Mark Attanasio

[GMF 757]

@shefcanary excellent analysis, although a couple of questions/observations.

Using the c-preference shares as a valuation measure for the Club must be questioned, because, arguably, the metric is only relevant if the conversion into ordinaries actually occurs. The indication from the recent documentation suggests that the considered opinion internally is that it won’t be exercised. Either the c-preference shares are repaid in six years time, or the liability is subject to a subsequent refinancing exercise.

Second, and this is a personal bugbear of mine, comparisons to the likes of Sheffield United and Burnley focus on the headline number, with no consideration of the associated debt for each. Arguably, a further adjustment is necessary to take into account the respective end values, as you wouldn’t pay an identical price if the revenues were broadly comparable, but one has significantly higher debt than the other.

Edited October 4, 2023 by GMF

[essex canary 506]

4 minutes ago, GMF said:

@shefcanary excellent analysis, although a couple of questions/observations.

Using the c-preference shares as a valuation measure for the Club must be questioned, because, arguably, the metric is only relevant if the conversion into ordinaries actually occurs. The indication from the recent document suggests that the considered opinion internally is that it won’t. Either the c-preference shares are repaid in six years time, or the liability is subject to a subsequent refinancing exercise.

Second, and this is a personal bugbear of mine, comparisons to the likes of Sheffield United and Burnley focus on the headline number, with no consideration of the associated debt for each. Arguably, a further adjustment is necessary to take into account the respective end values, as you wouldn’t pay an identical price if the revenues were broadly comparable, but one has significantly higher debt than the other.

On the first point the Club still played the £10 million for 10% card initially which gave the impression that would be a fair valuation at least at some point in time in the foreseeable future.

On the second point of course that is the case. Burnley sold whilst in the Premier League and perhaps, after staying up for 5 years recently, with the belief that they may have some prospect of staying there so clearly different to where we are now. Then again their efficiency ratio has been much better than ours particularly re wages which us why our debt has arisen.

[vos 155]

22 hours ago, PurpleCanary said:

As well as buying Foulger’s shares he also swept up some other minority holdings. Those have already been counted, and the new shares take him to 40 per cent quality with S&J.

Purple. I take your point although the wording from the press report does not seem to make it totally clearcut. It would help if the Club made a straightforward statement. Whilst S & J and MA have agreed to work in concert in the space of 2 1/2 years, that could only be a verbal agreement, and covering such a long period there might be disagreements. Rather interestingly in that scenario the Trust would have a big part to play. Overall for me the ownership arrangement is unsatisfactory in that financially we are now in a state of limbo for nearly three years. You can take the view that Delia is being cautious, and although MA might be whiter than white, it is a fact that when it comes to financial matters the Americans in general are usually in it for a quick buck and not very open. On the other hand it is possibly a fact that Delia just does not want to let go just yet !!!!

[GMF 757]

2 hours ago, essex canary said:

On the first point the Club still played the £10 million for 10% card initially which gave the impression that would be a fair valuation at least at some point in time in the foreseeable future.

On the second point of course that is the case. Burnley sold whilst in the Premier League and perhaps, after staying up for 5 years recently, with the belief that they may have some prospect of staying there so clearly different to where we are now. Then again their efficiency ratio has been much better than ours particularly re wages which us why our debt has arisen.

The Club didn’t pay anything for the C-preference shares, MA purchased them.

The trigger events linked to the c-preference shares are, effectively, a change control insurance policy for Attanasio, one that will only happen if D&M sell their shares. It’s nothing more than an option for MA, one that is highly unlikely to be exercised. In this context, it’s of little use with regards to a valuation exercise.

[essex canary 506]

11 minutes ago, GMF said:

The Club didn’t pay anything for the C-preference shares, MA purchased them.

The trigger events linked to the c-preference shares are, effectively, a change control insurance policy for Attanasio, one that will only happen if D&M sell their shares. It’s nothing more than an option for MA, one that is highly unlikely to be exercised. In this context, it’s of little use with regards to a valuation exercise.

I wrote 'played' in the sense of the clause appearing in the Articles of Association. Indeed as an option only but presumably MA would only exercise it if it makes economic sense to do so which presumably may well be why the assumption has now changed to 'highly unlikely.' That didn't seem to be clear initially, did it?

