David Conn: Bolton fans seek assurances from white knight

Bolton Wanderers have been taken over by a son-of-the-town-made-good, now living as a tax exile, but the reception from the club's fans for Edwin Davies has been thoroughly subdued compared to the bunting unfurled in Blackburn for Jack Walker when he flew in from Jersey in 1993 to take over Rovers. The fans have several reasons for being underwhelmed: partly, times and costs have changed since a couple of ingots of Walker's tax-free fortune could rebuild Ewood Park and pay for a title-winning shopping list of players whose headline-making wages, most notably £10,000 a week to Chris Sutton, are a 10th of what Roman Abramovich is now paying in his attempt to buy the Premier League for Chelsea.

Davies has paid £2.25m to take his ownership of Bolton to 94.5 per cent and his total outlay to £14m, a deal less trumpeted by Bolton's chairman Phil Gartside as a road to glory, than wanly offered as a needs-must grab for salvation. For those who admire Bolton as a thriving local club, which has managed to build the splendid Reebok Stadium and seems, under the manager Sam Allardyce, to have concocted a successful blend of home-grown triers and ageing superstars, the figures underlining the deal were surprisingly bleak.

The club is saddled with some of the original £23m cost of building the Reebok, compounded by losses from the mid-'90s yo-yo years, spent a further £16m building the adjoining hotel and offices, last year lost £5.1m paying the likes of Jay-Jay Okocha and Youri Djorkaeff, all of which rolls up into eye-watering total debts of £60m. Of that, £39m is borrowings, much of it repayable within a year and bearing high interest.

Davies took a corporate box at the Reebok for his company, Strix, then first shored up the club in October 1999, paying £1m for shares and joining the board. He subsequently took his stake close to 30 per cent, and has guaranteed £7.5m of the club's bank borrowings. Bolton's frantic need for cash is stark: in September 2002, they borrowed £8.5m from the bank Singer & Friedlander, substantially guaranteed by Davies; three months later, the club borrowed £2m from the Co-op Bank. The burden of debt, and the repayments of interest and capital, had become unsupportable, and at last week's annual meeting, Gartside urged shareholders to accept Davies' near-total takeover, saying the club was desperate to find £1.75m to repay the Co-op, and another £500,000 early this year. Put simply, Bolton were facing insolvency and had no options.

"We have to accept that," Allan Duckworth, the club's chief executive, told me. "We had to find the money and without Ed Davies we were looking at having to sell players, or, if we couldn't, administration was possible. That's reality. We were very lucky to have Ed Davies, whom we know and have worked with for four years, to refinance and ease the pressure from our bankers."

At Blackburn, which was and is wholly owned by Jack Walker's Jersey-based family trusts, fans overlooked his tax exile status as they saw what its proceeds could buy, and when he died in 2000, they were assured that arrangements had been made to keep the club alive. However, at Bolton, shareholders were angry that their shares, which peaked at 69p, valuing Bolton at £60m when the club became one of the more unlikely objects of the City's short-lived flirtation with football in 1997, are now effectively worthless, at 0.1p each. In this mood, many asked pointed questions about the club's direction.

"We're a home town club with a local support," said Brian Scowcroft, a shareholder and, from 1993 until his resignation in 2000, a Wanderers director. "Now we're owned by an Isle of Man tax exile via his Bermudan trust. It leaves us feeling very vulnerable and with many unanswered questions."

Not too much is known about Edwin Davies and he did not ingratiate himself with shareholders by failing to turn up at the AGM. He has not talked to the local press about the takeover and did not return my call. Aged 57, he was, the club is keen to stress, born and grew up in Bolton, where he went to the local Farnworth Grammar School. He is understood to have left Bolton at 22 and his business activities took him around England and abroad until he moved to the Isle of Man in 1984. There he became the managing director of Strix, a company originally founded by Dr John Taylor, a scientist who invented components for kettles, particularly relating to thermostatic controls, which prevent them boiling dry. Under Davies, the company steamed ahead and, by 1992, could boast of becoming "the world market leader in controls for water boiling purposes". Strix now provide components to a cabinet of household names and in 2000 after Dr Taylor resigned, Davies became the chairman and was awarded an OBE.

Isle of Man companies do not have to file accounts publicly and so Strix's financial size is unknown but is clearly successful. Details of shareholders, disclosed at the company registry in Douglas, reveal that Strix Group, which ultimately owns the company alongside Davies and Taylor, is based in Bermuda. The Bermudan Government's website is admirably clear about the advantages offered to money deposited and companies registered on the island: "Bermuda is a tax neutral environment. There are no income taxes... capital gains taxes... estate duty or inheritance tax payable in Bermuda."

The vehicle Davies has used for the takeover of his hometown Lancashire club, is the E Davies Trust, set up for his and his family's benefit, and Moonshift Investments. Both are administered by the Bermuda Trust Company, which is owned by The Bank of Bermuda. "The E Davies Trust," documents issued by Bolton make clear, "does not publish financial information."

Duckworth, while he explained that Davies is a Bolton fan who goes to almost every game home and away, acknowledged that he is a businessman whose funding and takeover is not being done for charity. His loans, Duckworth said, charge interest "at a premium which reflects risk, which is high at a football club".

He painted a depressing picture for the famous old club, a founder member of the Football League in 1888, its history spattered with glory - the first Wembley FA Cup win in 1923 and the Nat Lofthouse-inspired 1958 victory - and tragedy; 33 people were killed in the Burnden Park crushing disaster in 1946.

Now, despite the footballing renaissance in their landmark new home, they were floundering for survival as the Co-op Bank, which readily lent money to football in rose-tinted days, looked to reduce its exposure as wages ballooned, ITV Digital and the transfer market collapsed, and the Nationwide League suffered an administration epidemic.

"We looked at all our options over four years and realistically only Eddie Davies came forward," Duckworth said. He said that with banks unwilling to lend, the club was approached by people offering other forms of finance, as has been seen at clubs like Chesterfield, Barnsley and Darlington, where accountants trading as the Sterling Consortium have lent millions at high rates of interest, with mortgages on the grounds. "It's not very different from people who personally get into terrible trouble with moneylenders. We were simply not prepared to go down that road." Davies' investment is clearly for the long term because Bolton's position is shaky, but already he has had some return - together with interest on his loans, he was paid £134,000 in 2002 and 2003 in dividends on his preference shares. In 2002 Bolton paid the Bermuda Trust company £100,000 in management charges.

Scowcroft, however, said he was less concerned about the return Davies stands to receive than his intentions. "We need assurances that income from the hotels and offices will not be hived off, but will continue to provide money to the club. Most importantly, what provision has he made for the club's future now we're dependent on him? I support what Mr Davies has done in the past but the future is uncertain."

Duckworth said that in a commercial deal the club had not sought categoric assurances from Davies' trust, but said after working with him they had built up trust. "We're lucky to have that. We're on a sounder basis, and will have more income in the future from the hotel and offices. In Davies, we have someone we know, he is from Bolton and has proved his long-term interest in the club. We haven't had to accept money-lenders or a white knight arriving at the last minute, some of whom do not turn out to be saviours at all."