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TeemuVanBasten

Shareholders, are you happy with dilution?

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12 minutes ago, TeemuVanBasten said:

I own shares in a few other non-listed businesses with 1000 to 5000 shareholders and all three in recent years and reduced paper communications (changed to email or via a dedicated comms page) and now just send the annual report each year as the printing and postage costs were getting out of control.

All three have sporadic (quarterly or six monthly) share trading and in two of the businesses the directors frequently buy out multiple smaller shareholders (say £500 worth and under), and I presume this is to reduce that administrative burden. Due to the cost levied on transferring ownership it would be cheaper per share for them to buy one larger shareholding, so I assume that is the motive.

The current shareholding situation is very much a product of the 2002 share issue, where you could acquire a minimum of 4 shares for £100. There’s approximately 5,300 shareholders owning 10 shares, or less. 78% of shareholders owning about 4.5% of the equity. It’s a logistical problem and there’s a significant proportion who don’t even have an email address, which compounds the problem even further. 

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2 minutes ago, GMF said:

The current shareholding situation is very much a product of the 2002 share issue, where you could acquire a minimum of 4 shares for £100. There’s approximately 5,300 shareholders owning 10 shares, or less. 78% of shareholders owning about 4.5% of the equity. It’s a logistical problem and there’s a significant proportion who don’t even have an email address, which compounds the problem even further. 

But I think those people with 10 shares or less are probably the least inclined to want to sell to be honest.

And that many with larger shareholdings might want to keep hold of 4 or 10 just to say they are still a shareholder.

Suppose the exception will be shares that have since been passed down to children who aren't the slightest bit interested in footy, they might sell.

Would be interesting to see uptake if he does make an offer to buy them out. 

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14 hours ago, TeemuVanBasten said:

What's the point in the General Meeting on the 13th February then.

Just to abide by Companies Act law. It's a done deal because between them, the large shareholders have over 75% of the shares. That's why within the notice they were discouraging other shareholders from turning up. It is just a formality.

12 hours ago, PurpleCanary said:

But you do have an exit opportunity. If Attanasio gets to 30 per cent, as seems very likely, then he is forced to offer to buy your shares and has to buy if you decide to sell.

In response to the OP, I am not that bothered by dilution.

If Attanasio gets over 90%, he is entitled to force you to sell your shares to him! Let's have a look at what price. 

 

6 hours ago, dylanisabaddog said:

No one can know for sure but it is possible that the shares are being issued to Smith at par. The benefit of that would be that it would reduce the value of all the issued shares and make it cheaper for Anastasio if/when he has to buy minority shareholdings. 

That may seem unfair but it could be justified by saying that the club won't benefit in any way from the transfer of minority shares. It would be dead money for the club and Anastasio although I'm one of those who would lose out financially. Never mind...... 

As many have mentioned already, no one on here knows how much Attanasio paid Foulger for his shares. We also do not know if he has made further purchases from connections of Foulger so again have no idea what price these might have been bought for. Therefore we do not know for certain what maximum price Attanasio has paid for his shares to date, which would be what other shareholders could expect to get for their shares should if as expected Attanasio's stake exceeds 30%.

In the absence of firm information on Attanasio's share dealings, the current value per share is driven by the fact his C Preference shares cost him £10m, which if converted, is 10% of the issued shareholding at that time. Before the 13th February this places a value of share at approximately £145 per share ((£10m*10) / (619,000*1.1)). 

For those worried about loss of value of their holding, the order of events on 13th February complicates things. In the absence of any other transactions, in theory the value per share reduces by 24%, so to £110. But will Attanasio convert his preference shares before or after the allotment? Will he make other share purchases before or after the allotment?  

Irrespective of this I expect the allotment to be at par, to Attanasio, not Smith & Jones. I also do not expect any substantial investment into the club, merely a shuffling of the debt, with Attanasio via one of his companies repaying the outstanding short term loans that were originally £65m with longer term loans. This in turn would free up the parachute payments for the club to invest in team building (either for another crack at the EPL or another season in Chumps) over the summer.

3 hours ago, Mello Yello said:

I feel sorry for Neppers Tom in all of this....Truly, madly deeply.....

We've discussed elsewhere that if Attanasio as expected is buying some of Smith & Jones stake directly, then this will leave Delia with the prospect of a large equity gain. I however do not expect them to sell out completely, regaining some form of holding for Neppers Tom in the longer term, but also to avoid crystallisation of an immediate capital gain, although this will involve quite a lot of complicated tax manoeuvring no doubt but given Delia's moral stance should avoid a Zahawi style blow up.  

