From the BZ editorial team
There is no peace at Hertha when it comes to finances. The relegated received the license for the 2nd division on Monday. Still, a 40 million euro bond that Berliners will have to repay to investors in November keeps the future looking bleak.
The DFL had granted Hertha the license because the club could deposit security in case the bond had to be repaid.
However, the management around Boss Thomas Herrich intends to postpone the repayment of the 40 million euros by two years by extending the bond until 2025. In order to achieve this, investors were initially offered an interest rate increase from the current 6.5 percent to 8.5 percent percent offered.
This offer has now been increased again. Hertha now announces: “Hertha BSC Verwaltungs GmbH (…) decided today to improve the conditions offered (…). Instead of the 8.5% previously offered, the company is now offering bondholders an interest rate of 10.5% (…).”
Means: So that the investors do not demand their money back in accordance with the contract, Hertha offers them 10.5 percent interest per year. This means that the cash-strapped capital club would have to pay out 4.2 million euros in interest per year.
But that’s not all. In order for the bond to be extended, two-thirds of the investors must agree. However, Hertha announced on Wednesday: “With the approvals already received, the company (i.e. Hertha, editor’s note) currently has approvals for a total of approx. 22% of the nominal amount of the bond.”
Means: Another good 44 percent of investors still have to agree. The deadline for this expires on June 19th. It is questionable whether the necessary majority will be found by then. The whole project is still shaky.
Apparently Hertha wants to make another offer in the event that not enough investors agree in the first attempt and speaks in its communication of a “further written procedure”.
What does it all mean?
On the one hand, the club has the license. On the other hand, Hertha will be repaid 40 million euros in November. It is unclear where this money will come from. Either the security provider that Hertha has deposited with the DFL will step in, or the Berliners will have to raise the money in other ways.
Or investors agree to the extension of the 40 million bond thanks to high interest rates of 10.5 percent. Then Hertha would have at least two years of peace with this problem.