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With the (fantastic) news breaking that the Morton House hostile takeover has fallen through, and they are looking to 'divest acquired shares as soon as possible'. we are left now looking at how do we move forward from here?
We don't believe any shares have actually legally changed hands, so with that in mind we have several shareholders left holding a decent proportion of the club without actually wanting it.
Andrew Kilpatrick
Dan Altman (Smarterscout)
Emre Marcelli (Smarterscout)
Graham Rawlinson (Westrose Leisure Ltd)
David
We are also left with Andrew Kelly who, now MH are pulling out, can hopefully complete his generous offer to transfer his shares to the Trust with monies paid to the football club.
Clearly the shares are not worth the up to £10 each that was offered... at a maximum they are probably worth £2; so the focus now must shift onto securing enough of these shares to ensure we never fall into this situation again.
You would hope a deal could be struck with Kilpatrick to rescue as much of his Dad's legacy as possible by gifting his shares or (more likely) selling them at real market value to the club / board / trust / fans.
Dan & Emre you would hope won't want to be associated with what has gone on, and could be looking to rescue some credibility. They are in the business of football... the stench of what they have done with Dale could still follow them for a long time to come, so hopefully there is a deal to be done there.
If these can be done, and the share issue from the club happens, then this severly dilutes the shares held by Graham and David - making them effectively worthless.
Alternatively the shares could technically now be owned by Morton House, and we would have to do a deal with the devil to get them. You would think they are not in a position to make things worse and should therefore sell them at market value and maybe look at Jarvis to recoup any losses they may have incurred.
As we saw on Tuesday and again today, we are at our most vulnerable after scoring a goal. We need to be vigilant and put the same effort into securing these shares as we did into stopping the takeover.
Don’t think Rawlinson would sell to the trust if his arse was on fire. Surely we want Bottomley to limp on as a shareholder who is despised by the club and which he as an Oldham fan will despise. Make him sweat and sell eventually to I don’t know, maybe RAFCBLUE. That would be karma. Surely the Stars and Stripes will want out ASAP. Would like to think some of the new board members could pick up some shares of them. To address the option of Morton holding 42% of, in reality, bugger all from their perspective. Well how could they get out without picking up a financial loss, impossible I would say. Surely after a few months they would be driven to cutting their losses. Just not sure who would be prepared to step in and buy 42% of the club. Backing out could prove more tricky than acquiring, which proved beyond them.
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The (in)Famous Five on 10:52 - Aug 22 with 4214 views
All depends on the terms of the agreements in place - if our scouse mate has done his work properly there will be a exemption clause pertaining to EFL approval (& that's a big if...) Otherwise they're stuffed financially.
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The (in)Famous Five on 11:36 - Aug 22 with 4156 views
Depending on the urgency for the club to raise funds for day to day use, it is possible to issue say 200k at £2 (£400k) preference shares paying a modest interest rate (3-5%) for 3 years and which then reverting to ordinary shares. Being prefs would make them more attractive to fans in the short term and they could not be used as voting shares for 3 years. A chunk of this money could then be used to buy back shares from the likes of the Americans and Kilpatrick and put them back in the treasury. These reclaimed shares can then be resold to shareholders and new investors at a future date without the threat of disaffected major shareholders selling them on to the likes of a Curran, maybe when the prefs become ordinary shares in 3 years time. This scenario would also give the Trust a 3 year fund-raising window prior to buying more shares other than the Kelly portfolio.
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The (in)Famous Five on 12:21 - Aug 22 with 4061 views
The (in)Famous Five on 11:36 - Aug 22 by 49thseason
Depending on the urgency for the club to raise funds for day to day use, it is possible to issue say 200k at £2 (£400k) preference shares paying a modest interest rate (3-5%) for 3 years and which then reverting to ordinary shares. Being prefs would make them more attractive to fans in the short term and they could not be used as voting shares for 3 years. A chunk of this money could then be used to buy back shares from the likes of the Americans and Kilpatrick and put them back in the treasury. These reclaimed shares can then be resold to shareholders and new investors at a future date without the threat of disaffected major shareholders selling them on to the likes of a Curran, maybe when the prefs become ordinary shares in 3 years time. This scenario would also give the Trust a 3 year fund-raising window prior to buying more shares other than the Kelly portfolio.