Lots of really technical work is going on behind the scenes.

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I bought the original allocation in 2002 really just to help the club when we were asked. It had a specific purpose and I was pleased to buy. The yearly dividend has covered that outlay over the 20 years. I can't see how any dilution would worry folk like me. I didn't buy as an investment and I was happy to part with the cash (well spent indeed with Hucks).

Hope the greater stake by Attanasio does us good. We have to wait and see. I cannot make much sense of the letter that arrived. I do know that change is happening and it all feels  like something that is being managed and well planned.

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My ‘good politics’ point vid small shareholders involved Attanasio deliberately making a small purchase somewhere along the road at quite a high rate. 

I would expect this to be an unwritten gentleman’s agreement between him and Delia, suiting both.

It would ensure that the large swathes of fan share owners get an attractive premium, acting as a PR sweetener, despite this being virtually irrelevant in the grander sweep of scale share buying. £100 looks a nice figure, perhaps even up to £150, it really wouldn’t cost much in context. 
 

The reported £3m for Foulger’s shares is more concerning, in the sense that it benchmarks ‘big lumps’ at a low ceiling, which to me is indicative of new money squeezing old money that can’t afford to put petrol in the Ferrari, plus somewhat negating a claim to equity gain. 

This can be presented as ‘fair’ and ‘worth what someone will pay for it’ though in reality it is carcass-picking and paying forward the equity gain to the next sale (which will then only go into Attanasio’s pocket). In some ways no-one will see the ‘loss’ they made. 
 

Did the Glazers create all of the value in Manchester United post buyout? Or did they buy it very cheap? (and not even with their own money of course)

If they bought it far too cheap, then previous shareholders ‘lost value’

If shareholders are lovely, kind, decent and promised to ‘never profit’ from the company, might they be vulnerable to such a scenario?

Parma 

@Petriix

@GMF

@PurpleCanary

@shefcanary

@BigFish

@essex canary

Edited by Parma Ham's gone mouldy
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@shefcanary leaving aside, for a moment, the potential gain in D&M’s shares over the period of their ownership, and having regards to their often stated view about not getting their money back / profiting from their ownership, there’s the possibility that they could pass them on for not much more than they paid for them.

That’s their choice, of course. However, in the wider context of this possibility, the question arises as to what fiduciary duty they have, if any, to all remaining minority shareholders. It’s quite one thing to be generous with their own money, should they choose, but what if that has wider implications for all other shareholders?

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26 minutes ago, GMF said:

@shefcanary leaving aside, for a moment, the potential gain in D&M’s shares over the period of their ownership, and having regards to their often stated view about not getting their money back / profiting from their ownership, there’s the possibility that they could pass them on for not much more than they paid for them.

That’s their choice, of course. However, in the wider context of this possibility, the question arises as to what fiduciary duty they have, if any, to all remaining minority shareholders. It’s quite one thing to be generous with their own money, should they choose, but what if that has wider implications for all other shareholders?

A point I made boringly ad infinitum over the last decade or more whenever posters said - and they said it a lot - that Delia should give the club away for next to nothing...😍

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2 minutes ago, PurpleCanary said:

A point I made boringly ad infinitum over the last decade or more whenever posters said - and they said it a lot - that Delia should give the club away for next to nothing...😍

Indeed!

But the if people are thinking this is something that is only being discussed now they are in cloud cuckoo land. We can pontificate all we like but I would think all this was sorted months ago. Now it's happening.

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

The reported £3m for Foulger’s shares is more concerning, in the sense that it benchmarks ‘big lumps’ at a low ceiling, which to me is indicative of new money squeezing old money that can’t afford to put petrol in the Ferrari, plus somewhat negating an claim to equity gain. 

Who reported this? I think it has been attributed to Bailey, but not certain.

Whatever, as you say if this was true it would be an artificially low figure. Given the valuation place on the Convertible C Pref shares, Foulger's stake was worth £16 million. Who in their right mind would be prepared to give up £13m just to allow an investment banker to store up more equity gains. Not a hard headed Norfolk businessman I'm sure. 

For this reason, I am minded that this report is false. I said at the time the figure probably related back to Foulger's acquisition costs of those shares, which is more realistic, the £13m being his equity gain.

28 minutes ago, GMF said:

@shefcanary leaving aside, for a moment, the potential gain in D&M’s shares over the period of their ownership, and having regards to their often stated view about not getting their money back / profiting from their ownership, there’s the possibility that they could pass them on for not much more than they paid for them.

