West Ham United will be taken over by a consortium of international banks in the coming weeks. Icelandic government-appointed officials running the stricken investment bank Straumur are set to take control from Bjorgolfur Gudmundsson at Upton Park as they seek to recover the money lost in the collapse of that nation’s economy.
Straumur was last month declared “effectively insolvent” by the UK’s Financial Services Authority as it took steps to protect the deposits of investors at its branch in London. Twenty-four hours later it was nationalised by the Icelandic government. Straumur provided the bulk of the finance for Gudmundsson when he bought the club in 2006 from its shareholders, led by the then chairman, Terry Brown, in an £85m deal. But since the collapse in the Icelandic economy and the meltdown of his investment vehicle, Hansa, last year, Gudmundsson’s ability to maintain ownership has been in serious doubt.
Despite a moratorium on Gudmundsson’s debts until June, won last month in the Icelandic courts, Straumur’s banking creditors are now preparing to take advantage of covenants on the debt that allow for the club to be taken over. It is believed that the banks will form a new board, with Gudmundsson making way.
(ARTICLE CONTINUES BELOW)
But West Ham fans looking for reassurance over the future of the club will find no comfort in the latest development. The club remains up for sale, although the incoming owners are understood to be patient as they look to achieve a big price for the Hammers.
That means the consortium of about half a dozen banks nominated by more than 40 institutions – Straumur’s creditors – expect to remain in charge of West Ham next season and probably well in to 2011. But although Gudmundsson is set to relinquish control, there will be no fresh investment for Gianfranco Zola to buy players and any summer spending will have to come from cash generated by sales. There is also likely to be pressure to make further cutbacks following the overindulgence of the previous chairman, Eggert Magnusson, which alarmed the club’s owner so much he was sacked.