Interesting suggestion but 2 questions: a) do the Club's articles define Preference shares as non-voting and b) how do we ensure the Five/MH or any other transferee don't buy some?
From what I gathered from the fans forum. Although the shares themselves haven't been transferred a power of attorney has been signed giving MH 'representatives' voting rights is that about right?
'Only happy when you've got it often makes you miss the journey'
The (in)Famous Five on 14:27 - Aug 22 by James1980
From what I gathered from the fans forum. Although the shares themselves haven't been transferred a power of attorney has been signed giving MH 'representatives' voting rights is that about right?
Just a thought is it possible the POA might not be legal?
'Only happy when you've got it often makes you miss the journey'
The (in)Famous Five on 14:27 - Aug 22 by James1980
From what I gathered from the fans forum. Although the shares themselves haven't been transferred a power of attorney has been signed giving MH 'representatives' voting rights is that about right?
I believe so.
It's also unknown if the terms of the deal includes a get out clause for either party. If not, those who agreed to sell will want their money.
The (in)Famous Five on 12:21 - Aug 22 by tony_roch975
Interesting suggestion but 2 questions: a) do the Club's articles define Preference shares as non-voting and b) how do we ensure the Five/MH or any other transferee don't buy some?
Yes I believe the Prefs are a non-voting option in the Articles. There are two points regarding The Five and MH (if indeed MH actually end up owning any shares ... 1. They would have to wait 3 years for them to revert to Ordinary (voting) shares, tying up their cash and even then the % owned wouldn't change. 2.MH are out of the picture if they don't own shares...I don't think the Directors would be able transfer them even if they have already paid for them as the EFL probably wouldn't allow them to become Major participants in the club. Are the 5 really going to buy still more to add to the ones they have without any prospect of being able to get over 50%? as they wont, in % terms, own a bigger % than they did previously thanks to pre-emption. which needs a majority vote (might even be 75%) to dis-apply it.
Its hard to imagine an agreement to buy didn't include a clause that the whole deal was contingent on them reaching agreements to buy 50% +1... AND (someone) passing the EFL proper person test. The agreements have probably failed on both counts and so become null and void. poor old DB, no cash for his duplicity! Ha ha ha ha!
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The (in)Famous Five on 16:38 - Aug 22 with 3591 views
The (in)Famous Five on 16:15 - Aug 22 by James1980
If they are getting £10 a share I doubt the vendors will be in a hurry to pull out of the deal.
I think what Simon Gauge said is completely true - we just don't know.
The EFL have now charged a number of parties with misconduct on breaking their rules. That's a formal process with a start and middle and an end.
You have separate the two parts of ownerships and regulatory approval from the EFL.
The purchaser from Morton House will have to have regulatory approval before they start or else they are going to find themselves in the same place.
To do they the purchaser would need to submitted Future Financial Information and to do that the purchaser would need the help of the Board to understand the business plan.
Morton House could sell to an existing shareholder - such as the Trust - but to do that they are going to have to take such a down valuation on the alleged £1m that they won't get their money back. Would the Trust pass the EFL test - yes. Will the Trust have £1m? Absolutely not.
Finally, there is the possibility that the existing sale is void. The SRA are investigating, presumably on money laundering grounds, given the perceived lack of credibility of the source of £1m.
I cannot see any of the five coming out publicly. Andrew Kilpatrick has been quieter now than he was when he was Chairman. The two American shareholders have not said anything either.
Whatever the solution is, it will be a long haul I suspect until:
(a) EFL investigations are completed (b) Clarity on the shares is known (c) A further deal gets done, with EFL approval.
That's actually a benefit to us as, for now, the shares of Morton House are invalid and the Board can't register them so essentially any vote is out of the remaining shares - 100% of which are behind the current Board.
George Bernard Shaw had it right:
"He who can does; he who cannot, teaches."
https://www.visittheusa.co.uk/
I think what Simon Gauge said is completely true - we just don't know.
