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Dec 31, 2009

Cash-strapped Portsmouth seek new owners again

ESPN Soccernet can disclose that moves are afoot to sound out potential investors in Portsmouth with a view to subjecting the club to an amazing third takeover of the season.

• Pompey to fight winding-up order

Alexandre Gaydamak sold to Sulaiman Al-Fahim in August but the new owner spent just 42 days in charge at Fratton Park before a second buyout by Ali al-Faraj. With financial problems persisting at Portsmouth, and HM Revenue and Customs (HMRC) serving a winding-up petition on Wednesday, the search has now actively begun for a fresh investor.

It is understood that the club's current debt stands at £75 million, and that £30 million is required immediately to keep the club afloat by meeting short-term cash flow demands, repayments to clubs and agents and to continue to pay staff wages.

Pompey issued a statement to express their "shock and surprise" at the action taken by HMRC and have pledged to contest the decision, but administration looms large unless the current owners can refinance or find yet another buyer. No Premier League club has gone into administration since the league was formed in 1992.

The search for a third owner already this season includes contacts being made in America, Asia and even another Arab nation. Although the club are confident of sorting out the immediate crisis of a winding-up order from the Revenue - with only one month's back payment now due at £3.5 million - the medium-to-long-term future of the club continues to look grim.

Administration is something the club want to avoid at all costs as with it comes a nine-point deduction which could well condemn the club to relegation from the Premier League.

ESPN Soccernet has learned that the financial crisis runs far deeper than paying the current month's wages of £1.8 million or placating HMRC which has been paid £9.7 million in recent months.

The main issue is that equity has not been put into the club by the latest Arab owners and nor has refinancing been secured to fulfil the obligations of short-term repayments to clubs owed transfer monies, agents and other general day-to-day cash flow commitments including the players' wages.

A source revealed: "The best solution for Portsmouth would be yet another owner. It could cost as little as £30 million to £40 million to buy a Premier League club, and that's pretty cheap. But that is the sort of money this club needs urgently, and as yet there is no sign of it arriving. It might do, the current owners are trying to refinance, and they want to see the club survive, but as yet it hasn't happened.

"This club needs to avoid administration at all costs. I don't believe it will happen with the Revenue. That will be sorted out. But long term, administration might very well happen if the club doesn't sort out its finances.

"Avram Grant believes he can turn around the results on the field, and save the club from relegation. If he does that then any new owner would be buying a Premier League club very cheaply, but even so it's difficult to find the right owner in the current economic climate, as this club has discovered already. We've had two Arab owners this season, and still searching for refinancing.

"So far the new owners have not been able to come up with any new bank loans or put any equity into the club. Instead it has loaned £15 million from Port Pin Ltd, owned by Balram Chainrai, to enable us to continue to pay the wages and pressing debts. That would bring the debt up to £75 million. A year ago the debut was close to £100 million, so it has improved. The debt is roughly £15 million of current loans, £30 million of ongoing loans to clubs, agents and Revenue, plus the loans to Sasha Gaydamak but much of that is long-term repayments so not pressing."

The Revenue's decision to serve a winding-up petition on December 23 against the club in the High Court has highlighted the danger of potential administration. Portsmouth have until a full hearing on February 10 to settle the Revenue and VAT payment of £3.5 million. "I don't think that is going to be a problem," a source confirmed. "They have paid £9.7 million to the Revenue so that indicates they are doing all they can, and also want to avoid administration."

Portsmouth confirmed on Thursday that they expect to pay their players' wages on January 5. The Premier League's bottom club have twice failed to pay players' wages on time this season and non-playing staff have already been informed that they will not receive December's wages until next week.

"Portsmouth Football Club expect to pay their first team squad's December salaries on Tuesday, January 5," read a statement. "The club has been speaking to the Professional Footballers' Association and the players have been informed.

"The club has been assured of receipt of funds by Tuesday and the owner and board have been working hard on resolving the short-term delay.''

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