Edited October 3, 2023 by essex canary

[PurpleCanary 5,582]

1 hour ago, vos said:

Purple. I take your point although the wording from the press report does not seem to make it totally clearcut. It would help if the Club made a straightforward statement. Whilst S & J and MA have agreed to work in concert in the space of 2 1/2 years, that could only be a verbal agreement, and covering such a long period there might be disagreements. Rather interestingly in that scenario the Trust would have a big part to play. Overall for me the ownership arrangement is unsatisfactory in that financially we are now in a state of limbo for nearly three years. You can take the view that Delia is being cautious, and although MA might be whiter than white, it is a fact that when it comes to financial matters the Americans in general are usually in it for a quick buck and not very open. On the other hand it is possibly a fact that Delia just does not want to let go just yet !!!!

Vos, I’m not sure that is a purely verbal agreement. I suspect it is more formal than that. But that doesn’t mean it cannot be ended early if both sides agree. 

[Soldier on 168]

10 hours ago, PurpleCanary said:

Vos, I’m not sure that is a purely verbal agreement. I suspect it is more formal than that. But that doesn’t mean it cannot be ended early if both sides agree. 

Connor’s piece also alluded to MA having first refusal on Delia and Michael’s shares if they opt to sell during this period . Presumably this is unlikely though.

[PurpleCanary 5,582]

2 minutes ago, Soldier on said:

Connor’s piece also alluded to MA having first refusal on Delia and Michael’s shares if they opt to sell during this period . Presumably this is unlikely though.

Yes, I noticed that. I was't sure whether it was new news or not.

[canarycop 209]

4 minutes ago, Soldier on said:

Connor’s piece also alluded to MA having first refusal on Delia and Michael’s shares if they opt to sell during this period . Presumably this is unlikely though.

It may be unlikely but if we get in a position where promotion is likely I'd imagine the process would speed up

[shefcanary 2,460]

15 hours ago, GMF said:

Using the c-preference shares as a valuation measure for the Club must be questioned, because, arguably, the metric is only relevant if the conversion into ordinaries actually occurs. The indication from the recent documentation suggests that the considered opinion internally is that it won’t be exercised.

Accepted, but nothing about valuations of a company is set in stone. My aim in my reply to KG was to prompt a discussion of what value Delia & Michael's shares may have. All purely speculation, only Attanasio would seem to have an answer: unless you have further information yourself? My own view is that as a third party at that time, with no "skin in the game", Attanasio had made a pretty fair valuation of the club with the acquisition of those shares - why else hand over £10M - his team would have done due diligence on the value of the club?

15 hours ago, GMF said:

comparisons to the likes of Sheffield United and Burnley focus on the headline number, with no consideration of the associated debt for each.

I'm not arguing about the debt point other than to point out my belief both clubs are running on very little borrowings at the moment. United are having to operate without debt as the Prince cannot find any third party willing to back him, hence why they faced transfer embargo's last season as they just weren't able to extend their overdraft and there were plenty of rumours of late player salary payments abroad in the steel city! Burnley did have to repay £60M pdq after the takeover last year, but the incoming outfit still paid over £90M for the club, so I think with EPL monies coming in and relatively little transfer business over the summer there will be little debt there as well.  

12 hours ago, vos said:

Whilst S & J and MA have agreed to work in concert in the space of 2 1/2 years, that could only be a verbal agreement,

The papers for the GM on Monday included a fully signed Shareholder Agreement between Delia & Michael and Mark Attanasio. Despite the changes arising out of that GM, the terms of the Shareholder Agreement are in part restrictive. However there are not many clues as to what happens if the terms of that agreement are broken by either party.  Given everything we hear, yes it will be steady as you go for the next 2 & 1/3 years (I'm counting down already) with very little scope for a change in strategy. It looks increasingly likely we have to wait for the AGM on further news of how the two parties will work in concert for that period, which is frustrating.

21 minutes ago, Soldier on said:

Connor’s piece also alluded to MA having first refusal on Delia and Michael’s shares if they opt to sell during this period .

