Mark Attanasio

[MrBunce 245]

1 hour ago, GMF said:

@MrBunce @PurpleCanary and @Parma Ham's gone mouldy any opinions on how deferred consideration or commitments to inject further funding into the Club would have to be reflected in any required offers to remaining minority shareholders, as per the Takeover Code? Nuanced stuff, obviously but relevant nevertheless to the remaining 6,800 plus minority shareholders.

For deferred consideration you typically (depending on how it's structured) need to get an independent valuation. The commitments are, I understand, usually a bit less 'formal'. 

Edited April 16, 2023 by MrBunce

[Parma Ham's gone mouldy 2,220]

Deferred consideration is a good deal less complicated than it sounds. It simply means the handing over of funds at a later date upon some conditional event occurring.

Contracts and agreements require consideration to be active-valid. In very simple broad terms I can agree and contract with Mr Bunce to sell him 10 apples for which he agrees to pay a pound. 

If however each Friday I give him 8 pears and he pays 50p, this becomes the de-facto ‘contract’ because clear exchange of services and ‘consideration’ (money hand over) has occurred. Thus what actually happens is key. 

In this way you could imagine clauses to amortise any future cashing in of the unrealised equity gain via a clause which said something akin to:

‘Should the purchaser (Attanasio) subsequently sell x shares or more, for a price of £x or more, or - having taken full control of NCFC disburses of any club assets over the value of x, then a sum equivalent to y or y% shall be due due to vendor (Delia)’

My experience is that once one side introduces even the most basic ‘what if’ or ‘when this’ clauses, the other side reciprocates with equally valid ‘counterbalancing’ clauses and other - ever more tangential - counterpoints.

Where to draw the line and tug the reins on this process is an art. Partisan Lawyers may have little incentive to develop it. 

Something along these lines may well be in play. The law of unintended consequences could almost be written for this scenario. A ‘noisy’ asset like a Football club. Genuinely caring owners with good, collegiate intentions, but who just can’t make a mistake. An unrealised equity gain that has been wilfully ignored. A party who understands corporate finance very well. Another who has perhaps not wished to ‘dirty their hands’ with it. 

Conditional clauses indeed….

Parma 

Edited April 16, 2023 by Parma Ham's gone mouldy

[essex canary 496]

49 minutes ago, Graham Paddons Beard said:

Question. 
 

Am I right- I’m looking for guidance . 
 

@PurpleCanary @GMF @MrBunce@Parma Ham's gone mouldy @shefcanary

My view has been that MA would not have embarked on this without a high degree of certainty that he will secure control of the club. 
Foulger sells his shares , but that doesn’t give MA control. 
The new shares are released and MA will buy them. The money goes to the club . 
These shares dilute the overall shareholding . So D and M don’t own 51% anymore ? But MA still doesn’t control the club. 
So MA needs to buy some shares from M and D ? 
The whole initiative is supported by The Club - evidenced by the Post Match Meeting in the pitch after the Spurs game . 
Is this correct so far? 

The trigger mechanism is detailed in rhe Articles of Association. Perhaps a good idea to reflect upon the bracketed example included within. 

As per @PurpleCanary long submission yesterday most likely there are still only 616,913 shares in issue at the moment. Perhaps another stumbling block - maybe the Takeover Code maybe something else- identified subsequent to 13 February EGM.

 

[TIL 1010 4,748]

3 hours ago, Midlands Yellow said:

Parma and Pete? 

Nope  it certainly does not begin with a P.

[TIL 1010 4,748]

3 hours ago, essex canary said:

Perhaps not on this thread but definitely worthy of top prize on many others.

 

 

 

I think most definitely his recent effort on here certainly is.

[Graham Paddons Beard 2,431]

12 minutes ago, essex canary said:

The trigger mechanism is detailed in rhe Articles of Association. Perhaps a good idea to reflect upon the bracketed example included within. 

As per @PurpleCanary long submission yesterday most likely there are still only 616,913 shares in issue at the moment. Perhaps another stumbling block - maybe the Takeover Code maybe something else- identified subsequent to 13 February EGM.

