Sources: Terms of £20m West Brom loan revealed
The loan secured by West Brom from MSD Holdings has an interest rate of over 10 per cent, Football Insider has learned.
Albion announced on Wednesday (28 December) that they had secured a £20million package from the American private equity firm.
That figure coupled with a ~10 per cent interest rate means the club will pay at least £22m in total unless the loan is repaid in full early.
Two sources with knowledge of the intersection between private equity and sport have told Football Insider that the Baggies’ loan has a base rate of 10 per cent which could rise to 12 per cent if they fail to meet certain conditions.
The specific nature of those conditions are not known but will likely include penalties for late repayment of instalments.
The 10 per cent figure is higher than the terms of the loans MSD have granted to West Ham, Southampton, Burnley and Derby County in recent years.
The loan is secured against the assets of the company that owns the club, West Bromwich Albion Group Limited, and is to be repaid within four years.
In a statement accompanying the announcement of the loan, West Brom wrote: “For the avoidance of doubt, the loan will only be spent on the purposes of the football club.”
That may have been a nod to the ongoing drama regarding loans paid by the club to current majority owner Guochuan Lai and former owner Jeremey Peace.
Lai is due to repay a £5m loan with a meagre interest of just £50,000 by the end of the month.
West Brom have meanwhile launched an independent investigation into a 2014 loan paid to then-owner Peace worth £3.7m.
That unpaid debt, which has since risen to over £5m with interest, was inherited by the current regime following Lai’s takeover in 2016.
The investigation is being funded by Shareholders For Albion, a disaffected group of investors that own around 12 per cent of the club’s equity who believe Peace used the cash to raise his own stake in the club.
In other news, Kieran Maguire claims “alarm bells ringing” amid £100m West Brom takeover reveal.