This is also news to me as well. The financial constraints covering the C Preference Share issue and the "trigger events" would preclude from a financial perspective Delia & Michael selling out to a third party UNLESS that third party had sufficient funds to pay off Attanasio. So, by implication you would think Attanasio is the only game in town with the legal and financial elements of all agreement pretty much making it extremely unlikely anyone else would get the opportunity, but if that third party was rich beyond all our wildest dreams then all bets are off?

[Parma Ham's gone mouldy 2,243]

24 minutes ago, canarycop said:

It may be unlikely but if we get in a position where promotion is likely I'd imagine the process would speed up

I think you’d find that the opposite is the case. It is continued annual losses in the second tier where the issue lies. 
 

Self-sustaining models have dramatic realities when that is the case. Ferraris have to be sold because one cannot afford the price of petrol. 

It is not an unreasonable analogy for the overall ownership situation either.

When the acceptable or likely sporting competitiveness level falls below a functional threshold - arguably predominantly due to limited finance - then broader strategic decisions loom large. 

Promotion kicks that strategic can further down the street…

…and we have kicked better than most in recent times. 
 

Perhaps until now. 

Parma

[Soldier on 168]

16 minutes ago, Parma Ham's gone mouldy said:

I think you’d find that the opposite is the case. It is continued annual losses in the second tier where the issue lies. 
 

Self-sustaining models have dramatic realities when that is the case. Ferraris have to be sold because one cannot afford the price of petrol. 

It is not an unreasonable analogy for the overall ownership situation either.

When the acceptable or likely sporting competitiveness level falls below a functional threshold - arguably predominantly due to limited finance - then broader strategic decisions loom large. 

Promotion kicks that strategic can further down the street…

…and we have kicked better than most in recent times. 
 

Perhaps until now. 

Parma

Yea would agree with this certainly don’t see that any pronation would expedite Delia and Michael selling shares. Far more likely if debts and league position doesn’t go in the right direction.

[essex canary 506]

It is clear which way this is going isn't it. @shefcanary and I were wrong about Foulger getting out with a substantial profit. Nonetheless his exit strategy, though far removed from that of Burnley's minority shareholders, could look pretty good in comparison to the remaining shares being traded at the nominal £1 in return for Attanasio writing off his loans that funded the Webber's vanity project.

[MrBunce 245]

50 minutes ago, Soldier on said:

Connor’s piece also alluded to MA having first refusal on Delia and Michael’s shares if they opt to sell during this period . Presumably this is unlikely though.

Yes there is one (for reference, in the Shareholders Agreement, schedule 3, towards the back). There are also tag along rights (if someone sells they can sell with them) and drag along rights (if someone sells they can force the other to sell). These are pretty standard. 

There is also a restriction on transferring shares unless the person receiving those shares agrees to be bound by the Shareholders Agreement. 

[GMF 757]

7 minutes ago, MrBunce said:

Yes there is one (for reference, in the Shareholders Agreement, schedule 3, towards the back). There are also tag along rights (if someone sells they can sell with them) and drag along rights (if someone sells they can force the other to sell). These are pretty standard. 

There is also a restriction on transferring shares unless the person receiving those shares agrees to be bound by the Shareholders Agreement. 

I believe that there are also permitted transfers within the Shareholders Agreement. These basically cater for the pre-existing legacy provisions (wills) for both parties, thereby enabling transfers to their respective beneficiaries. Again, pretty standard procedures.

Edited October 4, 2023 by GMF

[MrBunce 245]

37 minutes ago, GMF said:

I believe that there are also permitted transfers within the Shareholders Agreement. These basically cater for the pre-existing legacy provisions (wills) for both parties, thereby enabling transfers to their respective beneficiaries. Again, pretty standard procedures.

Yes that is right. 

[Soldier on 168]

On the match day blog last night Connor reiterated that this matter is now held up with EFL red tape re fit and proper person stuff that needs to be conducted on Attanassio.

I wonder what will be concluded first this share allocation or the hunt for a new sporting director ?!

[shefcanary 2,460]

41 minutes ago, Soldier on said:

On the match day blog last night Connor reiterated that this matter is now held up with EFL red tape re fit and proper person stuff that needs to be conducted on Attanassio.

I wonder what will be concluded first this share allocation or the hunt for a new sporting director ?!

I read his comment yesterday. He also said he had enjoyed reading people's views on his article, so he does come on here from time to time? The inference was he was right and anyone saying different was wrong. I'm not convinced but he must be closer to things than me.

