It has not been in a meeting of shareholders but the commercial court number 1 where the Valencia has revealed how the first loan that Peter Lim awarded the club worth 16.5 million and which four players guaranteed their return, as well as what is the salary that its top executives receive, especially the president Anil Murthy. In courtroom number 9 of the City of Justice, the club has released this information after the lawsuit filed by the association Libertad VCF, in which it challenges and requests the nullity of the agreements of the board of directors to contract that loan, the agreement to raise senior management salaries and increase the shares necessary to attend meetings: which went from 9 to 3,598.
Libertad considered that the directors of Valencia incurred a “conflict of interest” by causing the company to contract a loan with Meriton worth 16.5 million to face a payment to Bankia with the rights of four players from the first team as collateral. If the club does not comply with the payments, Meriton would be the one to collect before the sale of the footballer, thus causing whoever controls the board of directors (Meriton) to decide sales for their own benefit, the association has defended before the judge.
Until today, Valencia had never revealed which players they were, but before the judge he recognized that they were Ferran Torres, Kondogbia, Diakhaby and Gabriel Paulista. With the sale of the youth squad and the French midfielder, they were replaced by Daniel Wass and Gonalo Guedes.
As revealed by Valencia’s lawyer, Fernando Badenes, the council opted for the financing of Meriton because the alternative proposal of caixabank it was more burdensome, since it demanded an annual interest rate of 3.8%, part of the audiovisual rights and the rights of some players, that if they were sold, 25% of that sale would go to cover the loan.
The lawyer who drafted the loan agreement, Joaqun Sales, who shares an office with the secretary of the Valencia board of directors and also a lawyer, Germn Cabrera, legal representative of Meriton during the sale process and, in some cases, has appeared before the judge. , of the club itself, for which the conflict of interest could be proven, in the opinion of the plaintiffs.
Sales has confirmed that this loan was agreed quickly due to the need to face the payment to Bankia and the “excruciating lack of liquidity” of the club, which meant that the assessment attributed to each of the players was not stipulated. The position defended by Libertad is that these guarantees were “abusive” given that the market price of these players far exceeds the capital of the loan. The lawyer “came given” the conditions agreed between Meriton and Valencia for this credit that, in the scenario of a creditor’s contest, would not be of preferential collection but subordinated.
With the capital increase agreed at the last meeting, Meriton capitalized 43 million of the 54.5 that it had loaned to Valencia, the 16.5 object of this case and another 38 that were pending from a previous line of credit, guaranteed in this case for four other soccer players and 20% of the television rights. In addition, at the December meeting, a change was made in the guarantees: the rights of Diakhaby, Paulista, Guedes and Wass (which was later sold) and the other four unknowns were released, but Meriton guaranteed that the payment of its debt would go the first five million from the sale of any footballer.
Half a million in executive expenses in six months
Another point that Libertad VCF wants to challenge is the remuneration received by the president Anil Murthy. In his presentation, the association’s lawyer, Álvaro Sendra, revealed the salary amounts to 460,000 euros gross annual, in addition to including supplements for housing or vehicle without any limit, the schooling of their children, a return ticket to and from Singapore for their entire family and medical insurance with international coverage. In addition, it sets variable remuneration at the discretion of the board of directors that is not specified.
The salary of Kim Kohuntil a few months ago CEO with a salary of 200,000 euros to the, house rental, car, two round-trip flights to Singapore, and health insurance. In total, from December 16, 2019 to June 30, 2020, the two top executives cost Valencia 505,000 euros.
Libertad defends that, in a very precarious economic context and the club’s investment very low, these salaries approved by the board of directors do not conform to the figure of the responsible administration. For its part, Valencia defended that they obey market standards, and that they took the examples of Sevilla and Atletico Madrid, comparable clubs in that 2019 financial year at Valencia’s sports level. The lawyer assured that Sevilla pays about 1% of the turnover and Atlético about 2%, while Valencia is below.
Board without shareholders
Finally, it also demands that the modification that was approved in that meeting of article 11 of the club’s bylaws be annulled to raise from nine to 3,598 the actions necessary to attend those meetings also for being abusive “and serving exclusively the interest of the maximum shareholder”.
Libertad has stated before the judge that only three of the 48,341 shareholders del Valencia can attend the meetings with their own shares, which they consider excludes small holders and creates opacity despite the fact that it conforms to the representacin de 1×1.000 contained in the Capital Companies Law.
For Valencia, the only objective is to “simplify the organization, avoid costs and enable the participation of remote mechanisms”. The intention was to achieve better organized meetings from the bureaucratic and cost point of view, but also to facilitate the grouping of shareholders for remote participation. And he considers that goal achieved in view of the participation in the last assembly. “At the last meeting more shareholders attended than usual. Why? Because they were grouped and represented by different people. With this modification, shareholders can vote with a single share, more than before. An attempt has been made to encourage greater participation through the delegation. That’s how it has been, it has paid off,” said the club’s lawyer, who tried at every moment of the trial to delegitimize the plaintiffs.
Question that an association that represents 23 people, since it considers that the group is not valid to undertake this process, can impose its way of managing a company over the majority shareholder, something that according to the lawyer of Libertad VCF, Álvaro Sendra no longer took the judge into account in the previews, but Valencia is still looking for “formal errors”. “The caricature he makes of Libertad is the one they make of the Valencia fans, that they don’t care about anything and that for them it is an evil with which they have to live. We will continue to study every document and every step that Meriton takes. Regardless of the judge’s opinion, the next day we will work to audit. This is valid to know what Meriton does”, highlighted one of the representatives of Libertad VCF, José Antonio Pérez.
The ruling on this case will be made public next month, although it may be appealed to the Audiencia de Valencia and, where appropriate, the Supreme Court. Valencia’s lawyers, in case they win, have already asked the judge that the costs be calculated on the 16 million euros of Lim’s loan to Valencia.
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