On Friday of last week, the Trust received a notification from Companies House that a new debenture had been entered into between one of Clem Morfuni’s Australian-based companies, Axis Plumbing NSW, and Swindon Town Football Company (the Club).
Since then, we have met with Anthony Hall, the Club’s CEO, to discuss the purpose of the debenture and the restructuring announced last week. We want to update supporters on what we have learned and the concerns we raised.
A debenture is similar to a mortgage. When you borrow money from a bank or building society for a property, they put a charge over that property, so if the debt is not repaid, the bank can take control, sell it, and settle the debt. A debenture is just a commercial version of that. It appears that Axis Plumbing NSW has agreed a lending facility with the Club, secured by this debenture, with the first £200,000 under it being used for the March payroll.
We have asked Anthony since the meeting, to provide a copy of the facility agreement, which would confirm that this only relates to new debt. We have not yet received it, but we will update supporters once we do.
Despite the debenture being tied to new lending and not the historic £12 million debt which is thought to be owed by the Club, the Trust has two concerns.
First, we don’t believe a debenture is necessary when Clem Morfuni owns 100% of both Axis Plumbing NSW and 100% of the Club. It would make more sense if other shareholders were still involved, but as announced last week, Axis Football Investments now owns 100% of the Club. Thus, we have asked why a debenture is now needed after £12 million was previously loaned without one, and why this it is required now, given the reported 100% ownership.
Second, we have a more specific concern about the drafting of the debenture. It includes a charge over all the Club’s investments and holdings, capturing the 50% ownership of the joint venture which owns the Nigel Eady County Ground. While it has been reported that the debenture tries to apply a charge over the ground, this is incorrect. We still believe, however, that a charge is being placed over those 50% shares, and we have raised this with the club. Anthony Hall committed to reviewing this with the Club’s legal advisors, and if it is the case, they will amend the debenture to remove the charge over those shares.
Less than three years ago, we praised Clem Morfuni for paying off a previous £2.8 million debenture originally created by Andrew Black, which changed hands multiple times before being used as leverage against the current owner. While we have been told by the Club that the intentions of this new debenture are honourable, we are concerned because debentures can be transferred and assigned without public notice, and, as we have seen, if they end up in the wrong hands, they can pose a real risk to the Club. For that reason, we have asked Clem Morfuni to remove the debenture and instead use other mechanisms, such as his director loan account or unsecured loans, as he has done for the last five years.
We are disappointed to have to comment on off-field matters as we enter the most critical stage of the season. With four games left, all focus should be on supporting Ian Holloway and the players as they strive for automatic promotion. In the meantime, we will stay in touch with the Club and keep you updated.