Valencia’s institutional crisis took another turn as they passed ownership over to the local city government.
The club have failed to renegotiate on interest payments due of €4.8m to Bankia and have seen a majority of over 70 per cent sharehold in it pass over to the local city council.
Los Che owe a total debt of €360m, cut down in the last three-and-a-half years by almost €200m, but have found that a particular €81m loan from Bankia has accelerated issues.
The club have defaulted in paying interest on this loan, which now stands at a total of €86m. Taken out in 2009, this loan was used by Fundacio VCF to purchase 72.5 per cent shares in the club, with the city acting as guarantor.
Fundacio VCF publicly declared this week an inability to pay interest on this loan, first due in August and now once more due at the end of January, and they had expected to enter into talks with Bankia to renegotiate either once more delaying the repayments or at least lowering them before the latest deadline.
However, Bankia released a statement overnight confirming that they are in direct negotiations with the local government now over the €4.8m interest payment due, signalling that talks with Fundacio VCF failed and that ownership has changed hands.
Regional government’s deputy head Jose Ciscar confirmed this in a statement also released, promising to work to save the club, but not mentioning the possibility of player sales this month.
The city already own percentage shares in Elche and Hercules for similar situations after they defaulted on bank repayments. However, the Sports Act prohibits ownership of more than five per cent shares in more than one club. With over five per cent held in Elche, the 72.5 per cent in Valencia could create a legal issue.
The issue beyond this debt and its sidepoints is that Bankia also oversee a €230m debt with Valencia, owed generally over building of the Nou Mestalla. Repayments on that debt have been delayed and renegotiated already this season and now have a March expiry to be paid by.
Bankia are believed to be reluctant to renegotiate moving that deadline again, if the issue over interest on the €86m debt cannot be resolved.
Changing from negotiating with the club to the city has not alleviated pressure. Valencia regional government’s financial situation is difficult in itself, having asked the country’s government for a €2.5bn bailout for the calendar year of 2012.