Kind of blue

Another missed payment deadline by 777 Partners, this time to Everton, puts the firm’s takeover of the club into fresh doubt, while one of its airlines has just entered voluntary administration.

By Paul Brown and Philippe Auclair

For months, Everton have been operating on life support, relying on loans from prospective buyer 777 Partners. But it seems to be the Miami investment firm itself which is currently in need of resuscitation.

Since last September Everton have been paying the bills each month with the help of working capital loans from the multi-club ownership group run by managing partner Josh Wander.

But 777 Partners, which is being sued over unpaid debts in various different parts of the world, has had to borrow this money from A-CAP, the owner of five US insurers which have just been ordered by regulators to exit their relationship with the company.

And despite reports to the contrary, the most recent tranche of this funding for Everton, understood to be around 20 million pounds, did not arrive as promised last week. That was an issue for Everton, who needed it to make payroll and pay Laing O’Rourke the next instalment of the build costs for the club’s new stadium at Bramley Moore Dock.

Josimar has been told by two independent sources with knowledge of the process that Laing’s money was due last Friday, while a deadline for the money needed to make payroll was extended to Tuesday 30 April.

Despite promises from both 777 Partners and A-CAP that the money would arrive by close of play on Monday, it did not. Those familiar with the many accusations of missed deadlines, late payments and broken promises which have dogged 777 Partners in recent years may recognise a pattern here. 

In the absence of the 20 million pounds, Everton were forced to use their own cash, held in the company’s bank account, to cover the 11 million pounds needed to make payroll this month. It is unclear if the club has sufficient funding in addition to this to cover the payment due to Laing. Failing to make payroll has potentially severe consequences for a Premier League club and would attract the attention of the authorities. 

Everton has already secured its Premier League survival this season on the pitch, despite falling foul of two independent commissions which docked the club points for financial irregularities off it.

But the spotlight is once again on 777 Partners here. The New York Times recently reported how accountancy firm Deloitte, which advises Moshiri, has been empowered by the British-Iranian businessman to speak to other potential buyers. 

Josimar is aware of two US groups who have expressed an interest in the club over recent months, and it is understood at least one of those is still in the running. 777 Partners do not have exclusivity, though an agreement between them and Moshiri contains potential penalty clauses should he decide to walk away. At the same time, Moshiri has been forced to extend several deadlines concerning this agreement while 777 Partners continue to try and satisfy strict Premier League conditions for the long-awaited approval of their takeover.

One of these conditions was the repayment of a 158 million pound loan to Everton by MSP. When 777 Partners missed a deadline to do so earlier this month, it was granted an extension, which is understood to be on a rolling basis. However, A-CAP is no longer able to lend to 777 Partners through its insurance companies. And funding is no longer available either through the firm’s Bermuda-based reinsurer 777re, which has been put into administrative control by regulators after a credit ratings downgrade. A recent capital raise by brokers Tifosy was unsuccessful, and is currently “on hold” according to 777 Partners. So it is unclear how the firm will be able to repay this loan, or fund a full takeover. 

The clock is ticking, and this latest missed deadline will do little to reassure fans of the club that 777 Partners are capable of completing the deal they first agreed with Moshiri all those months ago. A failure to do so would likely have bigger consequences for them than it would Everton. Sources have told Josimar that 777 Partners needs Everton more than Everton needs them. Debt recovery lawsuits against the company are mounting up and Everton, with its brand-new stadium, was seen as crucial for bringing new investment into the company, according to documents Josimar has seen.

Right at the beginning of our investigation, one former employee of 777 Partners told us the company “operates by constantly making new investments” and that “everything is cross-collateralised”. Another described the firm’s operations as “a giant shell-game” where money is shunted around the various companies in the group. But the shells appear to have stopped moving. Former lenders are now calling in debts, new money is not coming in, and new investments are not being made. Without the Everton deal to attract new capital, it may well be 777 Partners and not the debt-ridden Premier League club (*), which ends up needing life support.

8 million short
The only recent source of satisfaction for 777 Partners has been the promotion of their club Red Star FC (as champions) to Ligue 2, France’s second tier, after a superb campaign. Josh Wander promptly rewarded Red Star’s players and technical staff with the promise of an all-expenses paid trip to Miami at the end of the season. This, however, did not discourage the fans of the club from the Parisian banlieue to publish a scathing statement about multiple club ownership and brandish an anti-777 banner on the field of Stade Bauer after promotion was secured.

