The assets were legally charged to the Fulton’s.Exiled wrote:Not sure what a charge on assets is? Was the loan secured against the ground in contract? That would need to be voted on and passed,and if so so was this pre or post redistribution of shares? Either way with a sale or CVA the value of the ground would be included as covered in my previous post.Robbo wrote:Simple fact is that Fulton’s had a charge on the assets that’s how you protect your money.Exiled wrote:oops was reply to @Robbo
What has happened is standard business practice. No one would 'invest' £2.5m in to any business with multiple share holders and then leave that money vulnerable by being at the behest of other shareholders. It is prudent as the majority shareholder to issue ordinary shares to ones self and 'water down' the value of all shares to protect yourself should the company fail and go into administration.
The shares issued to the Fulton family will also have been distributed in proportion to amount of investment (or debt that they are owed). This also shows you the disproportion in investment in comparison to other shareholders. They are now also liable to the proportionate amount of debt per share.
When you invest in a private company these are the considerations you must undertake; there can always be a majority shareholder (and 99% of the time this is the case) that will have leverage, either directly or through partners. Not understanding this when 'investing' is naive.
The limit on % of shares owned you mention. Was this voted on or a gentleman's agreement? If the latter it really means nothing in business terms and the former must have been voted upon and passed by the shareholders.
As for the debt: can you show us proof that the debt is due to be paid in full on death of the two parties mentioned? Seems very strange.
Sorry to hear that you and other shareholders were badgered into accepting the distribution of new shares in 2016 however, it shows again, a naivety (or good faith of trusting supporters). At that point if, as you say there was no majority shareholder then the Fulton's would have had to take the company into a CVA (after calling in the loan) to force your hand and with no majority, they risked losing the club to other shareholders.
I understand where you are coming from as a supporter, but looking at it from a business point of view the Fulton's have merely protected their considerable investment:A - from the club going under and B - Should anyone want to buy the club.
On point B
Should the circumstance have arisen that a takeover was put to the shareholders prior to the recent share distribution and agreed upon, then the shareholders would all have been due a disproportionate amount of money per share in relation to the major investor that was owed significant debt. The debt would need to be paid by the new owners or agreed upon in the sale price - which would have been voted on by the shareholders, which wouldn't necessarily have the major shareholders best interest at heart.
Long and short is they have covered their ass in the most normal way possible. You invest in something you take a risk. Especially if you are not business savvy.
In the event of the club folding the value in WR more than covered the loan. It’s a secured debt.
If the new ground valued at 10m plus is ever built 96% of it is owned by them.
Plus the value of WR
It’s the control that worries me.
I will try to screen shot the document Re the debt to be paid on death.
Cheers Robbo
Looking at the distribution of shares and the money paid for those shares initially the 4% of the value of the new ground and the sale of WR would easily be worth more than the original investment. So a win for all.
Not trying to take sides or doubt either view, but just make some sense of it all from a supporters point of view. I do believe that the club could be a little bit more reassuring to the supporters in their disclosure, however they are under no obligation to do so other than the legal requirements.
Correct me if I am wrong, but you do seem a little aggrieved at the situation you find yourself in. Going from, as you see it, an 'equal' shareholder or at least within some sort of trusted parity -to being out muscled into a marginalised minor share holder? Don't get me wrong, I do not believe that it is the money that concern's you, rather the control taken over the club by an individual?
I guess every club be it R.L, R.U or football etc would rather be fan owned - Barcelona style. Unfortunately that is rarely the case and most clubs are owned by a single person.
The only real concern I have as a supporter, and one that potentially could have a huge impact on the club is the fact that on death of either one of the two directors that are owed owed money, the club would be forced into an immediate call in of those debts. As mentioned above I find this highly irregular and very concerning.
I have no issue with that at all.
I am upset at the way it was done.
Yes if they want interest in the loans then fine.
I find that easier to stomach than removing any discussions and having taken money from current shareholders by issuing shares at nil value.
The club had a net worth of 800 k at the last reported accounts.
There were 80,000 shares of which 48000 were given to the Fulton’s.
That’s 10 pounds each
So to issue 42000 shares should have cost 4.2 m
Had they written off the loan and put in 2 million then fine.
However the loan remains .
Ethical? Not in my book
Robbo