A new bond scheme?

The board of directors of our beloved club have found a new and perfectly legal way for them and their connections to take even more control of the club - and this time they are using OUR money to do it.

The company that wholly owns the club has announced that as a 'service' to its present shareholders they are prepared to buy back up to 2.2 million shares at £1 each. This at a time when the company's stockbrokers quote a price of approximately £2.50 per share to buy or sell shares but admittedly in shareholdings of less than 1,000. It is impossible to sell larger shareholdings as apparently there are no buyers.

The effect of this by virtue of the decreased share capital, if it goes ahead, will be for the Chairman and interests connected with him to increase their shareholding in the company and hence in the club from 34.3% to 38.2% without spending a penny of their own money.

Instead the company will spend the £2.2 million from its own resources. The question is - where did the company get £2.2 million to give back to its shareholders when its last accounts show it has no money in the bank? Does this money come from the sale of Rio - money that belongs to the club, not the company that owns the club.

In short, the club give the impression they have no money to buy players, have borrowed money to build a new stand but are able to assist the company which owns the club by giving £2.2m to it to be spent on buying back shares, so increasing the majority shareholders’ control of the company - and hence the club. What is the club getting in return for giving the company this £2.2m? Is it repaying a debt the club owes the company? If not, why give it the money?

What sensible business would borrow money at 7 or 8% to build a new stand when the business has money to buyback shares from shareholders who receive no dividend so the cost to the club of using shareholders money is nil.

It doesn't sound very good business sense, unless of course the majority shareholders wish to increase their percentage shareholdings in the company at no personal cost.

This is even more outrageous that the bond scheme.

If you feel strongly about this and are a shareholder in the company that
owns the club then contact KUMB who will put you in contact with me so that a no vote can be coordinated at the meeting on 2nd April 2001 that is required to pass the legal resolution to approve this regrettable transaction. If you are not a shareholder then write to the chairman expressing your unhappiness otherwise the club will spend £2.2m of OUR money, which should be used to buy players or at least benefit the club - not the company’s majority shareholders.

* Further to my article [above] the company have announced that they received valid acceptances for 1,347,648 shares at £1 each. The result will be that the company will spend £1,347,648 which it will get from the club as the company has no money itself, thereby depriving the club of this money for player purchases, etc.

As a side effect the percentage interest of Terry Brown and his connections will increase from 34.3% to 36.6% without having spent a penny of their own money.

* The club were offered the opportunity to reply to this article but declined to comment.

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* Disclaimer: The views and opinions expressed in this article are those of the highlighted author/s and do not necessarily represent or reflect the official policy or position of KUMB.com.


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