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Football: Government guarantee of Valencia loan withdrawn

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(Globalpost/GlobalPost)

A Spanish court has nullified a guarantee made by the Valencian regional government over a loan given to Valencia football club by the troubled Spanish bank Bankia.

The original loan of 75 million euros ($97.7m, £65.6m), which has now grown to 86 million euros ($112m, £75.2m) with interest payments, was taken out on behalf of the Valencia foundation in 2009 so that it could buy shares in the club to help prevent it falling into administration.

It had been guaranteed by the local government through the Valencian Court of Finance (IVF), but that has now been declared void by the Court of Administrative Dispute, which found that by allowing the loan to be guaranteed the IVF had acted to the "detriment of other members of the club."

The case had been brought back to court by those members who had previously bought shares in the club and had opposed the granting of the loan in the first place as it would diminish their interest in the club.

The local government already paid 4.8 million euros ($6.3m, £4.2m) at the beginning of the year to cover a payment which the foundation failed to meet.

Bankia confirmed that repayments on the loan were up to date and, with the next payment not due until August 27, they were "studying different options to receive value for their rights and those of their shareholders."

However, the vice-president of the Valencian local government, Jose Ciscar, said the decision does not necessarily mean the club is now under the control of the bank.

"The guarantee of the government backing has disappeared, but this does not need to mean that Bankia has to become the owner of Valencia," he said.

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http://www.globalpost.com/dispatch/news/afp/130313/football-government-guarantee-valencia-loan-withdrawn