla. The first, identified in Relevo, that downgrade assistance in the event of such an assumption will be received again by the organizationuntil now it had been mortgaged to Rights and Media, the club’s previous lender. Apparently in an agreement with Goldman Sachs, Valencia placed various guarantees and pledged assets depending on your situation, but given the downside risk in recent years, The 40 million he would have received from La Liga was removed from the equation..

And for relief one that Valencia will have for the next two years. This variable is inseparable from the fact of reaching an agreement itself. Valencia intends to continue two more years with a management model based on being below the minimum in all aspects, as explained a few months ago. Why? Because until New Mestalla is built (2026) and it starts to give additional benefits expected by the organization (2028) From an economic point of view, your income will be relatively low.

From 2026 New Mestalla will begin to give additional income and in 2028 (two years after construction), The club expects to already generate a profit of 30 million annually.. For all these reasons, the agreement provides for a waiting period of two to three years, that is, during the first years. Valencia Football Club will not pay a single euro of interest on the loan received (interest rate 7%).which will be a relief in many ways.

“Completion of debt restructuring marks a milestone in our journey that many of us have worked tirelessly to achieve.“Said club president Leihun Chan. “The successful completion of the corporate finance agreement together with the bridge loan has strengthened our financial position. This allows us to confidently move forward towards financing the Nou Mestalla project. “The new stadium symbolizes our commitment to growth, innovation and the vision that drives us forward.”

Signs of Lima’s departure and long-term loan

That is, thanks to this agreement, Valencia becomes even more indebted in the long term, but achieves greater solvency in the short term. Will Peter Lim stay at Valencia for long? The announcement of his departure is a chimera, in fact they are saying that “he is leaving” as of 2020, and the largest shareholder remains in the company year after year. But since the company has been ordering for many years, all signs point to In the short term it will still persist (in the above two-year plan), but this He seems to be having a hard time staying at the club for long.

The truth is that thanks to this agreement, in the short term, in which Asia will continue to exist in essence The club will receive financial assistance and some respite from debt.. In the long run, obviously will have to pay more money than it would have paid its previous creditors Rights and Media and Caixabank. Will Lim stay in this long-term and will he have to manage the club so that he can pay on time, or will he sell the venture after these two years of economic relief? The question that all Valencians ask themselves.