New Board Director Confirmed - Mark Attanasio

[essex canary 491]

7 hours ago, GMF said:

@BigFish Impressive digging. Me thinks that are are conflating two completely different points and those figures are, as a consequence, coincidental!

If (and if is doing a lot of heavy lifting) the investment in c-preference shares is £10m and, if the conversion to ordinary shares is 10% of the allocation shares, then that’s the equivalent of £162 a share.

Clubs similar to ours are trading at £100 million plus so on that basis £10 million for 10 per cent of the Club seems reasonable. That must be new shares rather than old shares which would increase the number of shares in issue. Hence the new money, old money argument.

As for £162 per share, as a shareholder I would certainly like to claim £62 minimum as fair recompense for the Clubs Fixed Assets of £38 million. As for the £100 extra per share  perhaps goodwill, an enhanced holding for the Trust and some new funds injected into the Club to finance the ground development etc. If anything agree with Shef, keep going North.

 

Edited August 24, 2022 by essex canary

[essex canary 491]

9 hours ago, essex canary said:

Clubs similar to ours are trading at £100 million plus so on that basis £10 million for 10 per cent of the Club seems reasonable. That must be new shares rather than old shares which would increase the number of shares in issue. Hence the new money, old money argument.

As for £162 per share, as a shareholder I would certainly like to claim £62 minimum as fair recompense for the Clubs Fixed Assets of £38 million. As for the £100 extra per share  perhaps goodwill, an enhanced holding for the Trust and some new funds injected into the Club to finance the ground development etc. If anything agree with Shef, keep going North.

 

Upon reflection and having just read Section 5 (vi) of the proposed Articles of Association carefully, it would appear that the 10% of shares would be carved out of the existing shares in issue with financial settlement to existing shareholders to relinquish 10% of their holdings. No apparent clarity as to how the financial settlement would be arrived at.

Any views welcome as to whether that interpretation is correct?

[GMF 736]

17 minutes ago, essex canary said:

Upon reflection and having just read Section 5 (vi) of the proposed Articles of Association carefully, it would appear that the 10% of shares would be carved out of the existing shares in issue with financial settlement to existing shareholders to relinquish 10% of their holdings. No apparent clarity as to how the financial settlement would be arrived at.

Any views welcome as to whether that interpretation is correct?

Personally, I’m struggling to read it that way and come to the same conclusion as you. Normally, a conversion from one share class to another would involve the issuing of new shares in the converted to shares, otherwise that would result in a reduction in the share capital of the company. 

[BigFish 1,986]

17 hours ago, GMF said:

Two points; if you refer to my initial comment, my observation was that I thought £162 a share was ridiculously expensive. I still stand by that comment.

Second, the shares are unlisted securities, they’re worth whatever someone is willing to offer for them. There’s no real time pricing information readily available, which also makes valuation somewhat difficult.

Whatever personal presumptions you have regarding a possible bargain, the auction process (which included two rounds of bidding) was conducted by the Court appointed administrator. Are you really implying that they didn’t do their job properly?

Whoah @GMF, I am not making any presumptions, personal or otherwise, or drawing any implications.

Is the price the Trust paid in the public domain, and if so what was it? It would be a useful additional data source for this debate.

[BigFish 1,986]

10 hours ago, essex canary said:

In many ways I suspect minority shareholders are an encumbrance. They were useful though when S&J didn't have enough money to buy the Club outright. Perhaps they are useful now as a kind of meat in the sandwich in the ownership percentage game? Perhaps some of us aren't impressed? 

And I am sure you are not alone in that. But far from being cuddly little old Norwich this is big boy stuff with a large number of moving parts. Some of these work in unison, some conflict. Without @PurpleCanary's Supporter Director idea informing the fans and minority shareholders of what is happening is counter-productive beyond the normal legal protections, such as prompted this EGM.

[shefcanary 2,385]

11 hours ago, essex canary said:

In many ways I suspect minority shareholders are an encumbrance. They were useful though when S&J didn't have enough money to buy the Club outright. Perhaps they are useful now as a kind of meat in the sandwich in the ownership percentage game? Perhaps some of us aren't impressed? 

Minority shareholders have been used as a defensive block very cleverly by Smith & Jones; they might say it leads to a community owned club by proxy, but it certainly means a hostile takeover is nigh on impossible unless it involves Saudi-style billions to buy up some of the shareholdings as well as Smith & Jones' shares plus all the legal and corporate finance fees required to underwrite the deal (and yes, you read that right, I mean a good couple of billion). The current deal looks friendly enough, but look at the legal hoops that entails, so well constructed were previous share allocations!

