Hedge fund puts Coventry City football club in play
The hedge fund owner of Coventry City FC is open to offers from a buyer with the clout to capitalise on financial difficulties at Wasps, the rugby team that owns the football club’s shared stadium.
Wasps, who play in England’s top rugby division, are in default on a £35 million bond, having failed to repay retail investors who helped to finance the purchase of the Coventry Building Society Arena in 2015.
The bond was suspended from the London Stock Exchange in May when repayment had been due. Last Friday Wasps admitted that it also would miss a new repayment deadline of August 12.
The Times understands that Sisu, a Mayfair-based hedge fund, is considering a sale of Coventry City, believing that Wasps’ distress may present an opportunity for a third party to make an offer for the club and, at the same time, bid to acquire the lease for the arena. A senior source said Sisu was “open for business”. Sisu itself is unlikely to make an offer for the stadium because of its troubled relationship with Coventry city council, which owns the freehold.
A spokeswoman for Wasps declined to comment on the idea, but said the club was “committed to its long-term future” at the stadium.
Sisu, which is led by Joy Seppala, 60, an American investor, bought Coventry City in 2007. Wasps, having relocated to Coventry from west London in 2014, bought the lease for the stadium amid a dispute between Sisu and the council.
The rugby club’s bond, which has a 6.5 per cent coupon, was suspended in May on the last day of trading before it was supposed to reach its maturity date. Wasps had said that it was seeking to refinance with HSBC and in June it extended the proposed redemption date for the bonds to August 12.
On Friday, Wasps Finance, the issuer of the bond, said it had not been able to “agree final terms for refinancing” and so would be unable to redeem the bonds next month. Wasps said that in addition to talks with HSBC, it was “pursuing different refinancing options”.
Sisu’s ownership of Coventry City, known as the Sky Blues, has involved an often-fractious relationship with both the council and the team’s fans. However, the team has been enjoying progress on the pitch recently, rising from League Two to the top half of the Championship last season.
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Sisu is thought to be open to the football club changing hands or a part-sale of equity if a third party also manages to acquire the lease for the stadium, which was built by the council in 2005. The source, speaking on condition of anonymity, said the natural next step for Coventry City was promotion to the Premier League, but that would require “serious investment”, possibly from a third party. “This is a real opportunity for growing the club into its potential,” the source said.
Wasps said that next month it would ask bondholders to agree a further extension to the redemption deadline, which would remove the bond’s default status, and that it was seeking to have it reinstated on London Stock Exchange. Bondholders will continue to receive interest.
A spokesman for Sisu declined to comment.
Always a Wasp
