For the umpteenth time in its existence, the Belgian tradition club KV Mechelen is in troubled water. At stake in a boardroom fight is fallen entrepreneur and KVM owner Dieter Penninckx. Indoor rooms are also asked questions about 400,000 euros that flowed from KVM to a Penninckx company.
KV Mechelen has become a crab basket due to the power play around the control of the club. The stake of the war in the boardroom is owner Dieter Penninckx. He was recently expelled from the board of directors of KVM after a remarkable demarche by the other shareholders. Penninckx – suspected of, among other things, forgery of documents at his now bankrupt fashion company FNG Group – disappeared from the management committee in September 2019. In September last year, he was replaced as chairman by minority shareholder Luc Leemans. But his staying on as owner and director and his presence in the catacombs leads to great unrest. The other shareholders expelled him from the board to placate sponsors who are threatening to leave and push him to sell his stake. That is not evident, because due to the troubles surrounding FNG Group, Penninckx is obliged to report share transactions to the court.
What preceded
KV Mechelen was convicted of bribery in 2019 in order to avoid relegation to 1B, the second division the year before. Through house broker Dejan Veljkovic, an attempt was made to ensure that opponent Waasland-Beveren would not go all out in the last league match against KVM. The bribery scandal led to a dance of chairs within the club, including co-owner Olivier Somers, who sold his shares to Dieter Penninckx. Above the club is also the broader judicial and fiscal investigation into Operation Zero concerning fraud and money laundering circuits in Belgian football.
Penninckx is challenging his dismissal. He sent the club a letter of formal notice last week – the harbinger of a lawsuit. The stake is, among other things, a dispute about the legal interpretation of the way in which Penninckx has been voted out.
The small shareholder Edwin De Reys was previously killed in the internal war at the top. He was dismissed from the board of directors in July 2020, according to the annexes to the Official Gazette. De Reys does not wish to comment at all. Management and board member Hans Van der Biesen resigned from all his positions at the end of 2020 for private reasons.
Bribery scandal
Penninckx’s dominant position is the result of an equally traumatic event at the club. His role in a bribery scandal forced the operationally strong man Olivier Somers – the businessman who took over KVM together with Penninckx at the end of 2017 – headlong into selling his 35.6 percent share package.
As a result, the agreement had to be changed that no one at KVM is allowed to control the majority of the club. Another trauma – KVM has a turbulent history – makes the club a unique case in Belgian football. The fans control 11 percent of the shares and also sit on the board of directors. Under the impetus of well-known face Marc Uytterhoeven, they saved the club after a bankruptcy in the early 2000s. That was a result of too much dependence on one patron, a situation that the fans would prefer to avoid in the future. Only Penninckx presented itself as the only candidate buyer at the exit of Somers.
According to insiders, Penninckx paid 2.2 million euros for the acquisition of Somers’ shares. Part of the deal is that Somers and Penninckx gave each other discharge – the club can no longer prosecute them if potential criminal offenses come to light.
Everyone against Penninckx
At KVM, everyone is against Penninckx today. Within the club, eyebrows are raised about money that has flowed from the company KV Mechelen to Somers and Penninckx in recent years. De Tijd was given access to invoices sent by companies of the two businessmen to KV Mechelen.
Somers resigned as managing director on June 30 and also disappeared from the board of directors a little later. His company Breakout invoiced 302,5000 euros to KVM on 1 July 2019, De Tijd learned. The following is stated as the reason for the invoicing: commission on the successful conclusion of sponsor contracts and commercial performances. That year, Wave, a sports marketing company in which Somers invests through its investment fund Monus, invoiced 1.2 million euros in December. Reason: Marketing Fee. Monus also invoiced EUR 45,558 in September 2018.
Olivier Somers states in an official response that the invoices from Breakout and Monus are the settlement of costs for actually delivered performances. The amount invoiced by Wave is incorrect. It is about 200,000 euros, also for performances delivered. ‘
Penninckx also made a lot of calculations. Through his company Golden Shoe Invest – which is the holding company above the two limited partnerships KVM Invest and Malinwa Invest with which Penninckx controls the club – Penninckx invoiced a management fee of 403,000 euros to the club on 25 May 2020. Around that time, the storm around FNG had erupted in all its intensity.
It is unclear which period the compensation applies to. A fee of 400,000 is substantial in the case of KVM – an SME. Penninckx resigned as a board member in September 2019 and was only chairman in May 2020. According to sources within the club, the amount invoiced has been paid. The board of directors was aware of this agreement and the way in which it came about at the end of June 2019. Not one euro of this invoice is intended for me, ‘says Penninckx in an official response.
Millstone
The stalemate around Penninckx hangs the club around its neck like a millstone. Just at a time when Malinwa is facing major challenges. There is one point of light. Even with the four-month impact of the corona crisis, last season’s annual accounts prove that KV Mechelen has everything it takes to be a profitable sub-top in the highest class. The club had a turnover of 25 million euros, an operating profit of 1 million and a quarter of a million net profit. The 8 million loss of the previous season – when the club was in 1B, the former second division – has been eliminated by combining extra income with a substantial reduction in costs. Just like for the other clubs, a serious corona dip in revenues will follow this season.
The club expects to be able to compensate for this through additional commercial income. There are a number of expiring five-year sponsorship deals with discounts of up to 50 percent compared to the market price for hospitality, boarding and sky boxes. The lost income is estimated at more than 4 million euros.
In the very short term, the club is financially safe. This can be attributed to approximately 10 million euros one shots from transfers of the talents Aster Vranckx and Issa Kabore.
The club is heavily indebted for the coming years. These debts were partly due to the renovation of the stadium, of which the crucial part is behind us. The problem is that much of the debt has to be repaid in the short term. Due to expiring loans, the club in principle had to repay almost 12 million euros in mid-2022. The cash flow is not large enough to achieve all of this within that period.
KVM board member Thierry Lammar confirms that the club has now refinanced approximately ten million debt. ‘It is partly about short-term bank loans that have been deferred in the longer term and the takeover of loans by third parties to make things more bearable.’
Jos Sluys
One of those private parties is the well-known investor Jos Sluys. He officially confirms to De Tijd for the first time that he lent money to the club. As a strategic partner of KVM, Saffelberg Investments (the investment vehicle of Sluys, ed.) implemented an important refinancing of various historical debts at the end of 2020, with a longer term and a significant reduction in the annual interest burden, ‘says right-hand man Luc Osselaer. ‘The refinancing consists of 7 million euros over ten years and 2 million euros over five years.’
The refinancing comprises 7 million euros over ten years and 2 million euros over five years.
Both Penninckx and Somers are also lurking around the corner with KVM’s debt to Sluys. Saffelberg was a shareholder of FNG Group and lent the company several times. Sluys also invested in a Somers company. Penninckx is said to have borrowed money from Sluys to buy Somers’ shares at KVM. KVM is now grateful to Sluys for helping to keep the club financially afloat.
The club owes the debt rescheduling to a guarantee by the city of Mechelen. It helped convince the banks. The city council gave the club an extra guarantee of 5 million euros for 20 years last year. In total, the city’s long-term guarantee amounts to 17 million euros. The city agrees to provide surety for loans. But it only takes effect when the last phase of the stadium project is started. Today there is no concrete file ‘, says Mechelen Alderman for Finance Koen Anciaux (Open VLD).