That’s their choice, of course. However, in the wider context of this possibility, the question arises as to what fiduciary duty they have, if any, to all remaining minority shareholders. It’s quite one thing to be generous with their own money, should they choose, but what if that has wider implications for all other shareholders?

 

5 minutes ago, PurpleCanary said:

A point I made boringly ad infinitum over the last decade or more whenever posters said - and they said it a lot - that Delia should give the club away for next to nothing...😍

As I've contemplated elsewhere, I think Smith & Jones will look for some charitable venture to justify taking their equity gain in full (Delia's Nest for instance is one potential scenario they would find attractive).

There are tax consequences even if they don't take "full value" for their shares. HMRC will still seek full capital gains tax based on the maximum share price at the 13th February, irrespective of the price Smith & Jones accept. As Parma and I have both agreed on, there really seems no benefit to anyone other than Attanasio by gifting the proceeds to the club - it is not a charity and I think any scheme would not escape the clutches of HMRC either. This builds further weight that they will accept full value, in the process crystallising gains of other minority shareholders, pay up the tax due out of their proceeds, whilst potentially finding a legacy elsewhere via charitable means which will be clearly signposted to fend off accusations of profiteering. 

It is a difficult one though but as Nutty has just posted this has all been worked out long before the GM in a fortnight.

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56 minutes ago, shefcanary said:

As many have mentioned already, no one on here knows how much Attanasio paid Foulger for his shares. We also do not know if he has made further purchases from connections of Foulger so again have no idea what price these might have been bought for.

I'm intrigued about this, confirmation statement made up to 11th October 2022 shows when shares have changed hands / been transferred in the year up to that point.

Doesn't show Foulger's transfer of shares to Attanasio.

Does this mean that Foulger's sale of shares actually finalised after this date then, as it was announced in September?

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1 minute ago, TeemuVanBasten said:

I'm intrigued about this, confirmation statement made up to 11th October 2022 shows when shares have changed hands / been transferred in the year up to that point.

Doesn't show Foulger's transfer of shares to Attanasio.

Does this mean that Foulger's sale of shares actually finalised after this date then, as it was announced in September?

It was commented on by myself and GMF when we saw the confirmation statement; we were a bit mystified, was it an administrative error, or was there another reason? This potentially adds weight to the theory that Attanasio was acquiring other shares, and the completion of Foulger's share transfer was after 22 October as all share transactions happened together at some time after that date. 🤷‍♂️ 

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7 minutes ago, shefcanary said:

It was commented on by myself and GMF when we saw the confirmation statement; we were a bit mystified, was it an administrative error, or was there another reason? This potentially adds weight to the theory that Attanasio was acquiring other shares, and the completion of Foulger's share transfer was after 22 October as all share transactions happened together at some time after that date. 🤷‍♂️ 

The evening news did report the following, so I assume he's approach others with say 1000+ shares. Think even Chase still had a few thousand last time I checked! 

Attanasio is understood to have purchased around 16pc of the club from Michael Foulger, while smaller stakes from other shareholders will top that up.

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Thanks to all, especially @shefcanaryfor the information in this thread. I'm now intrigued. Like many others I never expected to see my money again when I bought shares so in my mind I have little to gain or lose.

I'm a bit more concerned about the attitude to Smith & Jones. They seem to be damned if they do and damned if they don't. I'm sure they could have cashed in a long time ago if they'd wanted to but potential buyers have been dubious to say the least. To a certain degree they have protected us from some dodgy characters but Anastasio seems acceptable based on the information I've seen. I've got no problem with my shares being devalued and I'll keep them unless forced to sell. Likewise I have no problem with Smith/Jones getting market value. They may have said they weren't in it for the money but that's a long way from giving the club away to a stranger. 

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2 minutes ago, dylanisabaddog said:

I'm a bit more concerned about the attitude to Smith & Jones. 

Can't see a single disparaging post about either of them on this thread? Literally none?

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1 hour ago, Parma Ham's gone mouldy said:

The reported £3m for Foulger’s shares is more concerning, in the sense that it benchmarks ‘big lumps’ at a low ceiling, which to me is indicative of new money squeezing old money that can’t afford to put petrol in the Ferrari, plus somewhat negating an claim to equity gain. 

To be fair there has allegedly been somebody trying to sell 640 shares for £30 each since July 2019...

https://www.canariestrust.org/ncfc-shares

According to that there are 640,861 A, B & Ordinary shares. So presumably that's pre-C share issue.

So they are selling 0.1% of the clubs shares for £19,200

Which translates into £192k for 1% 

Or £1.92m for 10%

So they've had no taker, having valued the club at £19.2m! 

