Watford have staved off the threat of administration by paying back money owed by the club to their former chairman and vice-chairman. The Hornets looked set to be forced into administration after chairman Jimmy Russo and brother Vince rejected a £7.5million rights-issue package from majority shareholder Lord Michael Ashcroft last week.
A club statement read: "Watford Leisure announces that on December 21, 2009 Fordwat Limited paid approximately £4.93million to Valley Grown Salads in full and final settlement of VGS' demand of 15 December 2009 for full repayment of approximately £4.88million in loans previously made available to the Company.
"The sum of £4.93million paid by Fordwat included accrued interest and a contribution to the legal fees of VGS (in accordance the loan agreement between VGS and the Company).
"In connection with the above payment, on December 21, 2009 Watford Leisure signed an agreement with Fordwat for a loan to the Company of approximately £4.93million, repayable on demand and accruing interest at the rate of 4.5% above the base rate of Barclays Bank plc (except in default when the rate rises to base rate plus 7.5%).
"Furthermore, it is the understanding of both Watford Leisure and Fordwat that security over the Vicarage Road Stadium for the Fordwat Loan, replacing that of VGS, will be put in place in due course.
"The purpose of the Fordwat Loan was to prevent the company being placed in administration by VGS."