Port Vale: Vale loan breached council cash deal
CASH-STRAPPED Port Vale breached their £2.25 million loan agreement with Stoke-on-Trent City Council when they took out a mortgage worth £277,000 last month.
Former club chairman Peter Miller borrowed the cash from Gibraltar-based company Continental Solutions on December 6, using Vale Park as security.
At the time, Vale chief executive Perry Deakin said the money was needed to help ease the club's "cash flow" problems.
In fact, the move risked the very future of the club since it breached the terms of the substantial loan Vale agreed with the City Council in 2006.
This Sunday between 11am & 4pm with FREE admission at the Moat House Hotel Festival Park we will be exhibiting with some special show offers, the weather forecast isn't good but our deals are
Terms: Visit us or pick up a voucher at the show to be eligible
Contact: 01782 342609
Valid until: Sunday, June 23 2013
According to that agreement Vale are not permitted to incur more debt while the loan remains, and any attempt to do so must first be cleared by the authority.
By taking out the mortgage, Miller, pictured left, risked the council demanding the return of their cash, a move almost certain to plunge Vale into administration.
It remains unclear whether he discussed the mortgage with council officers, but it seems unlikely since his vice-chairman, Mike Lloyd, below, claimed the club board knew nothing of the loan until 10 days after it was registered with Companies House.
The city council refused to comment on the terms of their loan last night, but it appears Miller's gamble with the future of the club paid off.
Mohammed Pervez, leader of the Labour-run council, told The Sentinel it would not be in the authority's interest to take "drastic steps" that might jeopardise the club's future.
Instead, he said the council would continue to monitor the "delicate" situation while protecting public money.
Chartered accountant Sam Corcoran said he believed the club had breached their deal with the council by taking out the mortgage.
He explained: "The council loan agreement talks about not entering into any material contracts, including loans, without the approval of the authority.
"In my opinion, the loan taken out last month falls into this category because of its magnitude."
The city council loaned Vale £2.25m in 2006 to be repaid over 20 years. Latest available figures show that £1.897m is outstanding, but the city council confirmed all payments had so far been met by the club.
Vale Supporters' Club chairman Pete Williams claimed the latest revelation showed how poorly the club was being run.
He added: "I find it appalling that Mr Miller has taken out this loan without the other directors knowing about it.
"It shows how poorly the club is being run if the chairman can take such a major decision which should surely have only been taken following a vote at board level.
"By taking out the loan Mr Miller has put the club's future in further doubt, especially if he didn't seek approval from the council."
Supporters are preparing to call an extraordinary general meeting to vote out the club's four directors, and Williams added: "Fans and shareholders must come together to remove this board before they destroy our club."
No-one at Vale was available for comment.
More Port Vale articles: