Chairman David Sheepshanks has hinted that talks are still continuing with the club's main lenders regarding a write-down of the Blues' £36 million debt. Town are looking to have their debts reduced to a level which would enable them to become more competitive in the Championship.

A fortnight ago reports suggested that talks had reached an impasse, but Sheepshanks said in his Saturday programme notes that things are moving in the right direction: “In modern football, where on-pitch performance is so much more closely related to financial firepower, and where there is such a wide gulf between those clubs with and without this firepower, finance matters more than ever.

“We are seeking a sum sufficient to resource the club financially to challenge strongly for the Premiership and succeed. We are making progress but I can say no more than that at this stage.”

The Blues hope to secure a write-down of the £28 million they owe on the Norwich Union bond taken out in 2001 to pay for the new stands.

Negotiations have been ongoing with Morley Fund Management, who are currently in charge of the debt. Morley, like Norwich Union, is one of the Aviva group of companies.

In addition to the bond debt, Town owe another £8 million, to Barclays, for the pre-administration overdraft, and the Bank of Scotland, for the mortgage which paid for the purchase of the Playford Road training ground.

The Blues found the annual £2 million annual interest payments on the bond increasingly difficult to meet while trying to remain competitive in the Championship and last year agreed a three-year ‘interest holiday' which will see Norwich Union eventually own 15% of the club.

Writing down the debt - possibly by as much as £20 million - would make it easier for the club to find investors willing to inject more significant sums than has been the case in recent years, and would be a major step towards improving Town's ability to compete for promotion back to the Premiership.

The club dismissed a recent report claiming that a mystery consortium is looking to buy the debt from Morley.

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