 

My point is I’m asking whether a formal side agreement was in place before MA started down this route. The “trigger” looked like an obvious mechanism for him to buy the shares and the end result outlined in my question. 
 

[GMF 745]

17 minutes ago, Graham Paddons Beard said:

My point is I’m asking whether a formal side agreement was in place before MA started down this route. The “trigger” looked like an obvious mechanism for him to buy the shares and the end result outlined in my question. 
 

I’ve always presumed that the trigger event clauses in the AoA were there to add a layer of protection to the C-preference shareholder, in the event of D&M selling their majority holding (or part there of) to an unrelated 3rd party, rather than the C-preference shareholder. That said, I’m not a corporate lawyer, so will be happily guided by those who know the position.

[essex canary 496]

28 minutes ago, TIL 1010 said:

Nope  it certainly does not begin with a P.

Did the suspects get away with answering questions in this style?

[MrBunce 245]

20 minutes ago, Graham Paddons Beard said:

My point is I’m asking whether a formal side agreement was in place before MA started down this route. The “trigger” looked like an obvious mechanism for him to buy the shares and the end result outlined in my question. 
 

I would imagine that some kind of formal arrangement was put in place. Usually a step in a deal is to agree a Term Sheet or Memorandum of Understanding or Letter of Intent (as a non-lawyer the distinction was always lost on me). It basically sets out some general principles and aims of what is trying to be achieved. 

For example you might say person A is interested in acquiring a stake in Company C. Person B is interested in selling their stake to Person A. As a first step person A will at first seek to acquire a minority interest in Company C. If this arrangement is successful, Person A will intend to buy out Person B and Person B will seek to sell to Person A. It will then set out some steps on the road to getting there. 

[BigFish 1,987]

28 minutes ago, Graham Paddons Beard said:

My point is I’m asking whether a formal side agreement was in place before MA started down this route. The “trigger” looked like an obvious mechanism for him to buy the shares and the end result outlined in my question.

I have always assumed that there is a formal side agreement, or at least an informal one that provided for three possible outcomes: 1) MA takes control and the format of that; 2) S&J call the whole thing off; and 3) MA calls the whole thing off. For 2 & 3 MA gets his cash back, for 1 S&J take their equity gain & protect their reputation. Deferred consideration is only a mechanism in support of all three options. Further to that there is no market value to the clubs shares, because there is not market in which they are traded. Equally there is no market in football clubs, so no no market value. Where the complication is the the large number of minority shareholders & their legal protections including the takeover code. MA won't cross the Rubicon until there is a mechanism in place to manage this fact, and ultimately the price and structure of the transaction. So we have to wait.......

[TIL 1010 4,748]

29 minutes ago, essex canary said:

Did the suspects get away with answering questions in this style?

No comment.

[essex canary 496]

52 minutes ago, MrBunce said:

I would imagine that some kind of formal arrangement was put in place. Usually a step in a deal is to agree a Term Sheet or Memorandum of Understanding or Letter of Intent (as a non-lawyer the distinction was always lost on me). It basically sets out some general principles and aims of what is trying to be achieved. 

For example you might say person A is interested in acquiring a stake in Company C. Person B is interested in selling their stake to Person A. As a first step person A will at first seek to acquire a minority interest in Company C. If this arrangement is successful, Person A will intend to buy out Person B and Person B will seek to sell to Person A. It will then set out some steps on the road to getting there. 

Does the bracketed section at the end of the first paragraph of page 8 of the Articles of Association represent this?

I am assuming that the 17.5% contained therein is a euphemism for Foulgers and ANother shares and the 22.5% for the new issue shares whilst the 10% Preference Shares is clear.

Of course it says this is "For example' only and as such can't hold the Club to anything. Hard to see that it is a matter for the AA's but perhaps an outline statement of intentions? 

Would it have happened quite like this under Neil Doncaster?

 

[Graham Paddons Beard 2,431]

58 minutes ago, MrBunce said:

I would imagine that some kind of formal arrangement was put in place. Usually a step in a deal is to agree a Term Sheet or Memorandum of Understanding or Letter of Intent (as a non-lawyer the distinction was always lost on me). It basically sets out some general principles and aims of what is trying to be achieved. 