The EFL have now charged a number of parties with misconduct on breaking their rules. That's a formal process with a start and middle and an end.
You have separate the two parts of ownerships and regulatory approval from the EFL.
The purchaser from Morton House will have to have regulatory approval before they start or else they are going to find themselves in the same place.
To do they the purchaser would need to submitted Future Financial Information and to do that the purchaser would need the help of the Board to understand the business plan.
Morton House could sell to an existing shareholder - such as the Trust - but to do that they are going to have to take such a down valuation on the alleged £1m that they won't get their money back. Would the Trust pass the EFL test - yes. Will the Trust have £1m? Absolutely not.
Finally, there is the possibility that the existing sale is void. The SRA are investigating, presumably on money laundering grounds, given the perceived lack of credibility of the source of £1m.
I cannot see any of the five coming out publicly. Andrew Kilpatrick has been quieter now than he was when he was Chairman. The two American shareholders have not said anything either.
Whatever the solution is, it will be a long haul I suspect until:
(a) EFL investigations are completed (b) Clarity on the shares is known (c) A further deal gets done, with EFL approval.
That's actually a benefit to us as, for now, the shares of Morton House are invalid and the Board can't register them so essentially any vote is out of the remaining shares - 100% of which are behind the current Board.
So does that mean the new share issue could now go ahead unopposed iyo? In which case are we looking at an open goal and a chance to further strengthen the independence position?
The (in)Famous Five on 16:12 - Aug 22 by 49thseason
Yes I believe the Prefs are a non-voting option in the Articles. There are two points regarding The Five and MH (if indeed MH actually end up owning any shares ... 1. They would have to wait 3 years for them to revert to Ordinary (voting) shares, tying up their cash and even then the % owned wouldn't change. 2.MH are out of the picture if they don't own shares...I don't think the Directors would be able transfer them even if they have already paid for them as the EFL probably wouldn't allow them to become Major participants in the club. Are the 5 really going to buy still more to add to the ones they have without any prospect of being able to get over 50%? as they wont, in % terms, own a bigger % than they did previously thanks to pre-emption. which needs a majority vote (might even be 75%) to dis-apply it.
Think that will need confirming - in the version of the Articles I have Clause 8, which establishes Preference shares, makes no mention about voting and Clause 69 on votes allocation makes no mention of Preference shares. re 1 - but if the voting proxy Simon Gauge mentioned is still valid MH can use their 43% vote re 2 - who knows what the 5 are going to do (including another deal with another potential "investor") - they aren't the subject of any OADT. Agreed they might decide to cut their losses and sell back to the Club or Trust but do we 'trust' them to do the right thing? Yes, needs 75% to pass a special resolution like disallowing pre-emption.
I think what Simon Gauge said is completely true - we just don't know.
The EFL have now charged a number of parties with misconduct on breaking their rules. That's a formal process with a start and middle and an end.
You have separate the two parts of ownerships and regulatory approval from the EFL.
The purchaser from Morton House will have to have regulatory approval before they start or else they are going to find themselves in the same place.
To do they the purchaser would need to submitted Future Financial Information and to do that the purchaser would need the help of the Board to understand the business plan.
Morton House could sell to an existing shareholder - such as the Trust - but to do that they are going to have to take such a down valuation on the alleged £1m that they won't get their money back. Would the Trust pass the EFL test - yes. Will the Trust have £1m? Absolutely not.
Finally, there is the possibility that the existing sale is void. The SRA are investigating, presumably on money laundering grounds, given the perceived lack of credibility of the source of £1m.
I cannot see any of the five coming out publicly. Andrew Kilpatrick has been quieter now than he was when he was Chairman. The two American shareholders have not said anything either.
Whatever the solution is, it will be a long haul I suspect until:
(a) EFL investigations are completed (b) Clarity on the shares is known (c) A further deal gets done, with EFL approval.
That's actually a benefit to us as, for now, the shares of Morton House are invalid and the Board can't register them so essentially any vote is out of the remaining shares - 100% of which are behind the current Board.
Could the shares be split between the family members? So even though single entity doesn't have the 42%. As a collective the Curran, Rose and Courtnell families potentially would.