[cornish sam 944]

2 hours ago, GMF said:

Personally, I’m struggling to read it that way and come to the same conclusion as you. Normally, a conversion from one share class to another would involve the issuing of new shares in the converted to shares, otherwise that would result in a reduction in the share capital of the company. 

I will caveat this with I am just going off this thread, but, have they not removed the previously unallocated shares (or the provision to create them) as part of this and through doing so also changed the potential share capital of the company in the opposite direction? Or have I just misunderstood?

Edited August 25, 2022 by cornish sam

[BigFish 1,986]

2 hours ago, cornish sam said:

I will caveat this with I am just going off this thread, but, have they not removed the previously unallocated shares (or the provision to create them) as part of this and through doing so also changed the potential share capital of the company in the opposite direction? Or have I just misunderstood?

Yes, or pretty much that is the general assumption on here. It was always a red herring.

As to its impact on share capital this whole exercise demonstrates if a suitable majority of shareholders want something it is simple enough to call a EGM, have a vote and enact it.

[shefcanary 2,385]

2 hours ago, cornish sam said:

I will caveat this with I am just going off this thread, but, have they not removed the previously unallocated shares (or the provision to create them) as part of this and through doing so also changed the potential share capital of the company in the opposite direction? Or have I just misunderstood?

Yes, the resolutions include the removal of the current right by the Board to unilaterally increase the issued ordinary share capital. However nothing would stop them reinstating this right at future GM's, with the agreement of the shareholders, as they have been able to do regularly nearly every AGM since 2004. 

A remaining question not clearly answered in the paperwork is that if a trigger event occurs that allows the issued C shares to be converted into up to 10% of the issued share capital, will this come from existing share capital (requiring some form of mechanism to re-allocate existing share capital from current holders to the C share holders - the paperwork is silent on this) or from new share capital (is there an implicit right in the paperwork for the Board to automatically create this new ordinary share capital). I would err to the latter, unless it is already mentioned in the "plan" that has not been shared with us. Both involve the dilution of existing shareholder rights (the paperwork notes this) so if the resolutions are accepted there is no practical impact (being the same in both) as most material holdings will be held by the main protagonists; the impact on most minority shareholders will be a 10% reduction in voting rights and the right to dividends, which might upset some of the minority holders but they have little scope to challenge this. 

Again, the drafting appears to have overlooked this point.  It would take an expensive QC to confirm the intentions here if not made clear at the GM, so there remains the risk of a dispute between existing shareholders and incoming converted C share holders.  I would not expect it to happen unless someone did acquire through another mechanism a substantial holding approaching the 30% mark. The chances of this are extremely remote (but fun to contemplate if like me you are into that sort of thing).

[GMF 736]

42 minutes ago, shefcanary said:

Yes, the resolutions include the removal of the current right by the Board to unilaterally increase the issued ordinary share capital. However nothing would stop them reinstating this right at future GM's, with the agreement of the shareholders, as they have been able to do regularly nearly every AGM since 2004. 

A remaining question not clearly answered in the paperwork is that if a trigger event occurs that allows the issued C shares to be converted into up to 10% of the issued share capital, will this come from existing share capital (requiring some form of mechanism to re-allocate existing share capital from current holders to the C share holders - the paperwork is silent on this) or from new share capital (is there an implicit right in the paperwork for the Board to automatically create this new ordinary share capital). I would err to the latter, unless it is already mentioned in the "plan" that has not been shared with us. Both involve the dilution of existing shareholder rights (the paperwork notes this) so if the resolutions are accepted there is no practical impact (being the same in both) as most material holdings will be held by the main protagonists; the impact on most minority shareholders will be a 10% reduction in voting rights and the right to dividends, which might upset some of the minority holders but they have little scope to challenge this. 

Again, the drafting appears to have overlooked this point.  It would take an expensive QC to confirm the intentions here if not made clear at the GM, so there remains the risk of a dispute between existing shareholders and incoming converted C share holders.  I would not expect it to happen unless someone did acquire through another mechanism a substantial holding approaching the 30% mark. The chances of this are extremely remote (but fun to contemplate if like me you are into that sort of thing).

This point has been mentioned before.

Being specific, resolution one is clearly intended to remove the pre-existing option the Board has to issue up to 1m ordinary shares (currently time limited to 2025). However, the second paragraph of resolution one clearly enables a “window of opportunity” to still grant these shares, if, for example, they have agreement with MA (I can’t imagine it would be with anyone else at this moment in time) to exercise the option (probably in part) but have yet to complete the deal. The chances of it happening are, I would suggest, remote, but why have the second paragraph otherwise?

