Thetownend.com

Anyone going?

Not quite sure I understand the mechanics behind how they are going to strengthen the balance sheet, but given that I struggle with iTunes, and finding Whole Nutmeg then I am sure there is little surprise among my peers on here.

Feel free to explain it to me...

I will go if the Mrs is over her bug.

It confuses me too. Si Pie must know!

I think what they are saying is that they will reduce the nominal value of a share (i.e. the paper value, obviously shares aren't really worth anything)  from 50p per share to 1p per share. Thus the liability on paper (the amount to buy all the shares in existence) is reduced -  they aren't actually going to buy them of course, the holding co own 75% anyway.

Is that right?

They're also making a propsal to abolish future AGM's. Obviously they'll be a vote, but the board have enough votes to carry the motion no matter what the rest of the shareholders vote.

I will be attending. If anyone fancies joining me for breaky at a Wetherspoons beforehand then give me a shout. I'll be the midget looking one wearing a rose on the breast of my jacket.

Onto the boring stuff:

They're proposing to reduce the nominal value to 1p as you say Batch. This reduces the 'called up share capital' amount in the balance sheet and also removes the 'share premium reserve' in the balance sheet. As these gets reduced, the 'profit and loss reserve' will increase in the balance sheet.

So in other words, this event will remove large defecits brought forward from years of trading at a loss.

The next part he talks about is to make a rights issue. A rights issue is where the company give you an opportunity to buy x amount of shares for every y amount of shares you own (e.g. a 1 in 5 rights issue will give you the chance to buy 1 extra share for evey 5 you own). This will provide the club with additional funds.

I think Fitton has worked it out so that the slate will be wiped clean initially, i.e. there will be no defecits and thereafter try and trade above water. Not sure what the rights issue will be, but Spacey is a wanker, even if it's a 1 for 2 rights issue @ 10p (as a stupidly simple example), it should give the club shy of £900k extra cash should people take up their rights. Given the fact 75% is owned by Fitton's consortium, then this seems a fair way for them to pump some cash into the club.

Hope that makes some sort of sense. No doubt I'll read it back at some stage and realise I've typed a load of tosh  :)

Is that not a bad thing?

I see at as being a bad thing, yes. The AGM is about the only time the small shareholders (i.e. the fans) get to hold the board to account.

If it's been more than 12 months since the last AGM, only 5% of shareholders need to ask for a meeting to get one. 10% if it has only been 12 months or less.

I'd wager if there was anything we needed further accountability, we could force a meeting anyway.

I must say, I'd much prefer one. Obviously I'd expect some decent commentary and documents to be sent our way in place of a meeting.

With the holding Co owning 75% of the shares and the Wills family 23% (ie 98% between them), that "only" 5% is effectively unobtainable by genuine small shareholders, though. And given the history of this club, do you really want to "wager" we could force accountability? Don't necessarily think it's likely to be an issue under the current board tbh, but safeguards, once removed, aren't usually reinstated

Might give us an excuse to get the coffin out again though, I sort of miss the save our club spirit even if some of the fans thought we were a bit mental.

Do you still tell us on here when you're having trust meetings Paul? I don't check my emails that often any more and apart from the podcasts you've been a bit quiet. I think the trust is still important so I hate to think of it fading away as the urgency dies out.

It's just another example of the bourgeoisie using the blood of the workers to oil the wheels of capitalism.




I'm going to have Mrs spacey check that and if it turns out you're talking shite then......well I wouldn't want to be in your plimsolls.

Well to save you the trouble of rummaging thru your inbox, the next scheduled Trust meeting is the Trust AGM on Mon Nov 17th. I might put forward a motion to abolish all future AGMs to stoke some controversy and boost the attendance!

hahaha

Really? That sucks. I'll vote against it. Though I only have 1 share I bet Fitton shits it.

It's certainly worth attending to listen to the arguments put forward - I understand AF intends to explain more fully the reasoning behind it. It may be that there is a perfectly good rationale which will make perfect sense once we hear it explained in full. At the moment we're relying on the bald statement in the AGM notification, there may be subtleties to it that put it in a different light.

Incidentally, the provision to allow small companies to dispense with automatically holding AGMs was introduced in the Companies Act 2006 and is intended to allow small businesses to avoid the hassle and expense of having to hold AGMs where they only serve as expensive and inconvenient red tape. Which probably makes sense for a lot of small businesses but in lieu of having heard a fuller explanation, I'd argue that it's a bit different for football clubs where there is a genuine wider interest from small shareholders who've invested not as a business opportunity but to take a stake in their club.

