Owls’ £41m debt has been wiped out under Mandaric

The former Portsmouth and Leicester City chairman rescued the Owls from the brink of administration 12 months ago, paying around £9m to the the club’s major creditors, including the Co-operative Bank and former chairman Dave Allen.

His own company, UK Football Investments LLC, was subsequently owed £6.4m at the end of the last financial year and Mandaric told the Yorkshire Post last weekend that the club will lose £5m chasing promotion to the Championship this season.

The Owls released a statement last night, saying: “This year’s accounts reflect the change of ownership following the acquisition of the club by UK Football Investments LLC in December 2010.

“The main highlight that we are pleased to report is the removal of over £41m of debt from the club. Last season, as part of the takeover strategy, our operating losses were offset by the waiver of the intercompany debt (of £21.4m) and although no money changed hands, the accounting treatment saw the eventual profit reach £15.8m.

“As well as a major overhaul of the business both on and off the field, we are also able to report the net assets of the business at the end of May 2011 were a healthy £11m compared to the net liabilities of £31m reported at the end of May 2010.

“The trading figures are generally disappointing, a mixture of relegation, supporter dissatisfaction and the general economic downturn saw falls in revenue across all areas of the business.

“Looking forward, the business is now in a robust financial position and whilst we still have some way to go to achieve our plans, the financial strength of the new parent company, together with the enthusiasm, commitment and changes made by our chairman, is driving the club in the right direction.”

Owls midfielder James O’Connor is set to leave the club in the next 48 hours after talks with manager Gary Megson.

It is understood that the Dubliner, 32, has been offered a coaching position in Major League Soccer.

Although a regular for the majority of the last three years, he has missed the last three games and will be out of contract next summer.