Two of the loans are worth in the region of £10million to the football club, while Lai also borrowed £2million from a third party which he secured against 2.35 per cent of his shareholding in the Baggies.
Here we try to explain the three loans and look at when they are supposed to be repaid.
£4.9million – 2021
Albion’s latest accounts have shown Lai has taken a £4,950,000 loan out of the club which he has ploughed into a related company.
The loan was made in March 2021 – with the money going to Wisdom Smart Corporation Limited, a related party to the Baggies’ controlling shareholder.
Interest was fixed at £50,000 with the repayment supposed to be made on September 15, 2021.
That repayment was missed with a new date of December 31, 2022, having now been agreed.
In a statement on Albion’s website, Lai insisted the loan will be repaid in December and manager Steve Bruce will have the funds for the January transfer window.
Meanwhile, in a briefing with local media, chief executive Gourlay said he is ‘absolutely convinced’ the money will be repaid in full and on time. Lai revealed he borrowed the money because some of his other businesses were seriously impacted by Covid-19.
Lai said: “Regrettably, the Covid-19 pandemic saw my international businesses suffer, particularly those in the hospitality and entertainment sector, which experienced an almost complete closure for long periods, and in March 2021 I received a loan from the football club.
“The upturn in the global economy has brought with it greater positivity and I can confirm I will repay the loan in full, with interest, by the end of the current calendar year and the funds will be available to the club during the January 2023 transfer window.”
Albion fans – and manager Bruce – will no doubt now have the date of December 31 written in their diaries to see if that money will be available for signings.
£2million – 2021
Albion’s latest accounts also show Lai borrowed – via his company West Bromwich Albion Holdings – £2million on September 8, 2021.
The money was borrowed from Warmfront Holdings Limited – with the cash not coming from the club.
Albion are not the lender or the beneficiary. However, it went into Holdings and Lai used 2.35 per cent of his shares to secure the loan.
That means if Lai fails to repay the money, Warmfront Holdings Limited will own 2.35 per cent of Lai’s shares in Albion.
Interestingly, if 2.35 per cent of Lai’s shares are worth £2million – the club as a whole is worth in the region of £97.5million at the time the loan was agreed.
That, of course, is substantially less than what Lai paid Peace when he purchased the club in 2014.
According to Albion’s latest accounts, the £2million loan was due to be repaid on March 31 this year.
It will not be clear until Albion’s next set of accounts are published next year whether Lai repaid the loan on time.
Jeremy Peace loan – 2014
The longest-standing loan Lai is currently responsible for was actually taken out by former owner Jeremy Peace.
Peace borrowed £3.7million from the club into his then-own company – WBA Holdings – in 2014.
But that debt was transferred to Lai when he took over 88 per cent of the clubs shares in 2016.
That loan has been the source of much anger for Shareholders For Albion (S4A), which represents the majority of small shareholders who own 12 per cent of the club
It has been claimed by S4A that Peace may have used the loan from the club to WBA Holdings to assist a bid he had made, three months earlier, to purchase shares in WBA Group, the club’s parent company.
Peace increased his stake in WBA Group from around 65 per cent to 88 per cent in 2014. Two years later he sold the club to Lai for around £200m.
But using the loan to increase his own shareholding is something Peace has always strenuously denied.
S4A have long called for an independent investigation into the loan that, with interest, has now hit £5million.
Albion, previously, turned down their requests for an investigation.
But in May, new chief executive Gourlay gave the green light.
That investigation is now under way with the Express & Star understanding those involved have signed non-disclosure agreements that mean they cannot legally talk about the loan until the investigation has reached its conclusion.
S4A hope, though, it will lead to the money being repaid or that it will advise Albion to take action against the directors involved in the loan when it was taken out in 2014.