Portsmouth takeover to be challenged

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The Independent Football

Portsmouth latest takeover is heading towards a legal dispute at the same time as the new owner attempts to buy time by applying to have next week's winding-up hearing postponed.

Hong Kong-based businessman Balram Chainrai has become Portsmouth's fourth owner this season and the financially-stricken club could have a fifth before the summer.

Chainrai has taken the 90% shareholding from previous owner Ali Al Faraj after exercising a clause in the agreement relating to a £17million loan made by his company Portpin to the club.

Mark Jacob, the British lawyer appointed to the board by Al Faraj, is however contesting whether the takeover can go through, claiming that neither party has complied with the loan agreement.

Chainrai's aim is merely to stabilise the club before selling it on to new owners in order to recoup his loan, and the first step is to try to put off next week's High Court hearing brought by HM Customs and Revenue relating to a £7.5million VAT bill.

Portsmouth confirmed in a statement: "The club will now apply to HMRC to adjourn next week's winding-up hearing to allow time for the club to be stabilised and new owners found."

However, Jacob is set to challenge whether the terms of the loan agreement mean Chainrai can assume ownership.

As far as the club are concerned, there is no issue and they have released an official statement confirming Chainrai, a Nepalese-born businessman, as the new owner.

The statement said: "Balram Chainrai has exercised a clause in the security arrangement with Falcondrone Ltd [Al Faraj's company] to take a controlling interest in Portsmouth Football Club.

"Mr Chainrai wishes to stabilise the club's situation until new owners for the club are found.

"The security arrangement with Falcondrone Ltd is based on documents drawn up by Fuglers law firm as part of the original draw down of the loan, depositing with Mr Chainrai the original share certificate and a signed but undated share transfer in favour of Mr Chainrai, which could be dated and exercised in the event of default on the terms of the loan agreement.

"Peter Storrie continues as the chief executive officer of the club and continues to run the club. Meanwhile new owners are being found for the long-term future of the club."

The latest takeover announcement also signals the end of the involvement of Daniel Azougy, the controversial Israeli lawyer convicted of fraud in his home country, who has been working as a financial advisor for Al Faraj.

The takeover should also herald the end of the involvement of Jacob, who worked for Fuglers law firm, and was appointed as a club director by Al Faraj.

The Portsmouth statement added: "New directors will be appointed to the board and Daniel Azougy will no longer be involved with any part of the club.

"The importance and priority is to stabilise the business and give the players, staff and fans of Portsmouth FC confidence that the club will go forward."

Chainrai will have to satisfy the Premier League's 'fit and proper person' test.

A Premier League spokesman said: "Any new owners and/or directors will have to satisfy Premier League rules."

Portpin is owned by Chainrai, a 51-year-old Hong Kong-based businessman of Nepalese extraction but with a British passport, along with an Israeli business partner Levi Kushnir. They were part of the consortium put together by Peter Storrie in August that tried to buy the club.

It is the latest twist in a season of upheaval for Portsmouth, who saw Alexandre Gaydamak sell the club in August to Sulaiman Al Fahim - Gaydamak says he is still owed £28million by Portsmouth.

The financial problems that began to surface in the summer became acute in early October with a delay in players' wages being paid, followed by Al Fahim selling a 90% stake to Falcondrone, a British Virgin Islands-based company owned by Al Faraj.

That takeover failed to bring any financial stability to Pompey, whose fans will be desperately hoping that the latest move does.