The Everton Board Thread 2015/16 [ Not takeover related ]

[hibbo'sclass]

I honestly don't know mate. Obviously don't want to rush to any unsupported conclusions, even if the Everton board's secrecy and Vibrac's BVI base seem designed to render supported conclusions impossible.

Just intrigued that Vibrac and those controlling Everton have unusually corresponding choices/preferences for their go to man when certain tasks need doing. That being Samuelson to present a false investment vehicle/scam an AGM, and Samuelson to take over Reading as a Vibrac proxy. Finance and football isn't really that small a world is it ?

To be honest, if the reported link between Vibrac and Mousehole is correct, then football funding would appear to be an incredibly small world. Suppose it has to be taken into account that due to the economic crisis, the banks no longer wanted to be as exposed as they were to the industry, so the opportunity arose to set up this kind of scheme.
BVI is pretty much impenetrable if you want it to be, and I think I've said before that if I were setting this up I would probably use a discretionary trust with no named beneficiaries and third party settlor to own the company.
Thing of it is, when Vibrac loan is satisfied and charge removed, it'll all flare up yet again about JG Funding I suppose!!!

 

[The Esk]

Couldn't agree with you more.
I'm probabky the worst offender for getting side-tracked into giving responses to allegations raised elsewhere.
Not sure if it was on this thtead or the finances thread, you posted what appeared to be a "compromise" new share issue, which would see the issue and sale of 7,000 (ish) new shares, presumably as a rights issue underwritten by a new investor.
This would leave the majority shareholding with the existing board (just), but my questions would be:

What would the share price be?

Given the costs involved, would it be worthwhile in the overall scheme of things and do you pay down debt with it or God forbid, keep it ring-fenced to put toward a new ground?
Would an external investor be sufficiently interested in acquiring a maximum of 16.67%?

The alternative given certain members of the board's alleged relative poverty can surely only be a takeover with an open offer followed by a rights issue.

I know that the above is glaringly obvious, but thoughts and opinions would be interesting.

The assumption is that the Board do not subscribe for new shares:

The Board could issue 12,623 shares without giving up majority control. Now it is unlikely they would want to give all those shares to one investor as it would take that investor above 25% - 26.5% to be exact. That obviously has implications in terms of blocking extraordinary pieces of business at General Meetings.

Let's round it down for simplicity. If the Board issued 12,500 new shares they could raise the following amounts before expenses:

Share valuation £2,000, valuing the club at £70 million pre money - raise £25 million, wipe out Vibrac/JG style borrowings - limited appeal.

Share valuation £4,000, valuing the club at £140 million pre money - raise £50 million, wipe out Vibrac/JG borrowings, leave £25 million towards stadium/redevelopment ? - limited appeal

The conclusion must be that for an equity issue to be worthwhile (£100 million plus in my opinion) the Board would have to subscribe or lose control.

If they're not prepared to that then they should sell for reasons given many times before.

 

[hibbo'sclass]

The assumption is that the Board do not subscribe for new shares:

The Board could issue 12,623 shares without giving up majority control. Now it is unlikely they would want to give all those shares to one investor as it would take that investor above 25% - 26.5% to be exact. That obviously has implications in terms of blocking extraordinary pieces of business at General Meetings.

Let's round it down for simplicity. If the Board issued 12,500 new shares they could raise the following amounts before expenses:

Share valuation £2,000, valuing the club at £70 million pre money - raise £25 million, wipe out Vibrac/JG style borrowings - limited appeal.

Share valuation £4,000, valuing the club at £140 million pre money - raise £50 million, wipe out Vibrac/JG borrowings, leave £25 million towards stadium/redevelopment ? - limited appeal

The conclusion must be that for an equity issue to be worthwhile (£100 million plus in my opinion) the Board would have to subscribe or lose control.

If they're not prepared to that then they should sell for reasons given many times before.

Hi mate.

Sorry, bit thick with my calculation - been spending too much time on here and not enough sleeping.

So, the reality is an open offer having reached agreement with the board, but hopefully from the investors point of view including Mr Abercromby, Lord Grantchester, Estate of Sir Philip Carter to get past the Special Resolution hurdle. I'm pretty certain that only an Ordinary Resolution is required to issue more shares if the new model articles are adopted with amendments.

Once in control, new investor then has a further underwritten (by their own advisors) rights issue to bring the actual capital into the club.

So the mechanics of it are straightforward.