For example you might say person A is interested in acquiring a stake in Company C. Person B is interested in selling their stake to Person A. As a first step person A will at first seek to acquire a minority interest in Company C. If this arrangement is successful, Person A will intend to buy out Person B and Person B will seek to sell to Person A. It will then set out some steps on the road to getting there. 

That’s how I assumed it would work. I thought that without said Intent it was unlikely to have progressed . 
I’m now left wondering if it is just a lengthy process or whether one of the party’s is having second thoughts .

Thanks Mr B Much appreciated . 

[shefcanary 2,409]

Mello, you'll be glad to know I've been focusing elsewhere for a while, too busy to come on here, i do have another life.

Indulge me in some musings following catching up on another three pages on this thread over the weekend.

The current valuation of the club has been set at £100m by the issue of the convertible C preference shares being effectively 10% of Ordinary shares at a cost of £10m. Now it may be the trigger event linked to any conversion might not happen, thus a different valuation could be inputed. Additionally the potential allotment of 194,814 shares, which of itself doesn't change the value of the club, could reduce the value of each share. If Smith & Jones do not take any of this allotment, their share of the club would also reduce.

So, if Attanasio did acquire a large proportion of Smith & Jones' shares in order to gain effective control of the club, there would be a significant capital gain arising, potentially as high as £40m, on which tax at up to 40% could be payable. It is likely Smith & Jones will be taking tax advice to try and minimise the tax payable on the capital gain.

Note here that the tax would be payable in the following tax year to the completion of the deal, and I believe it will be payable at that time irrespective of any deferred consideration. This makes me feel it is unlikely deferred consideration would feature in such a deal, as I do not believe Smith & Jones have access to finance elsewhere to cover such a tax charge other than from the consideration itself.

However one reason for delay in progressing the takeover could be that Smith & Jones are creating a new charitable trust to gift their gain which could avoid some of the capital gains tax, whilst also creating a vehicle that could be a community charity with some form of say over future direction of the club. I am only thinking outside of the box here, but we know Smith & Jones are keen that any new owner should have the interests of the fans and local community at the forefront of their decisions after they gain control. By gifting both proceeds and some legacy shareholding (say 10% of the total club shareholding), Smith & Jones could ensure they minimise tax liability but create some form of attributable "watchdog" to ensure the future controlling owner cannot sell the club "down the river". The creation of such a charity is complicated and would take a lot of legal steps, not least clearance from the Charities Commission. Such clearance takes several months at the moment, I have current experience of this.

It's only my supposition, but just another reason for the delay in progress which may have been underestimated by the club's advisers. Or something similar. Or a straightforward deal has already been done. Or the deal is off. 

Anyone with any other thoughts on the source of a delay?

 

[Robert N. LiM 4,360]

8 minutes ago, shefcanary said:

However one reason for delay in progressing the takeover could be that Smith & Jones are creating a new charitable trust to gift their gain which could avoid some of the capital gains tax, whilst also creating a vehicle that could be a community charity with some form of say over future direction of the club. I am only thinking outside of the box here, but we know Smith & Jones are keen that any new owner should have the interests of the fans and local community at the forefront of their decisions after they gain control. By gifting both proceeds and some legacy shareholding (say 10% of the total club shareholding), Smith & Jones could ensure they minimise tax liability but create some form of attributable "watchdog" to ensure the future controlling owner cannot sell the club "down the river". The creation of such a charity is complicated and would take a lot of legal steps, not least clearance from the Charities Commission. Such clearance takes several months at the moment, I have current experience of this.

This would be an outstanding idea and a fitting end to D&M's time at the helm.

[Parma Ham's gone mouldy 2,220]

17 minutes ago, shefcanary said:

 

The current valuation of the club has been set at £100m by the issue of the convertible C preference shares being effectively 10% of Ordinary shares at a cost of £10m. Now it may be the trigger event linked to any conversion might not happen, thus a different valuation could be inputed. Additionally the potential allotment of 194,814 shares, which of itself doesn't change the value of the club, could reduce the value of each share. If Smith & Jones do not take any of this allotment, their share of the club would also reduce.

