Ownership of Chelsea transferred to Virgin Isles

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The Independent Online

Chelsea Village is to be owned by a British Virgin Islands-registered company once Roman Abramovich completes his takeover of the football club.

It also emerged yesterday that the company's managing director, Trevor Birch, would be entitled to a massive pay-off if he is not wanted by the new Russian billionaire owner of the club. The offer document for the £59m deal, posted out to shareholder yesterday, revealed that Mr Birch is on a salary of £500,000 a year, plus other benefits.

The document said Mr Birch is on a four-year-and-11-month contract, agreed on 21 January this year, which would run until December 2007. This would entitle him to over £2m if he is dismissed now ­ given that he has performed his duties satisfactorily. That would be an unusually large pay-off, especially for a director of a company listed on AIM, the UK's junior stock market.

According to the offer document, the agreement with Mr Birch is terminable by Chelsea Village with 18 months written notice if Mr Birch has "failed to perform his duties to a standard reasonably satisfactory to the board" after having received a written warning from Chelsea Village. It added: "There is no provision for compensation payable on any termination of the contract." As things stand, Mr Abramovich has no plan to oust Mr Birch.

The offer document also revealed that Chelsea Limited, a special purpose vehicle, registered in England, formed to buy Chelsea Village is just an intermediate entity. Chelsea Limited is wholly-owned by Isherwood Investments Limited, a company incorporated in Cyprus, which is in turn wholly-owned by Taverham Holdings Limited, a company incorporated in the British Virgin Islands. Mr Abramovich is the sole beneficial owner of Taverham.

To add to the complex corporate structure, it is thought that Taverham will be ultimately owned by Millhouse Capital, a holding vehicle for all Mr Abramovich's assets which is registered in this country and has an office in Weybridge, Surrey. Millhouse shares are all owned by an entity in Cyprus.

Russia and Cyprus have a tax treaty which makes the Mediterranean island an attractive place for wealthy Russians to keep their money.

A spokesman for Mr Abramovich said he was not trying to hide anything and that this company structure was just the best way to organise his interests. "People worry about these sorts of arrangements because they can be used to hide ownership. In this case, ownership is transparent. It is all owned by Mr Abramovich," the spokesman said.

The Chelsea deal has continued to whet investors' appetite for football stocks. Manchester United shares closed up 11 per cent at 160.75p, the highest level since 2001, as traders bet that it would be the next to attract a rich foreign patron.

Mr Abramovich is Russia's second richest man and some speculated that the country's richest tycoon, Mikhail Khodorkovsky, may be tempted to trump the Chelsea acquisition with a bid for Manchester United.