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Goals founder's family completes pre-pack rescue deal for stricken firm



Troubled Goals Soccer Centres has been bought out of administration  in a pre-pack deal by a firm part-owned by its founder’s family.

The future of the East Kilbride firm had been in doubt after it called in forensic accountants to investigate accounting irregularities and trading in its shares was suspended this year. Now it has confirmed that Northwind 5s Ltd, a new company backed by Soccerworld and Inflexion Private Equity, are to take over.

 

Soccerworld is owned by Barry and Ian McDermott, sons of Ian McDermott Snr who started Goals in 1990. McDermott sold the business in 2000 to Keith Rogers and venture capital firm Dunedin.

Goals today admitted that investigations into claims of VAT fraud at the company had revealed other alleged misconduct including cheques wrongfully issued to individuals and profits overstated by as much as £40 million a year for the last decade. It confirmed VAT owed to HMRC could be “very significantly” more than £13.2 million.

The deal means the jobs of 750 Goals employees have been secured along with its sites across the UK and a handful in the US. But it will not cheer investors including Sports Direct owner Mike Ashley, who owned a 19% stake, after Goals’ board admitted they are unlikely to get anything for their shares. 

 

Goals said: “It is very unlikely that shareholders of Goals will receive any value for their shares. This outcome is a matter of deep regret for the Board, but as previously outlined the nature of the inappropriate accounting (going back to at least 2009) and the VAT-related issues means the business has been significantly less profitable than previously believed.

“At each and every step of the way the Board has done everything in its power in combination with its advisers to ensure that it took steps to deliver the best outcome for the Company and its stakeholders.”

Irregularities were first raised in February by Goals’ auditors BDO, who had replaced KPMG the previous summer. Its shares plunged in value and trading in them was suspended on the LSE Alternative Investments Market (AIM).

The board commissioned forensic auditors from BDO to investigate and their report in late September raised issues including the creation of false fixed assets, false revenues and fake invoices; and wrongful payment of cheques to individuals associated with the company in 2014.

Goals says it had bank debt of around £30 million from Bank of Scotland and had been in breach of its lending covenants pending the investigation. It said it had been technically insolvent and had asked shareholders for investment. A “preliminary, but highly caveated” offer was made for the firm by Sports Direct but that it did not follow up with a concrete bid.

It decided in August to sell the company through an accelerated mergers and acquisitions (AMA) process. Administrators Deloitte are understood to have sold its assets for around £25 million.

 

Goals said: “It is with regret that the funds generated through the sale do not fully compensate even the lenders to the company.”

In August, Goals confirmed that former chief executive Keith Rogers and ex-finance officer Bill Gow were being investigated as part of the company’s probe into alleged fraud. Rogers quit the company in 2016 and was no loner listed as a director. Gow left in July last year and has since January been listed as finance director of baker and confectioner Thomas Tunnock.

Goals added: “The Board has already taken steps to preserve the Company’s legal rights to compensation from parties who might be liable through negligence or more direct involvement, and entered into standstill agreements with former directors and also with its auditors of 15 years, KPMG. The Board is hopeful that action will be taken to hold those responsible to account, where appropriate. The Board members would be supportive of any such action.

 

The McDermott family have interests in property and leisure businesses including Glasgow-based Soccerworld, which also has sites in Dundee, Kilmarnock, Newcastle and Carlisle, and Great Western Golf. They were advised by Paul Lombardi and Audrey Cameron of Anderson Strathern and Mark Dunn of Stevenson & Kyles.

Barry and Ian McDermott said “ We’re delighted to be returning to the business, started in partnership with our father Ian snr. over 30 years ago, The business has grown across the UK and into the USA, an exciting market where there’s potential for significant growth. We’re excited to be back at the helm of Goals, and with our investment partners Inflexion Private Equity, look forward to growth on the back of the popularity of five-a-side football, especially in the US, where Goals is already in a joint venture with City Football Group.”



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