[PurpleCanary 5,582]

21 minutes ago, shefcanary said:

I read his comment yesterday. He also said he had enjoyed reading people's views on his article, so he does come on here from time to time? The inference was he was right and anyone saying different was wrong. I'm not convinced but he must be closer to things than me.

I hadn't seen that:

"Yes, he does. I've enjoyed the criticism of the reporting! As confirmed by the EFL, he needs approval."

He is plainly being sarcastic, although whether he is talking about below-the-line comments on his articles or comments here I don't know. Either way I am not sure that is the wisest move, given the failings of the EDP's coverage. 

Edited October 5, 2023 by PurpleCanary

[norfolkngood 1,087]

59 minutes ago, Soldier on said:

On the match day blog last night Connor reiterated that this matter is now held up with EFL red tape re fit and proper person stuff that needs to be conducted on Attanassio.

I wonder what will be concluded first this share allocation or the hunt for a new sporting director ?!

 

16 minutes ago, shefcanary said:

I read his comment yesterday. He also said he had enjoyed reading people's views on his article, so he does come on here from time to time? The inference was he was right and anyone saying different was wrong. I'm not convinced but he must be closer to things than me.

i Think this is becoming a bit of a Problem the longer it goes on ?

who owns the club who is in charge , who is taking over ,who is the Boss ?

same goes for DOF is webber really doing everything for the future of the club or just seeing out his days ?

what is Webber doing about January window getting top targets like Hwang ?

Wagner has hit a bit of a Rocky patch how can we replace him Webber is leaving the New DOF might want his own man ? 

 

it is small things in football that make a difference ,we have no clear leadership from Top or from DOF 

i think we need a clean sweep get a new DOF in ASAP can gain control 

[GMF 757]

@shefcanary thanks for your comments above.

We now know that MA paid £3.3m for a 21.5% stake in the Club in September 2022. He also paid £10m for the c-preference shares at the same time.

Like yourself, I presumed at the time that the conversion option into ordinaries in 2029 would be exercised, hence the degree of logic in presuming £100m, based upon a 10% stake.

However, with the benefit of the waiver circular, plus the terms sheet, my view has changed. In reality, this option is the equivalent of a Change Control insurance policy for Attanasio, protecting his £10m with the potential of extra equity, which would (all other things staying as it was in September 22) increase his stake to 31.5%.

Think of it In this context, a high price for an incoming party to match! That’s a pretty cute defensive mechanism, if viewed like that!

Either way, it’s relevance as a valuation mechanism only really comes into play if the option is exercised, which now seems highly unlikely given the disclosures in the documents.

So, in reality, all MA has paid for his 40% stake is the initial £3.3m, plus the £4.875m he’s paying for the new shares. And the c-preference shares is nothing more than a 7 year loan, with a 7% interest rate. There’s also the £33m debt financing to throw into the mix, albeit £4.875m of that is now about to be capitalised into the new shares.

Edited October 5, 2023 by GMF

[PurpleCanary 5,582]

11 minutes ago, norfolkngood said:

 

i Think this is becoming a bit of a Problem the longer it goes on ?

who owns the club who is in charge , who is taking over ,who is the Boss ?

same goes for DOF is webber really doing everything for the future of the club or just seeing out his days ?

what is Webber doing about January window getting top targets like Hwang ?

Wagner has hit a bit of a Rocky patch how can we replace him Webber is leaving the New DOF might want his own man ? 

 

it is small things in football that make a difference ,we have no clear leadership from Top or from DOF 

i think we need a clean sweep get a new DOF in ASAP can gain control 

The club is in effect owned and run by a united trio of Smith, Jones and Attanasio, because they have 80 per cent of the shares and have agreed to vote together on the big-picture/long-term stuff. More immediate issues, such as choosing DoFs or head coaches, they can disagree on.

[norfolkngood 1,087]

1 minute ago, PurpleCanary said:

The club is in effect owned and run by a united trio of Smith, Jones and Attanasio, because they have 80 per cent of the shares and have agreed to vote together on the big-picture/long-term stuff. More immediate issues, such as choosing DoFs or head coaches, they can disagree on.

Do you understand what i was trying to explain Purple ?