These resolutions, if approved, would be new and would enable the purchaser to, either redeem his cash, or, convert the c-preference shares into ordinary shares.

Edited August 25, 2022 by GMF
Typo

[GMF 736]

5 hours ago, BigFish said:

Whoah @GMF, I am not making any presumptions, personal or otherwise, or drawing any implications.

Is the price the Trust paid in the public domain, and if so what was it? It would be a useful additional data source for this debate.

All share transfers (there’s typically 200 to 300 each year) are private. 

[BigFish 1,986]

23 minutes ago, GMF said:

All share transfers (there’s typically 200 to 300 each year) are private. 

That is a politician's answer to a question I didn't ask.

Do the creditors of Archant not have a right to know the value of the disposal? Do the members of the Trust not have access to the details of this purchase, and if not why not. And would the expenditure and impact on assets for both organisations be reflected in their respective accounts? Not really expecting an answer, just interested now.

 

[essex canary 491]

9 hours ago, GMF said:

Personally, I’m struggling to read it that way and come to the same conclusion as you. Normally, a conversion from one share class to another would involve the issuing of new shares in the converted to shares, otherwise that would result in a reduction in the share capital of the company. 

It is puzzling then how the bracketed sentence at the end of AA's section 5(vi) about 'applicable proceeds to all holders of Ordinary Shares' should be interpreted? I would interpret as that in the event of the Trigger being applied I would receive £162 per share to relinquish 10% of my holding. Sounds an exceedingly generous settlement for a small dilution albeit of course that it may never happen.

Edited August 25, 2022 by essex canary

[PurpleCanary 5,554]

9 hours ago, shefcanary said:

Minority shareholders have been used as a defensive block very cleverly by Smith & Jones; they might say it leads to a community owned club by proxy, but it certainly means a hostile takeover is nigh on impossible unless it involves Saudi-style billions to buy up some of the shareholdings as well as Smith & Jones' shares plus all the legal and corporate finance fees required to underwrite the deal (and yes, you read that right, I mean a good couple of billion). The current deal looks friendly enough, but look at the legal hoops that entails, so well constructed were previous share allocations!

Shef, we don't normally disagree but I don't see that S&J have done anything more than making sure their position as majority shareholders has stayed secure, as one would  normally do in their position.

[cornish sam 944]

2 hours ago, essex canary said:

It is puzzling then how the bracketed sentence at the end of AA's section 5(vi) about 'applicable proceeds to all holders of Ordinary Shares' should be interpreted? I would interpret as that in the event of the Trigger being applied I would receive £162 per share to relinquish 10% of my holding. Sounds an exceedingly generous settlement for a small dilution albeit of course that it may never happen.

Would you also have to relinquish 10% of your season ticket? 😁

[GMF 736]

2 hours ago, essex canary said:

It is puzzling then how the bracketed sentence at the end of AA's section 5(vi) about 'applicable proceeds to all holders of Ordinary Shares' should be interpreted? I would interpret as that in the event of the Trigger being applied I would receive £162 per share to relinquish 10% of my holding. Sounds an exceedingly generous settlement for a small dilution albeit of course that it may never happen.

No, I don’t think that your interpretation is correct.

This relates specifically to the Conversion Right resulting from Trigger Events. There’s 8 listed, of which the relevant ones, in my opinion, are a), d) and e), all involving a sale of shares, either by the majority shareholders, or lesser interests, and the associated conditionality is the payment of the sale proceeds relating specifically to those sales.

Yes, the inclusion of the words,

”(included the distribution of applicable proceeds to all holders of Ordinary Shares in connection with such Trigger Event) is confusing but I read that as relating specifically to those sales, given that there may actually be more than one shareholder involved.

[essex canary 491]

29 minutes ago, cornish sam said:

Would you also have to relinquish 10% of your season ticket? 😁

It is a  perfectly fair question the answer to which isn't clear given that 1,000 shares is the threshold for all of it.

[essex canary 491]

7 minutes ago, GMF said:

No, I don’t think that your interpretation is correct.

This relates specifically to the Conversion Right resulting from Trigger Events. There’s 8 listed, of which the relevant ones, in my opinion, are a), d) and e), all involving a sale of shares, either by the majority shareholders, or lesser interests, and the associated conditionality is the payment of the sale proceeds relating specifically to those sales.

Yes, the inclusion of the words,

”(included the distribution of applicable proceeds to all holders of Ordinary Shares in connection with such Trigger Event) is confusing but I read that as relating specifically to those sales, given that there may actually be more than one shareholder involved.