If Foulger has sold 18% for £3m then that's a valuation of £16.7m. But in reality he's paying more than this as he's essentially bought new C-shares also, which when converted will instantly dilute the stake he bought from Foulger, he's essentially committed to diluting his own stake, so that likely 'priced in' when deciding what he was prepared to pay Foulger.

Edited by TeemuVanBasten

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39 minutes ago, shefcanary said:

Who reported this? I think it has been attributed to Bailey, but not certain.

Whatever, as you say if this was true it would be an artificially low figure. Given the valuation place on the Convertible C Pref shares, Foulger's stake was worth £16 million. Who in their right mind would be prepared to give up £13m just to allow an investment banker to store up more equity gains. Not a hard headed Norfolk businessman I'm sure. 

For this reason, I am minded that this report is false. I said at the time the figure probably related back to Foulger's acquisition costs of those shares, which is more realistic, the £13m being his equity gain.

 

As I've contemplated elsewhere, I think Smith & Jones will look for some charitable venture to justify taking their equity gain in full (Delia's Nest for instance is one potential scenario they would find attractive).

There are tax consequences even if they don't take "full value" for their shares. HMRC will still seek full capital gains tax based on the maximum share price at the 13th February, irrespective of the price Smith & Jones accept. As Parma and I have both agreed on, there really seems no benefit to anyone other than Attanasio by gifting the proceeds to the club - it is not a charity and I think any scheme would not escape the clutches of HMRC either. This builds further weight that they will accept full value, in the process crystallising gains of other minority shareholders, pay up the tax due out of their proceeds, whilst potentially finding a legacy elsewhere via charitable means which will be clearly signposted to fend off accusations of profiteering. 

It is a difficult one though but as Nutty has just posted this has all been worked out long before the GM in a fortnight.

Hi Shef, can I just weigh in here to say that if S&J sell out at an "undervalue" the simple tax solution is for them and Attanasio to do a "holdover election" which is covered by the HMRC website on the link below.  This simply means the transfer takes place (for tax) at the actual value, and S&J would only pay CGT if they make an actual gain on the sale.

Gift Hold-Over Relief - GOV.UK (www.gov.uk) - I can't see any reason why these requirements would not be satisfied.

This could obviously be coupled with Attanasio injecting funds into the club, which is clearly what's planned when he is subscribing for new shares.  

 

Also as has been discussed, Attanasio is then getting the club from S&J on the cheap.  So, as and when he comes to sell in the future, he'd make a bigger gain than otherwise.  As I see it, S&J can either accept this is part of the deal in return for him putting lots of money into the club, or they could sell to him with some sort of a sell-on clause (effectively like we have with Maddison) that if he sells on the shares at a profit, they get part of it.  This would start to get a bit more complex, but it is completely possible.

 

So the different routes do work - S&J can sell for full value and justify that with some sort of charitable use of the gains, or they can sell at an undervalue to let Attanasio put more money into the club (which personally is my preference).

 

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1 hour ago, GMF said:

@shefcanary leaving aside, for a moment, the potential gain in D&M’s shares over the period of their ownership, and having regards to their often stated view about not getting their money back / profiting from their ownership, there’s the possibility that they could pass them on for not much more than they paid for them.

That’s their choice, of course. However, in the wider context of this possibility, the question arises as to what fiduciary duty they have, if any, to all remaining minority shareholders. It’s quite one thing to be generous with their own money, should they choose, but what if that has wider implications for all other shareholders?

The directors have general duties under the companies act, chief among those is their 's172 duty' to promote the success of the company for the benefit of the shareholders as a whole. 

(FWIW, there are plenty of questions as to whether it is fit for purpose.)

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@TeemuVanBasten there’s a whole backstory to the 640 listed on the Trust’s website, I won’t bore you with the details, suffice to say that the price isn’t the issue! 

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38 minutes ago, It's Character Forming said:

Hi Shef, can I just weigh in here to say that if S&J sell out at an "undervalue" the simple tax solution is for them and Attanasio to do a "holdover election" which is covered by the HMRC website on the link below.  This simply means the transfer takes place (for tax) at the actual value, and S&J would only pay CGT if they make an actual gain on the sale.

Gift Hold-Over Relief - GOV.UK (www.gov.uk) - I can't see any reason why these requirements would not be satisfied.

This could obviously be coupled with Attanasio injecting funds into the club, which is clearly what's planned when he is subscribing for new shares.  

Many thanks for this useful information @It's Character Forming, it certainly scraps some of my theories on what Smith & Jones might do (although I am quite wedded to the idea of Delia's Nest). My tax knowledge is obviously not as great as I thought it was.

