Chelsea kicks off a bid for £2.5m

Chelsea Village, the owner of Chelsea Football Club, will this week attempt to free £2.5m of cash from the clutches of its bondholders.

The group is due to meet with holders of its £75m of bonds on Wednesday. There have been rumours that Chelsea would like to refinance the bonds, which pay interest at 8.75 per cent, costing Chelsea £6.56m a year.

The covenants on the bond are also extremely onerous. It holds a charge over all the group's property assets, making it extremely difficult for the club to release cash from any of its surplus investments.

Earlier this year, Chelsea sold a property for around £2.5m, but the money has been claimed by the bondholders. The group is keen to have this released so that it can use it to cover its players' wages bill.

Trevor Birch, who joined Chelsea as chief executive earlier this year, wants to prove to the City that he can put the club on an even keel. The former Ernst & Young accountant has told investors he intends to cut the bill for wages to below half of turnover. Last year turnover at the club was just over £73m, while it was believed to pay around £46m in wages.

However, Mr Birch will also need to deal with worries about how the club is run. Last week The Independent on Sunday revealed that investigators were looking into trusts administered by two non-executive directors of Chelsea, Mark Taylor and Patrick Murrin, which are believed to have links with fugitive businessman Stanley Tollman, who is wanted on fraud charges in the US.

The trusts owned a sizeable stake in Chelsea until earlier this year when they sold out to Ken Bates, the club's larger-than-life chairman.