The thorny bits

Is there any evidence at all that the Board members have any desire to sell their stakes? Must admit, as long as we stay in the Premier League I can't see this being the case for a year or two, then dependant on if the TV revenue bubble looks set to burst.

I don't believe that the Board have put any kind of firm valuation on the club in recent times but I will stand corrected.

Will the Board appoint an external firm to seek investment/takeover prospects.

I apologise as I know this is basically where the whole thread begins (probably every season), but just trying to get back up to speed in an abbreviated and brain friendly format for now.

Then, hopefully, I'll start being either a useful or provocative poster.

 

[The Esk]

Hi mate.

Sorry, bit thick with my calculation - been spending too much time on here and not enough sleeping.

So, the reality is an open offer having reached agreement with the board, but hopefully from the investors point of view including Mr Abercromby, Lord Grantchester, Estate of Sir Philip Carter to get past the Special Resolution hurdle. I'm pretty certain that only an Ordinary Resolution is required to issue more shares if the new model articles are adopted with amendments.

Once in control, new investor then has a further underwritten (by their own advisors) rights issue to bring the actual capital into the club.

So the mechanics of it are straightforward.

The thorny bits

Is there any evidence at all that the Board members have any desire to sell their stakes? Must admit, as long as we stay in the Premier League I can't see this being the case for a year or two, then dependant on if the TV revenue bubble looks set to burst.

I don't believe that the Board have put any kind of firm valuation on the club in recent times but I will stand corrected.

Will the Board appoint an external firm to seek investment/takeover prospects.

I apologise as I know this is basically where the whole thread begins (probably every season), but just trying to get back up to speed in an abbreviated and brain friendly format for now.

Then, hopefully, I'll start being either a useful or provocative poster.

The thorny bits are good questions mate - only the Board can answer and hopefully with actions not just words.

 

[Chang Elephant]

Obviously there is a great deal of interest in the past, a huge amount of speculation but in my opinion little evidence of some of the major allegations.

The real issue is what are the Board going to do going forward? How are they going to attract the investment desperately required?

That is the real issue, but coming to a view on what the board are going to do going forward, how likely they are to respond in ways that improve the club rather than just their own financial position, and how/if they can be moved forward requires interest in the past. And their track record is abysmal.

I can see why they wouldn't want scrutiny of the past though.

 

[The Esk]

That is the real issue, but coming to a view on what the board are going to do going forward, how likely they are to respond in ways that improve the club rather than just their own financial position, and how/if they can be moved forward requires interest in the past. And their track record is abysmal.

I can see why they wouldn't want scrutiny of the past though.

All true mate, what I am saying is there has to be a balance between what has gone on in the past and applying pressure in terms of what will happen in the future. It's not enough to say this has gone on in the past now fix it, we unfortunately have to assist in putting ideas forward. Good ideas well presented are much more difficult to deny, as against denying largely unproven allegations.

 

[Foot Long Hot Dog]

If you owned a large equity stake and you knew the business as was about to see a revenue increase of a about of a 1/3rd of it's current turnover, of incremental (as yet unallocated) TV cash landing in the coffers of a business that was already making a small profit, would you be in a rush to sell now?

We're fans so we're applying our own emotional rules as to how the owners should be acting in the best long term interests of the club, but as a cold hearted business investor, you'd make the decision that was the right one for you.

Selling or diluting your equity stake at this point in time wouldn't be on your agenda imo. Maybe the new TV deal will be viewed as the pinnacle of what's possible and maybe early in the next deals lifespa may be the point that they seek to sell (with possibly planning permission in place for a stadium to boot)

 

[Chang Elephant]

If you owned a large equity stake and you knew the business as was about to see a revenue increase of a about of a 1/3rd of it's current turnover, of incremental (as yet unallocated) TV cash landing in the coffers of a business that was already making a small profit, would you be in a rush to sell now?

We're fans so we're applying our own emotional rules as to how the owners should be acting in the best long term interests of the club, but as a cold hearted business investor, you'd make the decision that was the right one for you.

Selling or diluting your equity stake at this point in time wouldn't be on your agenda imo. Maybe the new TV deal will be viewed as the pinnacle of what's possible and maybe early in the next deals lifespa may be the point that they seek to sell (with possibly planning permission in place for a stadium to boot)

Great post mate, the board is clearly in this to maximise profit on the back of TV deal income without it's own investment to grow the business.

 

[Foot Long Hot Dog]

@Chang Elephant I think that's an absolute given where we are today, as in business terms it's a no brainer. Esk has made the point previously that there will be a point where they'll start to damage their own equity value through the lack of capital investment in the business, and I agree - but I don't think it's now.