So they could sell at an undervalue then, presumably with some assurance that Attanasio will pump a minimum amount of investment into the club at some point.

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6 hours ago, Mello Yello said:

I feel sorry for Neppers Tom in all of this....Truly, madly deeply.....

I feel sorry for all of the people who'll not have the scapegoats in high towers to now target, having given Attanasio their blessing to take over our club.

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5 minutes ago, chicken said:

I feel sorry for all of the people who'll not have the scapegoats in high towers to now target, having given Attanasio their blessing to take over our club.

Don't worry, I'm sure people will have no problem turning against new owners after the end of the honeymoon period !

 

It's worth remembering Newcastle fans thought Ashley was fantastic at the start.

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Just now, It's Character Forming said:

Don't worry, I'm sure people will have no problem turning against new owners after the end of the honeymoon period !

 

It's worth remembering Newcastle fans thought Ashley was fantastic at the start.

And they certainly love their current owners despite them using their club as a PR exercise... 

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2 hours ago, TeemuVanBasten said:

Can't see a single disparaging post about either of them on this thread? Literally none?

Have you been reading this forum for the last 5 years? 😂

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2 hours ago, It's Character Forming said:

Hi Shef, can I just weigh in here to say that if S&J sell out at an "undervalue" the simple tax solution is for them and Attanasio to do a "holdover election" which is covered by the HMRC website on the link below.  This simply means the transfer takes place (for tax) at the actual value, and S&J would only pay CGT if they make an actual gain on the sale.

Gift Hold-Over Relief - GOV.UK (www.gov.uk) - I can't see any reason why these requirements would not be satisfied.

This could obviously be coupled with Attanasio injecting funds into the club, which is clearly what's planned when he is subscribing for new shares.  

 

Also as has been discussed, Attanasio is then getting the club from S&J on the cheap.  So, as and when he comes to sell in the future, he'd make a bigger gain than otherwise.  As I see it, S&J can either accept this is part of the deal in return for him putting lots of money into the club, or they could sell to him with some sort of a sell-on clause (effectively like we have with Maddison) that if he sells on the shares at a profit, they get part of it.  This would start to get a bit more complex, but it is completely possible.

 

So the different routes do work - S&J can sell for full value and justify that with some sort of charitable use of the gains, or they can sell at an undervalue to let Attanasio put more money into the club (which personally is my preference).

 

I doubt you can roll over CGT to someone who is non resident. I can't be bothered to check but non residents don't pay CGT on share sales in the UK 

Edit

https://library.croneri.co.uk/cch_uk/gcabe/7-3

Edit 2

However legal this form of avoidance is, can you really see Delia getting involved? Regardless of her politics, she will be concerned about her reputation 

Edited by dylanisabaddog
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31 minutes ago, dylanisabaddog said:

Have you been reading this forum for the last 5 years? 😂

My main gripe with Delia and MWJ was their Nephew Tom succession plan, but they've clearly seen the light and changed their mind on that.

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3 hours ago, TeemuVanBasten said:

Can't see a single disparaging post about either of them on this thread? Literally none?

It's amazing. It's like going to non-football and finding a thread where Brexit isn't mentioned.

 

1 minute ago, TeemuVanBasten said:

My main gripe with Delia and MWJ was their Nephew Tom succession plan, but they've clearly seen the light and changed their mind on that.

I'd nearly finished typing the above and then this turned up.

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11 minutes ago, littleyellowbirdie said:

I'd nearly finished typing the above and then this turned up.

Still don't see what is disparaging about that. They are humans, it was a bad idea, we all have a bad idea now and again. 

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1 hour ago, dylanisabaddog said:

I doubt you can roll over CGT to someone who is non resident. I can't be bothered to check but non residents don't pay CGT on share sales in the UK 

Edit

https://library.croneri.co.uk/cch_uk/gcabe/7-3

Edit 2

However legal this form of avoidance is, can you really see Delia getting involved? Regardless of her politics, she will be concerned about her reputation 

Oh good point,  I agree that probably does kibosh it as an idea. Although it’s not avoidance, given it’s something deliberately designed in the system by HMRC which they tell you how to do on their website via a helpsheet.

 

So, S&J do have to sell for full value or at least for enough to be able to cover the CGT on full value (which of course would be a lot less).

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9 minutes ago, It's Character Forming said:

So, S&J do have to sell for full value or at least for enough to be able to cover the CGT on full value (which of course would be a lot less).

How is "full value" determined here, surely just use the Foulger sale price as precedent? If he sold 18 percent for £3m then surely can't begrudge Delia the £8m is that her stake is worth!

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