So, if Attanasio did acquire a large proportion of Smith & Jones' shares in order to gain effective control of the club, there would be a significant capital gain arising, potentially as high as £40m, on which tax at up to 40% could be payable. It is likely Smith & Jones will be taking tax advice to try and minimise the tax payable on the capital gain.

Note here that the tax would be payable in the following tax year to the completion of the deal, and I believe it will be payable at that time irrespective of any deferred consideration. This makes me feel it is unlikely deferred consideration would feature in such a deal, as I do not believe Smith & Jones have access to finance elsewhere to cover such a tax charge other than from the consideration itself.

However one reason for delay in progressing the takeover could be that Smith & Jones are creating a new charitable trust to gift their gain which could avoid some of the capital gains tax, whilst also creating a vehicle that could be a community charity with some form of say over future direction of the club. I am only thinking outside of the box here, but we know Smith & Jones are keen that any new owner should have the interests of the fans and local community at the forefront of their decisions after they gain control. By gifting both proceeds and some legacy shareholding (say 10% of the total club shareholding), Smith & Jones could ensure they minimise tax liability but create some form of attributable "watchdog" to ensure the future controlling owner cannot sell the club "down the river". The creation of such a charity is complicated and would take a lot of legal steps, not least clearance from the Charities Commission. Such clearance takes several months at the moment, I have current experience of this.

It's only my supposition, but just another reason for the delay in progress which may have been underestimated by the club's advisers. Or something similar. Or a straightforward deal has already been done. Or the deal is off. 

Anyone with any other thoughts on the source of a delay?

 

I like that thinking @shefcanary…I can certainly see such a vehicle being part of an umbrella deal. 

There would be corresponding-or-counterpoint clauses upon certain numbers-cash outs-events taking place, but that would certainly be a methodology under which Delia & Michael could make good on their promise to ‘not take a penny out’ (plus amortising any accusations of under-investment over the piece) whilst also ensuring that Attanasio cannot cash in an unreasonable proportion of the unrealised equity gain at a later date upon secondary sale. Indeed it might even put ratchet or penalty clauses on such a resale within certain timeframes or parameters. 

However. 

At that point Attanasio - or his advisors - would also change tack and produce some detailed maths as to what (proportion of)  equity  gain existed proctor hoc or post hoc from his involvement. Indeed they might challenge whether even a reasonable equity gain exists. ‘Yes you have a Ferrari, but you can’t afford it’s servicing, or even the petrol required to run it. It is rusting on your drive…’. 

Then collaborative heads of agreement ideas  - be they written or verbal - lose weight and you have Miss Haversham vs Crescent Capital red in tooth and claw. 

Or perhaps everyone behaves and the lawyers are kept in their boxes….£43m buys a lot of patience, though the ‘we won’t take out a penny’ principle may also not withstand the corporate light of day..

Parma 

Edited April 16, 2023 by Parma Ham's gone mouldy

[shefcanary 2,409]

@Parma Ham's gone mouldy you are of course right to highlight the view from the acquirer! It would make it less likely for Attanasio to pay top dollar! But I expect something like my musings must have been discussed even if it got dismissed.

[MrBunce 245]

58 minutes ago, essex canary said:

Does the bracketed section at the end of the first paragraph of page 8 of the Articles of Association represent this?

I am assuming that the 17.5% contained therein is a euphemism for Foulgers and ANother shares and the 22.5% for the new issue shares whilst the 10% Preference Shares is clear.

Of course it says this is "For example' only and as such can't hold the Club to anything. Hard to see that it is a matter for the AA's but perhaps an outline statement of intentions? 

Would it have happened quite like this under Neil Doncaster?

 

I wouldn't read too much into the percentages. Certainly when I drafted examples in my valuation reports or helped lawyers to do them, I would make sure they couldn't be construed as relating to anything 'actual'. But the substance behind those (or at least my interpretation) is representing that MA has a right of first refusal / is the expected purchaser, if it happens, of S&J's shares (or at least within the short/medium term). 

