By Paul Gorgas and Roberto Lamprecht
The club paints an alarming picture of their financial situation. The sticking point is the repayment of a 40 million bond.
In December 2022, Hertha President Kay Bernstein (42) told the “Kicker”: “This and the following season are fully financed.” There were “no liquidity problems”.
Just over five months later, the club paints a completely different, alarming picture of its finances. In a dramatic letter, the Bundesliga relegated appeals to the bondholders of the 40 million euro bond, which is due in November, to postpone repayment by two more years until 2025.
The document states: “If the issuer (Hertha; ed.) does not succeed in meeting these requirements, it is likely that the DFL will not grant the license to the issuer.” And further: “Should one or more the (…) described framework conditions for the economic turnaround are not achieved or not achieved in time, the issuer may become insolvent.”
Because the bond is insecure, the bondholders’ money would then be gone. And Hertha would probably have to start over in the regional league.
License refusal, bankruptcy, total loss – the document reveals how bad Hertha’s finances really are. How could those responsible around Managing Director Thomas Herrich (59) and President Bernstein allow it to get this far in less than six months?
The fact is: the repayment of the bond issued in 2018 is the decisive point in the fight for the second division license. Hertha wants to get the 40 million hole out of the books for the coming season and postpone the repayment into the future.
This requires the approval of the bondholders, who hold at least two-thirds of the EUR 40 million. In order to convince them, Hertha is now making a drastic appeal – and is luring investors with even more returns.
Hertha pays for the bond extension
Instead of the previous 6.5 percent, the future will receive 8.5 percent interest per year. There is a one-time payment for this. Hertha would add at least seven million euros for the postponement – an act of desperation?
The fact is: time is of the essence! The written process for bondholders to vote on the extension runs until June 19. On June 21, Hertha has to prove to the DFL how the 40 million gap should be closed.
A bank guarantee would also be conceivable instead of a postponement. When BZ asked why Hertha was given a time extension (the proof period originally ran until June 7), the DFL asked “for your understanding that we are not commenting on this at the moment”.
How was Hertha able to react so late in regulating the repayment? The need for a regulation had been known to the office since July 2022.
Numerous spelling mistakes reveal that the shock document was created under time pressure. The club admits in the paper: “The bond was not refinanced earlier due to the prolonged negotiations with the new majority investor 777.”
However: The contract was signed with 777 in March, more than two months ago. Was Hertha hoping that US investor 777 would offset the €40m for the club?
When asked by the BZ, Managing Director Herrich says: “This consideration is not part of our plan, because we cannot have all legacy issues compensated for by 777.”
According to BZ information, however, 777 should be obliged to step in financially if the bond plan fails. That could mean: The dramatic rescue call to the bondholders is possibly an attempt to put the creditors under pressure with a drastic horror scenario.
Whatever the case, Hertha’s condition is life-threatening. It remains to be seen whether the rescue will succeed.