'Only happy when you've got it often makes you miss the journey'
I think what Simon Gauge said is completely true - we just don't know.
The EFL have now charged a number of parties with misconduct on breaking their rules. That's a formal process with a start and middle and an end.
You have separate the two parts of ownerships and regulatory approval from the EFL.
The purchaser from Morton House will have to have regulatory approval before they start or else they are going to find themselves in the same place.
To do they the purchaser would need to submitted Future Financial Information and to do that the purchaser would need the help of the Board to understand the business plan.
Morton House could sell to an existing shareholder - such as the Trust - but to do that they are going to have to take such a down valuation on the alleged £1m that they won't get their money back. Would the Trust pass the EFL test - yes. Will the Trust have £1m? Absolutely not.
Finally, there is the possibility that the existing sale is void. The SRA are investigating, presumably on money laundering grounds, given the perceived lack of credibility of the source of £1m.
I cannot see any of the five coming out publicly. Andrew Kilpatrick has been quieter now than he was when he was Chairman. The two American shareholders have not said anything either.
Whatever the solution is, it will be a long haul I suspect until:
(a) EFL investigations are completed (b) Clarity on the shares is known (c) A further deal gets done, with EFL approval.
That's actually a benefit to us as, for now, the shares of Morton House are invalid and the Board can't register them so essentially any vote is out of the remaining shares - 100% of which are behind the current Board.
Indeed, Simon Gauge is right to advise caution - too many crucial facts are still unknown. I'm no legal eagle but if MH have an agreement with the 5 which includes a voting proxy that may still be valid even though the actual transfer of shares might fail the EFL OADT?
The (in)Famous Five on 16:53 - Aug 22 by DaleiLama
So does that mean the new share issue could now go ahead unopposed iyo? In which case are we looking at an open goal and a chance to further strengthen the independence position?
"Unopposed" is the key word.
To pass the resolution you need a 50.01% majority of shareholders. That I think is achievable.
Then you have to offer existing shareholders the right of first refusal (called pre-emption).
What you don't know if all shareholders will sign up for their new shares or not. That's the unknown.
To disapply pre-emption rights to allocate to who you want to you need 75% of shareholders to say yes. That's not possible with 42% of the shares under question.
Also, the possible money laundering angle. Can the club offer to the 42% of new shares without being 100% of the credibility of the money? I don't think they can.
That appears to have been the issue of the EFL and possibly the SRA have with those wanting to transact and those wanting to transact did not want to provide the information.
George Bernard Shaw had it right:
"He who can does; he who cannot, teaches."
https://www.visittheusa.co.uk/
The position on the proxy provide over the 42% is a real point of interest. My presumption is that although Morton may via the proxy have 42% control they will not now bother putting 2 people forward, as previously mooted, to represent them on the board. (OMG what if they did and one was Bottomley aarrrh). So the day to day running of the club and board meetings may not be affected at all. However as mentioned the unknown at this point is within the legal and regulatory framework Morton can flex their shareholding muscle, come an EGM. You would like to think they cannot, but for sure they are already creating a right mess to be sorted out.
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The (in)Famous Five on 11:22 - Aug 23 with 2654 views
To pass the resolution you need a 50.01% majority of shareholders. That I think is achievable.
Then you have to offer existing shareholders the right of first refusal (called pre-emption).
What you don't know if all shareholders will sign up for their new shares or not. That's the unknown.
To disapply pre-emption rights to allocate to who you want to you need 75% of shareholders to say yes. That's not possible with 42% of the shares under question.
Also, the possible money laundering angle. Can the club offer to the 42% of new shares without being 100% of the credibility of the money? I don't think they can.
That appears to have been the issue of the EFL and possibly the SRA have with those wanting to transact and those wanting to transact did not want to provide the information.
Thanks for the clarification - I misunderstood your previous post to mean that MH's proxy vote was effectively "frozen" and they could not, therefore, oppose the issuance of new shares. If they are pulling out as stated, it could be assumed that they would be unlikely to oppose, but I guess the risk cannot be taken until the whole ball of string is untangled .......... so more space to be watched then.