@shefcanary FWIW, I don't think a deferred consideration route is likely. I'm not aware of any takeover in a football club with such a mechanism (though it's common outside of football and of course in player transfers!). I only offered it as an example of why I think we're likely not in a 'straightforward' deal scenario (note: there are ways you can structure deferred consideration via loan notes to delay GCT being triggered). 

My interpretation of the 'delay' is that this is coming form our point of view. I imagine the people involved don't see it like that. They've set up the mechanism for shooting the starting pistol (the allotment) but are currently making sure the track is all clear. You want there to be as little obstacle between you and the finish line as possible. Basically a checklist you tick off. 

Just to be clear, I have absolutely no contacts at the club or any inside knowledge. I only come at it as someone who has worked on some deals and, maybe more importantly, been the person who analyses the ones that have gone wrong. 

My hope is that my posts are of some interest to fellow fans and that I can explain these things in an approachable way (hopefully the antithesis of Mello's post!) I'm under no illusion that for most people finance is incredibly boring, but maybe a little interesting here as it involves something we all care deeply about. 

Edited April 16, 2023 by MrBunce
Some elaboration

[PurpleCanary 5,562]

11 minutes ago, MrBunce said:

I wouldn't read too much into the percentages. Certainly when I drafted examples in my valuation reports or helped lawyers to do them, I would make sure they couldn't be construed as relating to anything 'actual'. But the substance behind those (or at least my interpretation) is representing that MA has a right of first refusal / is the expected purchaser, if it happens, of S&J's shares (or at least within the short/medium term). 

@shefcanary FWIW, I don't think a deferred consideration route is likely. I'm not aware of any takeover in a football club with such a mechanism (though it's common outside of football and of course in player transfers!). I only offered it as an example of why I think we're likely not in a 'straightforward' deal scenario (note: there are ways you can structure deferred consideration via loan notes to delay GCT being triggered). 

My interpretation of the 'delay' is that this is coming form our point of view. I imagine the people involved don't see it like that. They've set up the mechanism for shooting the starting pistol (the allotment) but are currently making sure the track is all clear. You want there to be as little obstacle between you and the finish line as possible. Basically a checklist you tick off. 

Just to be clear, I have absolutely no contacts at the club or any inside knowledge. I only come at it as someone who has worked on some deals and, maybe more importantly, been the person who analyses the ones that have gone wrong. 

My hope is that my posts are of some interest to fellow fans and that I can explain these things in an approachable way (hopefully the antithesis of Mello's post!) I'm under no illusion that for most people finance is incredibly boring, but maybe a little interesting here as it involves something we all care deeply about. 

They are, and you do. Since professional football began in England around the late 1880s finance has arguably always been the most significant factor in determining success and failure. Over the decades the source of that money has changed several times, often resulting in fluctuating fortunes for clubs (not least Norwich City) but not its importance.

[CANARYKING 638]

Wish they’d either get on with it or say goodbye and **** of back to the States

[Jim Smith 2,319]

11 hours ago, shefcanary said:

Mello, you'll be glad to know I've been focusing elsewhere for a while, too busy to come on here, i do have another life.

Indulge me in some musings following catching up on another three pages on this thread over the weekend.

The current valuation of the club has been set at £100m by the issue of the convertible C preference shares being effectively 10% of Ordinary shares at a cost of £10m. Now it may be the trigger event linked to any conversion might not happen, thus a different valuation could be inputed. Additionally the potential allotment of 194,814 shares, which of itself doesn't change the value of the club, could reduce the value of each share. If Smith & Jones do not take any of this allotment, their share of the club would also reduce.

So, if Attanasio did acquire a large proportion of Smith & Jones' shares in order to gain effective control of the club, there would be a significant capital gain arising, potentially as high as £40m, on which tax at up to 40% could be payable. It is likely Smith & Jones will be taking tax advice to try and minimise the tax payable on the capital gain.

Note here that the tax would be payable in the following tax year to the completion of the deal, and I believe it will be payable at that time irrespective of any deferred consideration. This makes me feel it is unlikely deferred consideration would feature in such a deal, as I do not believe Smith & Jones have access to finance elsewhere to cover such a tax charge other than from the consideration itself.