Given Bills reported health problems, next summer being the start of the new TV deal and the shadow of the elephant in the room - the stadium issue - growing ever larger..... then I don't think we're far off the point where we'll finally see some movement in the boardroom at Goodison.

 

[SerenityNigh]

Obviously there is a great deal of interest in the past, a huge amount of speculation but in my opinion little evidence of some of the major allegations.

The real issue is what are the Board going to do going forward? How are they going to attract the investment desperately required?

The central issue remains, we are massively under-capitalised and require equity not more debt.

So what is it going to be? The Board? New investors alongside existing? Or a total sale?

They are the only options to solve the club’s problems.

What do you think legitimate investment looks like? (Whether the board is interested in investment is a separate question). They can't issue new shares, can they?* Are they simply talking about a stadium deal, like the commercial deal they wanted with Tesco? I'm at a loss for what this "potential investment" looks like.

*Yeah, I should just keep reading sometimes

 

[SerenityNigh]

The assumption is that the Board do not subscribe for new shares:

The Board could issue 12,623 shares without giving up majority control. Now it is unlikely they would want to give all those shares to one investor as it would take that investor above 25% - 26.5% to be exact. That obviously has implications in terms of blocking extraordinary pieces of business at General Meetings.

Let's round it down for simplicity. If the Board issued 12,500 new shares they could raise the following amounts before expenses:

Share valuation £2,000, valuing the club at £70 million pre money - raise £25 million, wipe out Vibrac/JG style borrowings - limited appeal.

Share valuation £4,000, valuing the club at £140 million pre money - raise £50 million, wipe out Vibrac/JG borrowings, leave £25 million towards stadium/redevelopment ? - limited appeal

The conclusion must be that for an equity issue to be worthwhile (£100 million plus in my opinion) the Board would have to subscribe or lose control.

If they're not prepared to that then they should sell for reasons given many times before.

What about 12,500 shares at £4,000 pounds + commercial investor for a new stadium. What do you think you could do with £50m direct investment, £50m stadium loans, and commercial rights/investment in the property?

Not sure how that would work, unless the club leased the property to the commercial investor, since the club don't (currently) own the land for the (not yet planned) stadium. Also, not sure if £50M in debt on the stadium would put the club in a healthier position than it's in presently.

 

[The Esk]

What about 12,500 shares at £4,000 pounds + commercial investor for a new stadium. What do you think you could do with £50m direct investment, £50m stadium loans, and commercial rights/investment in the property?

Not sure how that would work, unless the club leased the property to the commercial investor, since the club don't (currently) own the land for the (not yet planned) stadium. Also, not sure if £50M in debt on the stadium would put the club in a healthier position than it's in presently.

I'm not sure that works for a number of reasons.

I do not think you could get £4,000 a share based on a minority stake in a more indebted company with only partial ownership/rights to what would be a fairly low budget stadium.

Besides the above there's the small problem of no commercial partner in sight and the council are unlikely to gift the land or provide a subsidy.

If the club were to raise £50 million by way of a share issue then the sensible use of those funds would be to pay off existing debt and utilise the remaining capital to completely revamp our commercial activities, sponsorship deals and global reach.

The club would then be more attractive to a second purchaser, or perhaps the subscriber to the equity raise, to fund a new stadium from a more substantial financial position.

 

[Groucho]

Hats off to all you business brains in here.

 

[SerenityNigh]

I'm not sure that works for a number of reasons.

I do not think you could get £4,000 a share based on a minority stake in a more indebted company with only partial ownership/rights to what would be a fairly low budget stadium.

Besides the above there's the small problem of no commercial partner in sight and the council are unlikely to gift the land or provide a subsidy.

If the club were to raise £50 million by way of a share issue then the sensible use of those funds would be to pay off existing debt and utilise the remaining capital to completely revamp our commercial activities, sponsorship deals and global reach.

The club would then be more attractive to a second purchaser, or perhaps the subscriber to the equity raise, to fund a new stadium from a more substantial financial position.

Cheers. Seems like the only exit option is a wealthy person with some sense of direction, preferably prior experience in sports, and appreciation of the unrealized potential, a la Mark Cuban.
















I was previously anti-Cuban, but now I'm turned pro-Cuban. Don't crush my dream.

 

[GwladysBlue]

Everton have refused to comment to the Echo on an update on WHP. I thought Bill said he was always going to be transparent with the fans?