Burnley seek new bank loan after relegation
Burnley are seeking a new bank loan after their relegation on Sunday.
The Daily Mail says Burnley recently rejected a loan offered at a relatively modest interest rate of six per cent as they were confident of staying up. They will now revisit the loan markets as well as attempting to refinance the terms of a previous loan from MSD Capital.
Burnley's first relegation for seven years will immediately cost them £55million in television revenue, and the club will face further financial penalties as a result of the nature of their highly leveraged takeover by ALK Capital 18 months ago.
Relegation will trigger an early repayment clause in a £65m loan from MSD which has so far been repaid on an interest-only basis — a payment that will account for all of the £42m parachute money they will get in their first year in the Championship.
In addition to the MSD loan, ALK Capital also borrowed £37m from the club's own bank account to help finance their takeover. In February, meanwhile, Burnley took out a £12.5m bridging loan from Australian bank Macquarie while they wait for the second instalment of the £25m fee for Chris Wood's transfer to Newcastle.
Burnley's options for further borrowing appear limited, not least as the MSD loan is secured against the club's existing assets such as future parachute payments and Turf Moor.
As a result, ALK may be forced to use the assets of their American media and technology companies to secure another loan. ALK have sought to bring in additional investment with little success since they bought Burnley in December 2020, but will now redouble their efforts.