The scene at Red Star’s Bauer stadium after promotion to Ligue 2.

There were also scenes of anger in Liège, where Standard have just gone through the worst season in their 125 year history. On 25 April, Standard’s home game against Malines had to be interrupted when smoke bombs started raining on the pitch of the stade de Sclessin. The supporters, who’d kept completely silent until then, then erupted in deafening chants hostile to their American owners.

Standard’s results have been the main cause of the discontent felt by its supporters, but they are not the only one. The Belgian Commission des Licences (which had twice punished the club with transfer bans in 2023 because of repeated failures to meet financial obligations) issued a licence for the 2024-25 season to Standard on 24 April, after securing a “lettre de confort” from 777’s sister company 600 Partners, which, on paper, is 100 percent  owned by Josh Wander’s associate Steven Pasko. This “binding” letter guaranteed that 600 Partners would supply – if necessary – the money needed to keep the club and its team afloat, but stopped short of providing proof that the sum in question (thought to be slightly under 40 million euros) had been set aside.

What is more, this letter means that, should the club find itself in a position where it needs the money, it would then have to submit a claim to a Belgium court. In other words, the holding company of Standard, owned by Wander and Pasko, would have to sue…Wander and Pasko.

And Standard needs money, as told to Josimar by multiple Belgian sources and confirmed by the Belgian national broadcaster RTBF. Standard’s independent suppliers still find it exceedingly difficult to get paid within three months of the due date, which has led some of them (whose identity is known to Josimar) to withdraw their services. 777 Partners failed to pay on time the second tranche of the money owed for the purchase of Standard’s stadium, which was due on 15 April: 3.5 million euro, of which nearly 700,000 are owed to Belgian international Axel Witsel. They have also been in default for the payment to former Standard owner Bruno Venanzi of the second tranche of their purchase of the club itself; another 3 million or so, which Josimar understands will be the subject of a court action. In total, 777 Partners’ operation is 8 million short.

Demonstration by Standard supporters in their home game against Mechelen, 25 April 2024.

Grounded – again

Another major source of concern for 777 Partners will be the news that their Australian ultra-low cost airline Bonza had grounded all of its fleet as of this Tuesday 30 April, as it could no longer afford to fly its thirty Boeing 737 Max-8s. This was confirmed in a short statement released that morning by the company’s CEO Tim Jordan. Hours later, it was announced that Bonza had been placed in voluntary administration.

This development would be worrying enough in itself if it illustrated how 777’s aviation ventures have been struggling to survive, let alone make any kind of profit, in the challenging markets they operate in: Canada, mostly, for Flair, which has also had its share of troubles, and Australia, for Bonza, two countries in which, historically, ultra-low cost airlines have found it almost impossible to turn a profit.

What is considerably more worrying is that, according to The Australian Financial Review, the grounding of Bonza’s fleet was the direct consequence of the repossession of some of its aircraft, whose ownership had been moved from 777 Partners themselves to AIP Capital, an investment house controlled by none other than Kenneth King’s A-CAP.

This is in step with King’s stated intention – not that he has much of a choice – to disinvest from 777 Partners, not only in order to reduce his considerable exposure to the group, but also to satisfy regulators in Bermuda and Utah as well as not to risk being further downgraded by credit ratings agency himself, as 777re, 777 Partners’ Bermuda-based reinsurance arm, were (to C- and ccc-) downgraded by AM Best in February of this year. The agency also downgraded the A-CAP Group from bbb+ to bbb in February, placing those ratings “under review with negative implications.” 

The significance of King ‘s move is still difficult to ascertain, as it is not clear whether he intends to carry on supporting 777 Partners through thick and thin as he’s done for years now, or if his ‘disinvestment’ means that he believes that things have gone so far as far as they could go, and that he had to bail out as soon as he could.

Whichever way one looks at the situation, however, it only means one thing. Trouble.

(*) A source close to EFC told Josimar that the club had enough cash available to honour payroll commitments until the end of the summer.

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