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Club News

INTERVIEW: A straightforward business transaction

John Nixon on the novation of the loan facility

11 February 2021

Eagle-eyed United fans will have noticed that part of the ongoing administration process for the EWM Group was the sale of EWM Limited and its assets, which included a loan facility as part of an ongoing commercial partnership with Carlisle United Football Club.

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The administrators, FRP, confirmed to the News & Star this week that the loan facility had indeed formed part of the sale of the business and assets by the Joint Administrators.

A check of the Companies House website shows that EWM Limited is now incorporated into Purepay Retail Limited, with John Jackson and Steve Simpson [both of EWM, and John a director with the club’s Holdings Board] registered as directors of that retail company.

We spoke to club director John Nixon to find out what impact, if any, this change of circumstance meant to the club.

“The correct term to use for what has happened is that the loan facility has been novated,” he explained. “That means it’s been transferred to another company, where the previous owner of the contract has either been discharged or released from that contract.

“Even though that has happened it has no impact on Carlisle United whatsoever. When a company goes into administration, as EWM did, we obviously were aware of the loan facility that was in place, and some of us were guarantors to that.

“That meant the initial period of waiting to see what was happening with EWM was an extremely worrying time, both in terms of whether or not it would impact on individuals or on the club.

“This novation, which moves the facility across to another company, Purepay Retail Limited in this case, is probably as good an outcome as we could have expected to see.

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“Clearly the work that our Holdings Board director John Jackson has done behind the scenes has served us well.”

“The biggest problem you have when a company goes into administration is that the administrators immediately see where money is owed from and they have an option to start to call those funds in,” he continued. “That would have had a really detrimental effect on Carlisle United, and probably on some of us as individuals as well.

“It would obviously have meant that we would have had to start to realise assets to be able to cover that, should the administrators have made the demand on us to pay it back. As I say, it’s as good an outcome as you can get.

“We’re now in the same position as we were some years ago when EWM first invested in us, in that it’s given us some stability. It hasn’t changed things, we still owe the money, but we haven’t received any notice to make payment and there are no demands like that heading our way.

“Effectively we are where we were, the club is on a sound footing and we can plan to go forward without having to worry about the loan being called in at short notice.

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“I suppose the best outcome would have been if the loan had been completely written off, but that was never going to happen. Compared to the worst outcome, and our biggest fear of the debt being called in, that would simply have had a huge impact on the club.

“That’s all been averted through this novation of the loan facility and we have EWM and John Jackson to thank for it.”

But has there been a need to seek any reassurances, particularly with the administration process still ongoing?

“No, because this is a straightforward business transaction,” he replied. “We don’t need any reassurances because we are where we were.

“The only change is that instead of the facility being with EWM it is now with Purepay Retail Limited. As everyone knows we borrowed money against assets of the club, those were the terms of the facility with EWM, and nothing has changed.

“Knowing that has allowed us to plan a way forward, maintain our investment in the squad and get ourselves into a relatively strong and healthy position.

“As with everybody else, as soon as you see administration it brings real fears with it, but this is a good outcome and we’re looking forward to pushing on.”


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