Maybe but the logic of that is very hard to understand given that 5(vi) is a continuous paragraph which starts on the subject of the 10% Conversion.

The fact that we are having such different interpretations just demonstrates how poor the draft AAs are. Hope the Trust will be making representations accordingly?

 

[shefcanary 2,385]

2 hours ago, PurpleCanary said:

Shef, we don't normally disagree but I don't see that S&J have done anything more than making sure their position as majority shareholders has stayed secure, as one would  normally do in their position.

No disagreement there I feel. On the same page.

[Mat McGoo 0]

Where is the infamous Tangible Fixed Assets when needed?? 

[GMF 736]

10 hours ago, shefcanary said:

No disagreement there I feel. On the same page.

Although some seem to believe otherwise, the shareholding breakdown of the Club arises primarily from historical reasons. The current structure is probably therefore more by accident than design! 

[essex canary 491]

Just now, GMF said:

Although some seem to believe otherwise, the shareholding breakdown of the Club arises primarily from historical reasons. The current structure is probably therefore more by accident than design! 

Why not S&J 53%, Attanasio 46%, Trust 1% subject to agreed variation on the last 2 categories?

Amongst other things going forward it would avoid exercises such as the expense of drafting convoluted and unintelligible 12 page Articles of Association and distributing 6,860 copies plus endless time we spend debating it.

We can then spend time developing the Trust as the sole platform for fan engagement.

 

[TIL 1010 4,722]

24 minutes ago, essex canary said:

 

We can then spend time developing the Trust as the sole platform for fan engagement.

 

😂

 

Edited August 26, 2022 by TIL 1010

[The Raptor 1,199]

I hope I don't get forced to sell my shares. I quite like the idea of being a shareholder. Even if it is only a couple.

Also the agms have been fun over the years. Particularly once they stopped that old boy speaking who just wanted to do stand up for 10 minutes.

 

[GMF 736]

26 minutes ago, essex canary said:

Why not S&J 53%, Attanasio 46%, Trust 1% subject to agreed variation on the last 2 categories?

Amongst other things going forward it would avoid exercises such as the expense of drafting convoluted and unintelligible 12 page Articles of Association and distributing 6,860 copies plus endless time we spend debating it.

We can then spend time developing the Trust as the sole platform for fan engagement.

 

It doesn’t take much figuring out that the most likely direction of travel here is the Club being taken private in a few years time. Then all those who’ve been fretting for years over a 53% majority ownership can fret over a 100% one! 😉

[TIL 1010 4,722]

8 minutes ago, The Raptor said:

I hope I don't get forced to sell my shares. I quite like the idea of being a shareholder. Even if it is only a couple.

Also the agms have been fun over the years. Particularly once they stopped that old boy speaking who just wanted to do stand up for 10 minutes.

 

That won't be happening anymore as sadly Peter Wolsey who you are talking about passed a couple of months ago.

[BigFish 1,986]

46 minutes ago, GMF said:

Although some seem to believe otherwise, the shareholding breakdown of the Club arises primarily from historical reasons. The current structure is probably therefore more by accident than design! 

 

5 minutes ago, GMF said:

It doesn’t take much figuring out that the most likely direction of travel here is the Club being taken private in a few years time. Then all those who’ve been fretting for years over a 53% majority ownership can fret over a 100% one! 😉

Pretty much this, two good points here and when they sink in a lot posters are going to be pretty sore. To which I would add for those unhappy about governance and opaque communications this will then be entirely in the control of one man, or a single entity.

[shefcanary 2,385]

1 hour ago, GMF said:

Although some seem to believe otherwise, the shareholding breakdown of the Club arises primarily from historical reasons. The current structure is probably therefore more by accident than design! 

Partially agreed, I've read the archives in detail and saw how the current structure built up. However the 2004 share issue and subsequent dealings do point to a little more "management" of the allocation (even if subconscious (?)), although I agree the intention in 2004 was certainly more about raising cash, than preserving control.

[Leedscanary 337]

9 hours ago, Mat McGoo said:

Where is the infamous Tangible Fixed Assets when needed?? 

Still looking for his umbrella ☂ 

[GMF 736]

1 hour ago, shefcanary said:

Partially agreed, I've read the archives in detail and saw how the current structure built up. However the 2004 share issue and subsequent dealings do point to a little more "management" of the allocation (even if subconscious (?)), although I agree the intention in 2004 was certainly more about raising cash, than preserving control.

My understanding was that the subsequent large allotments, in favour of D&M and MF were as a result of loans being converted to equity, rather than anything more sinister than that.