However one reason for delay in progressing the takeover could be that Smith & Jones are creating a new charitable trust to gift their gain which could avoid some of the capital gains tax, whilst also creating a vehicle that could be a community charity with some form of say over future direction of the club. I am only thinking outside of the box here, but we know Smith & Jones are keen that any new owner should have the interests of the fans and local community at the forefront of their decisions after they gain control. By gifting both proceeds and some legacy shareholding (say 10% of the total club shareholding), Smith & Jones could ensure they minimise tax liability but create some form of attributable "watchdog" to ensure the future controlling owner cannot sell the club "down the river". The creation of such a charity is complicated and would take a lot of legal steps, not least clearance from the Charities Commission. Such clearance takes several months at the moment, I have current experience of this.

It's only my supposition, but just another reason for the delay in progress which may have been underestimated by the club's advisers. Or something similar. Or a straightforward deal has already been done. Or the deal is off. 

Anyone with any other thoughts on the source of a delay?

 

My thoughts are that the source of the delay is that our owners are still not genuinely open to ceding control and so it’s all a lot more complicated or long winded than it would otherwise be if they were. 

[BigFish 1,987]

14 minutes ago, Jim Smith said:

My thoughts are that the source of the delay is that our owners are still not genuinely open to ceding control and so it’s all a lot more complicated or long winded than it would otherwise be if they were. 

Based on what? My thoughts are you are an envious, bitter, misogynist with zero evidence for this.

[Jim Smith 2,319]

36 minutes ago, BigFish said:

Based on what? My thoughts are you are an envious, bitter, misogynist with zero evidence for this.

Not based on zero evidence. 

[BigFish 1,987]

1 minute ago, Jim Smith said:

Not based on zero evidence. 

Just no evidence you are willing or able to share ......or actually exists

Edited April 17, 2023 by BigFish

[Badger 2,405]

17 hours ago, Midlands Yellow said:

21 hours ago, TIL 1010 said:

There are only two posters really worth reading the thoughts of on this thread Parma and you are one of them.

Parma and Pete? 

I think he means Parma and himself! 😉

[Graham Paddons Beard 2,431]

20 minutes ago, BigFish said:

Just no evidence you are willing or able to share ......or actually exists

It’s an opinion. Jim thinks Delia and Michael may be dragging their heels . There has been no rush to change ownership in the last  years . Now it seems there may be a motivation. That motivation may be more reluctant than we know . 
 

There is no evidence that they are. Equally there is no evidence that they are not . Keeping one of the only informative threads on the message board civil shouldn’t be difficult. 

Edited April 17, 2023 by Graham Paddons Beard

[Jim Smith 2,319]

1 minute ago, Graham Paddons Beard said:

It’s an opinion. Jim thinks Delia and Michael may be dragging their heels . There has been no rush to change ownership in the last  years . Now it seems there may be a motivation. 
 

There is no evidence that they are. Equally there is no evidence that they are not . Keeping one of the only informative threads on the message board civil shouldn’t be difficult. 

It’s an informed opinion, not just an opinion. But we shall see. Maybe our recent nosedive and the reality of mid table championship life will hasten things. 

[essex canary 496]

16 minutes ago, Badger said:

I think he means Parma and himself! 😉

That was my belief. You might make my top 10, he certainly won't.

[Dean Coneys boots 1,400]

1 hour ago, Jim Smith said:

My thoughts are that the source of the delay is that our owners are still not genuinely open to ceding control and so it’s all a lot more complicated or long winded than it would otherwise be if they were. 

Yes that seems likely 

[essex canary 496]

16 minutes ago, Graham Paddons Beard said:

It’s an opinion. Jim thinks Delia and Michael may be dragging their heels . There has been no rush to change ownership in the last  years . Now it seems there may be a motivation. That motivation may be more reluctant than we know . 
 

There is no evidence that they are. Equally there is no evidence that they are not . Keeping one of the only informative threads on the message board civil shouldn’t be difficult. 

Absolutely. Great civility on this thread yesterday. Ridiculous to suggest misogyny when the subject of discussion is one male and one female.