| Share sale2007 (part two) 09:29 - Jan 17 with 3391 views | NOTRAC |
By the 30th November 2007 ,the club's fortunes had changed completely.They had moved to the Liberty on the 23rd July 2005 and in the 2007 season under Martinez were destined to win the first division and get promoted to the Championship.Crowds were flocking to the Liberty and the Club's financial prospects and position was completely different to the dark days when the first shares were acquired only four years previously.
The total shareholding of the club amounted to £488,500 and it was decided to double the amount by a new issue of shares which were recorded on th 30th November 2007..This was meant to introduce money into the successful club to enable it to continue with its unprecedented success.Unfortunately very little of the £471,500 worth of shares issued actually resulted in new investment into the club.
Morgan,together with Katzen and partner to a lesser extent, had been lending the club money.The loans had been lent over a period of years and had reached a total of £342,716. This may sound very generous but Morgan was a very rich man and he knew that by lending money in this way based on securities he was unlikely to lose any of it, whilst at the same time he was obtaining a power base.
Because the shares were offered at par(this meant that they were valued exactly the same as when the original shares were issued), they represented tremendous value.The Morgans at this point only owed 10% of shares previously issued, but persuaded the other shareholders to allow him to transfer his loan for shares on a £1 for £1 basis.
Suddenly the Trust became aware of what was happening, and realised that unless they virtually matched Morgan with additional investment, their shareholding percentage would decrease dramatically.Other shareholders also saw the dangers, including that of a possible takeover by Morgan, and it was agreed that no shareholder should hold more than twenty four per cent.It was also agreed that the Trust who only had £60,000 to invest should be given time to raise the further £40,000 that was needed to maintain their percentage share..By doing this the Trust created a situation for themselves which virtually stopped them being allowed to increase their shareholding in the future to the magical 25% plus, which would have prevented special resolutions to be made to water down their shares by new share issues.
The opportunity to purchase additional shares was restricted to existing shareholders, who all, with the exception of Mel Nurse and Van Zweden took full advantage to the extent that they were allowed, or their pockets allowed them to.It was at this point that Dineen acquired an extra 40,000 shares which would eventually make him £4m.
Shares acquired by the 30th November 2007 issue were as follows.
Jenkins £58,000
Dineen £40,000
Katzen and partner £88,500
Trust £60,000 (plus a further £40,000 on the 12th October 2009)
Davies £50,000
Morgans £175,000.
The beauty of the above as far as the Morgans were concerned was that they became the largest shareholderswith 23.5 % and all the additional shares were acquired through transfers of his existing loans.
The fact is that the club did not benefit cash flow wise from the whole of the issue as was the original intention.Of the £471,500 share value issued, only £128,784 was received in the end as a cash injection, as the whole of the remaining £342,716 was used for the repayment of Morgan and Katzen loans either directly or through the issue of shares.None of these loans were legally repayable at that time.
From this point onwards it would be fair to assume that all the shareholders knew that they had shares worth considerably more than their original cost or loan transfer value.
In November 2012 Nurse cashed in his £50,000 of shares, the club buying them directly from him for £400,000.With this transaction disappeared all hope of the Trust acquiring any more shares.There was one specific reason for this.All the shareholders would have known or been told, that the saleable value of the club, and therefore of their shares would have been considerably less if they were selling less than 75%.
From November 2007 everything changed.In my opinion Morgan should never have been allowed to increase his shareholding as he did and in the way that he did. From that point onwards Katzen, Morgan and Jenkins had the controlling interest between them
To suggest that the original directors received justifiable rewards for helping the club at its hour of need is simply not true , particularly in the case of Morgan and Dineen.
That they all agreed to sell in the way they did by excluding the Trust can never be justified.
They knew what they were doing from 2007 onwards.
The rewards they had were out of all proportion to their investments.It was not based on accounts at that time but based on player valuations.That was akin to asset stripping regardless of consequences.
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| Share sale2007 (part two) on 11:41 - Jan 17 with 3315 views | MoscowJack |
So you think someone who lent the club money (to help the club) with no interest attached shouldn't be allowed to get the money back? The club didn't have excess money to repay debts in those days (everything went into the playing kitty) so converting debt to equity seems extremely normal to me.