I think we should not rule out the fact that the ex-director and his chosen agent are on manoeuvres right now trying to piece together another bid for those shares, from other funding sources.
One party may have withdrawn, because of the risk of EFL scrutiny. Lessons can be learned from that and another attempt may now be in preparation. After all, those shareholder details are still known, as is their desire to sell for the right price.
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The (in)Famous Five on 12:01 - Aug 23 with 2570 views
I think we should not rule out the fact that the ex-director and his chosen agent are on manoeuvres right now trying to piece together another bid for those shares, from other funding sources.
One party may have withdrawn, because of the risk of EFL scrutiny. Lessons can be learned from that and another attempt may now be in preparation. After all, those shareholder details are still known, as is their desire to sell for the right price.
After my initial euphoria on Saturday this is now the worry in the cold light of day. We cannot really relax till those shares, particularly Kilpatrick's, are in safe hands. At this stage I just hope that the shares are now legally back with the original owners as negotiations with them will be easier than with Curran/Rose if they have actually paid well over the odds.
I don't know anything about Kilpatrick as a person but my hope is that if the shares are back in his hands he may be amenable to a reasonable deal from the club for some or all of his shares. If the deal with Curran/Rose is off he could reconsider his options in the light of all the opposition.
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The (in)Famous Five on 13:39 - Aug 23 with 2431 views
The (in)Famous Five on 17:13 - Aug 22 by tony_roch975
Think that will need confirming - in the version of the Articles I have Clause 8, which establishes Preference shares, makes no mention about voting and Clause 69 on votes allocation makes no mention of Preference shares. re 1 - but if the voting proxy Simon Gauge mentioned is still valid MH can use their 43% vote re 2 - who knows what the 5 are going to do (including another deal with another potential "investor") - they aren't the subject of any OADT. Agreed they might decide to cut their losses and sell back to the Club or Trust but do we 'trust' them to do the right thing? Yes, needs 75% to pass a special resolution like disallowing pre-emption.
I think Prefs by definition are classed as non-voting shares. As there have never been any issued previously as far as I know, the Directors can clearly state the terms of the issue i.e. price, % of interest (up to 5%) to be paid, length of term (maximum 3 years) and non voting until reversion to ordinary shares at the end of 3 years.
I think we should not rule out the fact that the ex-director and his chosen agent are on manoeuvres right now trying to piece together another bid for those shares, from other funding sources.
One party may have withdrawn, because of the risk of EFL scrutiny. Lessons can be learned from that and another attempt may now be in preparation. After all, those shareholder details are still known, as is their desire to sell for the right price.
A crumb of comfort will be who the EFL is investigating. If Jarvis and Bottomley are under the EFL microscope then I doubt their involvement in any deal will be sanctioned. In fact, I think the way shateholder information appears to have been acquired will form part of any enquiry.
The (in)Famous Five on 13:39 - Aug 23 by 49thseason
I think Prefs by definition are classed as non-voting shares. As there have never been any issued previously as far as I know, the Directors can clearly state the terms of the issue i.e. price, % of interest (up to 5%) to be paid, length of term (maximum 3 years) and non voting until reversion to ordinary shares at the end of 3 years.
but it's chicken & egg; the Board can propose the issue terms but surely MH can still use their 43% proxy to defeat that resolution. As I and others have said we need those shares back in our hands. I suspect no EGM can be called until the legal ownership of those shares is confirmed.
The (in)Famous Five on 13:39 - Aug 23 by 49thseason
I think Prefs by definition are classed as non-voting shares. As there have never been any issued previously as far as I know, the Directors can clearly state the terms of the issue i.e. price, % of interest (up to 5%) to be paid, length of term (maximum 3 years) and non voting until reversion to ordinary shares at the end of 3 years.
I am probably being thick on this but why would anyonewant to buy preference shares in something like RAFC where the chance of turning a profit is low (as is the likey size of any profit). Wouldnt anyone interested in preference share investments have far better options elsewhere (which is probably why it has never been done before at RAFC).
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The (in)Famous Five on 19:20 - Aug 23 with 2100 views
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