Share Scheme News Update
January 1, 2000
Most of you will be aware of the shares ‘Rights Issue’ that the Board issued recently. This will be decided at the Football Club EGM on the 6th November 2006 at which there are the 3 following resolutions:-
1. Increase authorised Share Capital
2. Authorisation of Directors to allot shares
3. Dis-apply statutory pre-emption rights
Under this shareholders ‘Rights Issue’ offer, the Supporters Club will be able to buy shares at 50p to match the existing number of shares. We currently have 149,970 (110,970 through the share scheme), therefore we will be able to buy that number again. Provided resolution 3 is approved, the Board have committed to allowing the Supporters Club to purchase further shares at 50 pence over the remaining circa 2 years of the scheme. The Supporters Club now needs to consider how it can raise just under £75K to take up the rights issue offer. If resolution 3 is not passed we will need to find the money by 27th November, which will be a very stiff target and one we would struggle to meet.
The next stage will be to continue negotiation on the price of shares offered under the share scheme. Negotiations have been ongoing and we hope to be able to report soon after the FC EGM. Under commitments made by the Board in the document containing the ‘Rights Issue’ we will, in the future, be able to buy a share at 50 pence for every £5 share scheme share we buy. However we wish to reduce the cost of a share scheme share downward from that £5 price.
There have been many and varied views expressed on the forum and privately to members of the SCE. Indeed a number of fans have contacted us with views on how the Supporters Club should vote or whether or not we should canvass the whole membership or share scheme membership before voting. It is clear that there is much confusion particularly in respect of resolution 3 and how the rights issue will affect the Supporters Club and Share Scheme. We have taken legal advice and believe that the Supporters Club should support all 3 resolutions. This has not been an easy decision and only made after much consideration and consultation with solicitors. As a support organisation that has always supported the club financially, we believe it is right to support this rights issue along with other shareholders. The current directors are committed to paying £551,262 which will be much needed new investment. If all other shareholders commit to purchasing their allocated shares it will raise marginally under £1M of much needed new investment into the club.
We have considered the call to canvass the membership and have decided that the SCE will make the decisions as to how we vote on behalf of the membership. There are two main reasons:-
- Clearly this is a very specialist area of company law that many lawyers without this specialist knowledge are very unclear on. With the greatest of respect to our membership we believe that without legal advice it would be a difficult or impossible decision to make. In fact we only reached our conclusion at the end of last week and this would not have given us time to canvass the membership with an executive recommendation. We only had 4 weeks from the launch to voting at the EGM to obtain full legal advice, make a recommendation, and conduct a postal ballot.
- The second reason is that, having taken legal advice, resolutions 1 & 2 need only 50% + 1 share to be passed. Therefore, the Board with its 56.55% shareholding will carry these resolution regardless of how we or anyone else votes. This means that the ‘rights issue’ will proceed, however the BRSC vote is cast. Resolution 3, which will require a 75% majority of votes cast to be passed, will allow the Board to give the Supporters Club special dispensation to take up the promised shares over a considerably longer period. It will also allow us to continue to buy shares under the existing share scheme agreement in the future. If resolution 3 fails it will also end the share scheme without negotiation of a completely new agreement. It would not be in our interest therefore to vote against it.