West Ham United taken over by international bank consortium

• Gudmundsson ousted as Icelandic administrators move in• Gianfranco Zola to have no more spending money over summer 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 had 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 ever 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.But West Ham fans looking for ­reassurance over the future of the club will find no comfort in the latest development. One thing that has not changed is that it remains up for sale, although the incoming owners are understood to be patient as they look to achieve a big price for the club.That means the consortium of about half-a-dozen banks nominated by the 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.However, Zola's value to the new owners is clear from his record since arriving with his assistant Steve Clarke early this season. The Italian has achieved a strong performance in the Premier League in spite of the departure of nearly £20m of playing talent with the sales of Craig Bellamy, Matthew Etherington and Hayden Mullins in January.With six league games remaining, West Ham remain in contention for a place in next season's Europa Cup, a fact that has done well to hide the difficulties off the pitch. The Guardian revealed last month that the club's accountants, Deloitte, had refused to sign-off West Ham's annual report due to the uncertainty over how much compensation it would have to pay Sheffield United for the illegal use of Carlos Tevez that was found to have contributed to the Brammall Lane club's relegation. In the event that amounted to £25m, payable over five years.West Ham also have debts of their own to British high-street banks such as Barclays. These amount to more than £40m, but the increased turnover associated with the Premier League's broadcast deal, which became available to clubs from 2007, make the loans serviceable.However, in order for the club's Tevez settlement and other liabilities to remain affordable it is more important than ever for West Ham, who bounced back from ­relegation in 2003 to return to the Premier League two years later, to remain in the top flight.West Ham UnitedPremier Leagueguardian.co.uk © Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds
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