City FC were 24hrs from disaster

The Royal Bank of Scotland would have pulled the plug from yesterday had a deal not been struck to sell St George’s Lane and pay off City’s £1.5 million debt.

As a result, the team would have had 10 points deducted – the penalty for going into administration – and would almost certainly have been relegated from Blue Square South.

RBS had been waiting for City to sell their ground to Careys New Homes for £3.5 million so the debt could be wiped out. But the Wembley firm stalled on signing because St Modwen, the developer behind a proposed new stadium for the club at Nunnery Way, wanted an assurance that the football club could afford the move.

RBS was losing patience and was due to start charging the club interest on the full debt from today.

City would not have been able to pay, leaving no choice but to place themselves in administration.

However, contracts were yesterday exchanged between Careys and City – and the situation with St Modwen resolved, meaning the club will now receive the funds to clear its seven-figure debt, providing Careys’ application is passed by Worcester City Council next Thursday.

St Modwen are also due to submit a new planning application with designs for a scaled-down stadium at Nunnery Way after planners declared the previous scheme not viable.

It has taken weeks of negotiations to secure a deal, with chairman Anthony Hampson and his fellow directors battling to beat the end-of-March deadline imposed by RBS.

City will now have to trade profitably until Careys pay them the remaining money when they vacate the Lane in June 2012. That will prove a challenge as the club has lost about £60,000 per year for the last decade.

A club statement said: “The club has been perilously close to being forced into administration and agreed pre-payments have allowed us to satisfy the bank and other creditors.

“March 31 was a deadline by which we were required to pay the bank significant quarterly interest charges.”

Careys want to build 84 homes on the 100-year-old site, scaled down from an initial 98, and the proposal has been recommended for approval by the Guildhall.

On the pitch, a 10-point deduction would have seen the team fall to third-from-bottom in the table with just five games remaining and left them five points behind Lewes, who would have two games in hand.

THE STATEMENT IN FULL

The Board are pleased to confirm that we have exchanged contracts with Carey and St Modwen concerning the relocation of the club. While recognising the reduction in terms from previous proposals the offer has been tested by independent chartered surveyors who confirm that it is in line with current market conditions. A key stumbling block have been previous contracts, entered into in 2007, that promised the benefit of the sale of St Georges Lane to support the proposed development at Nunnery Way by use of a legal instrument called a charge. This charge has been re-negotiated to the satisfaction of all parties.

Both contracts require the grant of satisfactory planning permission. When that is achieved WCFC will be in a position to pay off the bank and move forward with the relocation to Nunnery Way. The terms of the deal allow WCFC to play at STGL for at least another two seasons while the development process for Nunnery Way is carried forward.

This positive step forward is a welcome further development on the road to re-establishment of the foundations of WCFC. It allows us to quantify the amount of money that will be received for the principal current asset and move forward with confidence but also within our means. The club has been perilously close to being forced into administration and agreed pre-payments have allowed us to satisfy the bank and other creditors. March 31st was a deadline by which we were required to pay the bank significant quarterly interest charges.

These arrangements have allowed us to conclude the deal to allow a Evesham a further season of the current ground share arrangement while their new facility is completed.