Nobody seemed to complain when the money was lent and if the club could have repaid it in cash then there would have been nothing to convert. I might be wrong but I think the same happened when the club was lent circa £1m for Scott Sinclair's loan fee and maybe £500k for Leon's return....but the club had the funds to repay this time as we got promoted to the PL.
I honestly don't understand.....maybe I'm missing something as there's only a tiny mention of Leigh Dineen joining the game at such a late stage, which I have never been able to understand. Ever. | |
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| Share sale2007 (part two) on 11:48 - Jan 17 with 3299 views | Shaky |
What Morgan did is known as a debt for equity swap.
the club may not have received any cash, but it's access to financing increased by eliminating existing borrowings. They could effectively borrow new money.
As for what are fair returns for shareholders, that is something the market decides in our fine capitalist system. |  |
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| Share sale2007 (part two) on 11:50 - Jan 17 with 3291 views | Shaky |
. . .And this is nothing to do with asset stripping. | |
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| Share sale2007 (part two) on 11:51 - Jan 17 with 3291 views | TheResurrection |
| Share sale2007 (part two) on 11:41 - Jan 17 by MoscowJack |
So you think someone who lent the club money (to help the club) with no interest attached shouldn't be allowed to get the money back? The club didn't have excess money to repay debts in those days (everything went into the playing kitty) so converting debt to equity seems extremely normal to me.
Nobody seemed to complain when the money was lent and if the club could have repaid it in cash then there would have been nothing to convert. I might be wrong but I think the same happened when the club was lent circa £1m for Scott Sinclair's loan fee and maybe £500k for Leon's return....but the club had the funds to repay this time as we got promoted to the PL.
I honestly don't understand.....maybe I'm missing something as there's only a tiny mention of Leigh Dineen joining the game at such a late stage, which I have never been able to understand. Ever. |
I think Morgan's injection, or at least one of them, came in the January before promotion, and to help with the costs including acquiring Fabio Borinh, who ultimately tipped the scales in our favour over the proceeding 3 months. |  |
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| Share sale2007 (part two) on 11:56 - Jan 17 with 3273 views | MoscowJack |
| Share sale2007 (part two) on 11:51 - Jan 17 by TheResurrection |
I think Morgan's injection, or at least one of them, came in the January before promotion, and to help with the costs including acquiring Fabio Borinh, who ultimately tipped the scales in our favour over the proceeding 3 months. |
I think you could be right.....I was probably mixing it up with Scott Sinclair. | |
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| Share sale2007 (part two) on 12:08 - Jan 17 with 3247 views | NOTRAC |
Gosh, there are a lot of Morgan supporters here.
look al I am saying is that there is a vast difference in making secured loans to the club and putting money into equity.The transfer to equity was made by a shrewd business man at the right time.He did not put a lot of his wealth into equity originally and in my opinion cannot justify his acquisition of shares as being made to 'save' the club. | |
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| Share sale2007 (part two) on 12:27 - Jan 17 with 3207 views | Shaky |
| Share sale2007 (part two) on 12:08 - Jan 17 by NOTRAC |
Gosh, there are a lot of Morgan supporters here.
look al I am saying is that there is a vast difference in making secured loans to the club and putting money into equity.The transfer to equity was made by a shrewd business man at the right time.He did not put a lot of his wealth into equity originally and in my opinion cannot justify his acquisition of shares as being made to 'save' the club. |
That depends on whether there was in fact adequate security for the secured loan. In a firesale there probably would not have been security.
indeed the rule in finance is that you count shreholder loans as an equity equivalent. | |
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| Share sale2007 (part two) on 13:27 - Jan 17 with 3102 views | QJumpingJack |
Speaking of Morgan, where does David fit into all of this.
Didn't he invest originally? And is he now back on the board? | | | |
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| Share sale2007 (part two) on 19:14 - Jan 17 with 2888 views | harryhpalmer |
| Share sale2007 (part two) on 13:27 - Jan 17 by QJumpingJack |
Speaking of Morgan, where does David fit into all of this.
Didn't he invest originally? And is he now back on the board? |
David Morgan is Jenkins Chauffeur these days, I heard. | |
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