And on top of that we've not exactly been blessed with the most 'open' owners in the past.  Personally this scares me a bit, once dispensed of it may be difficult to get it back...and if we trust the current owners, who's to say that the next owners won't be as trustworthy...meaning we're right up the creek.  Bad idea, imho (without hearing the rationale behind it).

Well, quite. That's what concerns me most

Didn't know the Wills held that much. I know I'm going back years but there was always a handful of members with 10% between them.

As I said Paul, I'd prefer to have one.

But in all honesty the only thing it's ever going to bring about is a place for people to vent or seek answers. We all know how much of a waste of time such meetings can be if the Board really wanted to hide something.

I'm guessing the reason it's been done away with is that any ordinary resolution gets approved by the Board anyway. From their perspective, it would simply save time and formality. It'll be good to hear the reasoning though.

Why would they want to abolish AGMs? I would have thought they were a good idea as a PR exercise if nothing else.

Although I've just realised why there would no longer be members with such a stake. Ignore me!  :-[

I certainly don't agree with aboloishing the AGM's, it is the only time us smaller shareholders get to question the whole of the board of directors, fine it seems the club is being run correctly now, but once it is removed then it will never be returned - what if Fitton & Co sell up in the future how would we get to question a new board about how they intend to run things, and what if Fitton & Co do something we as shareholders don't agree with in the future, how do we question them on it.

I think AGM's are an important part of football clubs and should be kept, it is not really costly, if as they want to do they publish minutes on line, as that is the real cost posting them out to shareholders and posting the notification.

Does memory serve me right that it was the failure to hold an AGM meant a certain Greek chap took over the club on a technicality. Obviously, as you say that shouldn't be an issue now under the 2006 Act.

Yes, that is how the remains of the Brady Bunch were removed. Brady was long gone then wasn't he?

I'm still struggling to see as reason to vote in favour of not holding AGMs.

The point about someone else taking over in the future is a very good one.

All well and good that Fitton will publish the accounts through the website etc (which will increase accountability imo) but this is going to be offset by the lack of an AGM.  My earlier point about getting 5% of members to call a meeting is clearly going to be troublesome (given the shareholding information that Paul posted).

Unfortunately whilst we cannot change the outcome via voting rights, perhaps if we make a fuss about it at this AGM Fitton will listen. I'm a bit sceptical of receiving information purely electronically as well, simply because links become outdated/broken and disappear into the virtual ether, though I can understand the rationale behind this. Will just have to make sure I save copies and print hard copies of documents myself.

I'd disagree. Obviously the AGM was never able to challenge the old board in terms of a vote but it was often a useful tool in exposing their deceit/incompetence. Look back over the past few:
1) Dec 2004. Bob Holt tells the AGM the club is in good order financially and "close to washing its own face" in terms of not running at a heavy operational loss. A few days later it transpires HMRC had served a winding up order on the club for a 6-figure unpaid tax bill, a material fact not disclosed to shareholders at the AGM in the financial summary
2) The "Finance Director who forgot about VAT" came to light in answer to a question put to Sandy Gray at the following AGM
3) And who can forget the "We are completely up to date with CVA payments" lie at the last AGM, again exposed as a lie a few days later

So while some of these issues came out after the AGM, the fact that they had to actively and knowingly deceive shareholders to continue to cover it up not only compounded the underlying issue  but in and of itself became an issue in its own right. These were important stepping stones in exposing that fans and shareholders simply could not trust the previous board.

There's plenty of examples from other clubs of AGMs affording an opportunity to be able to ask detailed financial questions that simply don't get asked or are brushed aside at Fans Forums etc. Whereas an AGM is when a board is held accountable to its shareholders and so is precisely the right forum in which to raise those kinds of questions if/when it is necessary. Granted you do get boards who are so bad they attempt to get round that by flat out attempting to deceive the shareholders but as I hope I've shown above that doesn't usually protect them, it just rebounds on them.

None of the above applies (I hope!) to the current board by the way, but it's why I'd regard mandatory AGMs as a vital safeguard for small shareholders against possible future incompetent/corrupt/aliens in human suits boards

Yeah very true Paul. Just to clarify I am not saying doing away with the AGM is a good idea, not that an AGM is not very useful. I think I am resigned to the fact we will lose it though. Unless we can persuade Fitton at this AGM we still would really like one. Which is really what my posts are about - worrying about how to get such information without an AGM.

If the AGM goes we will have to find other ways to get these answers. Unfortunately that's what part of my post above was trying to get at (although not very well) - that if the Board want to cover things up it's going to be bloody hard to find things out!

