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DLA Piper Advises on Scottish Football Team Takeover

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DLA Piper's Restructuring team has acted for Edinburgh businesswoman Ann Budge on her takeover of the Hearts of Midlothian football team.

The deal is expected to save the club from administration. The DLA Piper team advised Bidco, the special purpose vehicle set up for the acquisition.

Morisons (Scotland) acted for the administrators, Bryan Jackson and Trevor Birch of BDO. CMS acted for the Foundation of Hearts, the fan club which has been raising contributions from the supporters and is chaired by Ian Murray, MP.

The deal involved the acquisition of the 79% shareholding held by BUAB Ukio Banko Investicine Grupe (in Lithuanian bankruptcy proceedings), as well as the release of security held over Tynecastle Stadium held by BAB Ukio Bankas (also in Lithuanian bankruptcy proceedings).

DLA Piper also negotiated a funding and loan participation arrangement with the Foundation of Hearts, which, subject to satisfaction of various conditions, will enable the Foundation to become the majority shareholder of the football club in 5 years' time. In the meantime, the Foundation is required to provide working capital to the football club to enable it to keep trading and discharge the loan put in place by Bidco to the football club.

The acquisition of the 79% shareholding by Bidco from UBIG means that Bidco is obliged to make a mandatory cash offer for the remaining Hearts shares not already owned by Bidco pursuant to Rule 9 of the Code.

The club's appointed administrators from BDO will remain in office for the purpose of fulfilling the obligations of the board of the football club for the purposes of the Code. It is anticipated that the BDO administrators will remain in office until 19 June and then vacate office meaning that the football club will emerge successfully from administration, thus completing the rescue.

The board of the football club has been completely changed and arrangements are in place between the Bidco, Ann Budge, and the BDO administrators for the on-going management of the business pending the exit from office of the BDO administrators.

Ann Budge commented: "I have been involved in a number of corporate transactions over the years but never would I have believed any single transaction could be so complex. I cannot thank the teams of advisors enough for their perseverance, their commitment and their support in helping us get this deal over the line. "

Richard Obank stated: "We're delighted to have played a role in rescuing Hearts. This has been a hugely complex transaction requiring the co-operation and commitment of all the legal and financial advisers. At times, it really looked like it was an impossible dream to pull off. There have been a number of novel issues to contend with around the takeover code and it is a credit to everyone involved that a deal has been done. We wish Ann Budge every success with the club and look forward very much to working with her over the coming months."

The DLA Piper team was led by Partners Graeme Henry and Richard Obank, and also included John Gallon, Victoria Rhodes, Charlotte Sharples, Faith James, Gillian Buchanan, David Morton, Edwin Truesdale, and Emma Peverill.

Deloitte acted as CF adviser to Bidco. BDO acted as CF adviser to the administrators.



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