At today's full Salford Council meeting Salford City Mayor, Ian Stewart, revealed that the Council's outstanding £1.5million loan to Salford City Reds will have no interest charged on it after the conclusion of the Company Voluntary Agreement (CVA) which was agreed last week.
The CVA, in place we understand for five years, was agreed between creditors of the old Salford Reds controlling company, Salford Football Club Company (1914) Ltd, and the new Marwan Koukash company Salford City Reds 2013 Ltd.
Under the CVA, Koukash has agreed to pay all outstanding debts of the old company, except for Salford Council's £1.5million loan.
As previous Salford Star articles have explained (see here and see here), over the next five years Koukash will pay back £240,000, 16% of the £1.5million loan. And the rest - £1.26million - will be spread until 2038.
The interest free £1.26million loan contrasts with the previous contract for a £1million Council loan to Salford Reds, where interest was to be paid back at 1% above Bank of England base rate.
At the full Salford Council meeting today, Councillor Karen Garrido, Leader of the Conservatives, told City Mayor, Ian Stewart, that when she found out the loan was to be spread over 25 years "I thought you were having a joke. This is unacceptable for the people of Salford. I couldn't come to the Council and ask for £1.5million and say `I'll give you this much for the first five years and then I want another 20 years to pay'. It's not acceptable."
Stewart explained that under the terms of the deal, Salford Council would get "two bites of the cherry", as Koukash had agreed to pay the debt off, while the old guarantees were still in place with the directors of the previous Salford Reds company headed by John Wilkinson. This included the deal that would pay Salford Council back from a housing development on the site of the former Reds ground The Willows.
Karen Garrido responded that she wasn't sure whether the directors of the old company, Iain Watson and John Wilkinson, would still be around in 25 years should Koukash fail to pay off the debt.
"We believe that in the circumstances we've done the best to look after the people of this city" said Stewart, adding later that "You need to trust us…"
Meanwhile, Garrido asked Stewart about the £16,000 Salford Council cost of employing the consultant Dave Tinker who was involved in negotiating between the various Salford Reds companies…
"That's not a figure I recognise" responded Stewart.
See also original Salford Star article on the CVA - click here
Photo by Gareth Lyons