Yes you are right the ownership is more clear but the DOF is important issue to clear up 

the club seems in a Rut at the moment ,

hard to make decisions  on Head coach / Transfer targets etc when the DOF job is up in the air ,

[essex canary 506]

29 minutes ago, GMF said:

@shefcanary thanks for your comments above.

We now know that MA paid £3.3m for a 21.5% stake in the Club in September 2022. He also paid £10m for the c-preference shares at the same time.

Like yourself, I presumed at the time that the conversion option into ordinaries in 2029 would be exercised, hence the degree of logic in presuming £100m, based upon a 10% stake.

However, with the benefit of the waiver circular, plus the terms sheet, my view has changed. In reality, this option is the equivalent of a Change Control insurance policy for Attanasio, protecting his £10m with the potential of extra equity, which would (all other things staying as it was in September 22) increase his stake to 31.5%.

Think of it In this context, a high price for an incoming party to match! That’s a pretty cute defensive mechanism, if viewed like that!

Either way, it’s relevance as a valuation mechanism only really comes into play if the option is exercised, which now seems highly unlikely given the disclosures in the documents.

So, in reality, all MA has paid for his 40% stake is the initial £3.3m, plus the £4.875m he’s paying for the new shares. And the c-preference shares is nothing more than a 7 year loan, with a 7% interest rate. There’s also the £33m debt financing to throw into the mix, albeit £4.875m of that is now about to be capitalised into the new shares.

In essence then the concept of shareholding has been sacrificed in favour of debt financing and on the grounds that they were only meaningless unquoted securities. The £10 million for 10% merely serving to create a diversionary red herring for a while whilst the penny share plan was fully developed.

[Monty13 2,252]

40 minutes ago, GMF said:

@shefcanary thanks for your comments above.

We now know that MA paid £3.3m for a 21.5% stake in the Club in September 2022. He also paid £10m for the c-preference shares at the same time.

Like yourself, I presumed at the time that the conversion option into ordinaries in 2029 would be exercised, hence the degree of logic in presuming £100m, based upon a 10% stake.

However, with the benefit of the waiver circular, plus the terms sheet, my view has changed. In reality, this option is the equivalent of a Change Control insurance policy for Attanasio, protecting his £10m with the potential of extra equity, which would (all other things staying as it was in September 22) increase his stake to 31.5%.

Think of it In this context, a high price for an incoming party to match! That’s a pretty cute defensive mechanism, if viewed like that!

Either way, it’s relevance as a valuation mechanism only really comes into play if the option is exercised, which now seems highly unlikely given the disclosures in the documents.

So, in reality, all MA has paid for his 40% stake is the initial £3.3m, plus the £4.875m he’s paying for the new shares. And the c-preference shares is nothing more than a 7 year loan, with a 7% interest rate. There’s also the £33m debt financing to throw into the mix, albeit £4.875m of that is now about to be capitalised into the new shares.

I know nothing about this other than reading some of the excellent comments here…but it does seem to a novice he’s getting an absolute bargain based on the long term potential.

[Soldier on 168]

What date is the AGM ? Wonder if he plans to attend again.

[essex canary 506]

4 minutes ago, Soldier on said:

What date is the AGM ? Wonder if he plans to attend again.

Fair questions. Equally though I would like to hear from our soon to be former majority owners who at one fairly recent AGM stated that they hadn't been entirely transparent in the past but would be going forward.

[GMF 757]

21 minutes ago, Soldier on said:

What date is the AGM ? Wonder if he plans to attend again.

30th November.

[GMF 757]

32 minutes ago, essex canary said:

In essence then the concept of shareholding has been sacrificed in favour of debt financing and on the grounds that they were only meaningless unquoted securities. The £10 million for 10% merely serving to create a diversionary red herring for a while whilst the penny share plan was fully developed.

Debt financing is to assist short term cash flow. As for the last eight words, do you have any evidence to support this, otherwise it’s getting close to being libellous…

[GMF 757]

26 minutes ago, Monty13 said:

I know nothing about this other than reading some of the excellent comments here…but it does seem to a novice he’s getting an absolute bargain based on the long term potential.

He’s using a combination of equity and debt financing, so you have to look at it in the whole, but it’s certainly a huge financial commitment for MA.