Fair play to Mr Fitton. For those who weren't there, the article 14 (optional AGMs) motion had already been effectively passed as a written resolution but not yet enacted. Which meant it was effectively a done deal, and they didn't even have to discuss it if they didn't want to. Yet not only did they allow a debate on it, they explained the rationale behind it (they don't want to abolish AGMs, just to avoid legal penalties if an AGM due in say December ends up sliding out to the next calendar year) and listened to suggestions from the floor about possibly writing into the articles of association a requirement to hold a shareholders' meeting with board members' present and required to answer questions on the running of the club etc. Clearly on the floor of the AGM, it would have been a bit difficult to have started re-writing a potentially legally complex bit of the articles of association, but they took that idea and a further suggestion to defer the decision until the next AGM so they would have time to look at it properly on board. End result, article 14 was dropped from the wrtten resolution!

Instead, they're looking to re-write the articles of association anyway (which they need because they're a patchwork mess as anyone who's tried to wade through them recently will tell you) and will look at how to include either a guaranteed AGM without risking the legal penalties or an annual shareholders' meeting in a rewritten articles of association.

For those of us used to STFC AGMs where we get fobbed off, ignored or even lied to, this was openness and a willing to listen on a breathtaking scale. In fact even for a "normal" company, it would be highly unusual to have the board do such a volte face on the floor of an AGM with a resolution that was already passed and where they have such a massive majority of shares.

It shows real strength and intelligence to take stuff from the floor on board like this - can't help compare it with the last AGM's "Well you can have a vote if you want, but we've got 70% of shares so we'll force it through anyway" comment from Starnes. We are very lucky to have such a board.

One question Paul: Was Bert there?

Thought he was a board member but don't hear too much of his involvement...

In fact Bert is probably my favourite board member. I read his blog every day.

If he was, he wasn't at the top table. Astonishingly though, James Wills was. Think that's his first AGM isn't it?

It wasn't all good. The nominal share value will be reduced to 1p, then increased at a future date (e.g. to 10p). Those of us with shares worth less than the new increased nominal value will (e.g. 10p) will have to make up the difference.

In the example those with 1 share will have to find an extra 9p to retain their 1 share. 9p, does Fitton not realise there is a credit crunch on.

:) There was one guy who was really worried about that. I was sorely tempted to walk over and give him the 9p (with an offer to extend up to a further 40p should the reconsolidation price be anywhere up to 50p) so we could move on.

Haha I was just thinking the same thing Paul.

Fitton must have been thinking what the fuck, it's 9p?

me to he's on holiday isnt he,pay attention.

who the fuck is bert?

Bart's more positive elder brother

Was good going along yesterday. Seems we are in safe hands.

bert is andrew black, founder of betfair and keeps a blog on horse racing and sometimes stfc here (http://www.bertsblog.co.uk/)

I'd assume though that when Fitton & Co come round to this they will be doing a share option, and I would imagine that (as was pointed out to me on Sat) that it will be for every 1 share you hold you will be able to buy x amount of new shares, but I'd also assume there will be a minimum value you have to buy as well, i.e. those with 1 share may have to spend £100 on shares rather than being able to buy as little as say 5 shares for the 1 old share, thus doing away with those that have only very small amount of shares.

Does that make sense ?

I'm not sure of the legal position, but I wouldn't be surprised if you are right. Bit of a shame, as I intended to pay the 9p in cash. Flash Harry indeed.

The issue was that instead of having 17.75m shares at 1p each, it would be changed to 1.775m at 10p each. Unfortunately this means for anyone with multiples of less than 10 shares, you'd get fractional shares (which you cannot have). Thus, if these people pay 9p extra per share (only the amount of shares which is not a multiple of 10) to get the value up to 10p they could keep the same shareholding as before.

At least that's how I understood it.

I suspect it will be a combination: ie you can just flash the 9p to retain your existing holding, but will also be given the option to subscribe to further shares of a new issue. And probably, as p2p says, with a minimum subscription amount. There's no reason why the two should be tied - you can do the reconsolidation without doing the further issue, although it wouldn't make much sense to do the further issue before doing a reconsolidation.

In commemoration of this likely historic event, I think we should start a petition to have the treasury issue a special 9p coin

That's assuming they get priced at 10p though Paul - they may price them at 11p thus saving the treasury money (and tax payer) on producing the 9p coin

Didn't stop me voting against every proposal the old bopard made though.

How ironic that the man who made a fuss at the last AGM was ultimately right!