US company House to acquire the Scarlets

The off-market luxury asset broker is seeking to acquire a 55% stake in the Welsh rugby region. Business editor Sion Barry takes a closer look

- 

How the Ospreys now feel about their rivals just over the Loughor Bridge, in what could be seen as an attempt to steal a march on them in terms of future security, is not clear.

But why strike an option to acquire a 55% share of a club whose future is far from certain? HOL's chief experience officer, Simon Kozlowski, said it has no interest in a merger with the Ospreys and its focus is solely on the Scarlets.

The chairman of the Scarlets, Simon Muderack, and fellow board members such as Nigel Short would no doubt have undertaken detailed due diligence to give surety on the financial position of HOL, the source of its income and possibly formal notification from its bank(s) that it has the necessary reserves to invest long term into the club.

What we seemingly have at the moment is that HOL has entered into a management contract with the existing board and has invested some initial capital. while it works towards a majority ownership stake.

HOL, in its statement, said it had taken on liabilities of the club. It is understood that the WRU, which has had no previous interaction with the business, was informed by the board of the Scarlets only shortly before they issued their state-

ment. Around half of the club’s revenue still comes from the WRU.

Under PRA 23, or any future funding deal, it would need to conduct its own financial and fit-and-proper test - as any sporting governing body would. This would also be insisted on by NatWest if HOL is to take on the debt provision liability arranged by the union and passed through to the club, as well as by Carmarthenshire county council with its loan exposure.

The WRU would also need, as it would with any assessment of a takeover of a Welsh club, to understand the source of HOL's income stream and information on its clients.