Shareholders' letter

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Paul Waine
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Re: Shareholders' letter

Post by Paul Waine » Mon Oct 04, 2021 9:18 pm

Fantastic. The 84% owners of the club are offering to buy shares held by some/all of the remaining 16% shares. The price they are offering is £1,699 per share, split 50% cash and 50% credit to spend with the club. (I assume the T&Cs of the credit are detailed with the offer). So far as we know, £1,699 is exactly the same deal as ALK are committed to pay to the previous directors who sold their shares.

Some questions raised around why ALK might be doing this:
1) does it make it easier for ALK to sell the club? I doubt it makes any difference. Buying 84% has put ALK in full charge of the club. With no limitations on what they can do;
2) Chester Perry (good to see you posting again, CP) asks do we know where the money is coming from. Anyone who is concerned about where ALK is raising the money to pay, possibly £16,5 million in cash and to issue credit notes to the same value, should also be saying "thank you very much, I agree to the sale." Only the holders of 84% shares have any say in what the club does. If they are spending the Premier League tv money or raising debt then you should sell your shares as quickly as you can. Before ALK have made this offer, your shares are worth £nil. If you don't accept the offer your shares are worth £nil. (There's no one coming along to make a bigger offer for your shares).

How many of the small shareholders have put money into the club over the summer to help fund the club's transfer business? That's what ownership means, you have a share in ownership and you take a share in helping the club pay the bills. (STs don't count. No one needs to be a shareholder to buy a ST). Of course, the answer is no one has put new money into the club - except for ALK.

I'm not a shareholder. I've not seen a copy of the letter with the details of the offer. I expected ALK to make an offer for the remaining 16% at the same time as agreeing to buy the 84%. I didn't expect ALK to put their time and money into the club to build up their investment, while letting small shareholders "tag along for the ride." It makes sense, to me, that ALK want to own 100% of the club. OK, I am a nearly a year late in the timing of the offer.

I've mentioned before that Alan Pace and his colleagues are "smart" and that they know how to manage money. £16.5 million spent now is better in cashflow terms than spending it in Jan when they bought the 84%. Other than that it probably makes no difference to them.

Significant (for BFC) commitments have been taken on over the summer, both with the transfer activity - good to see Nathan Collins get his first Premier League start on Saturday, a week after Maxwel Cornet had done the same. We now only need Connor Roberts to do the same - and with Sean Dyche's new 4 year contract.

My guess is that when/if we see the financial information for the club the balance sheet looks a lot stronger and a lot less leveraged than others suggest.

Exciting times.

UTC

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Re: Shareholders' letter

Post by Tall Paul » Mon Oct 04, 2021 9:21 pm

Paul Waine wrote:
Mon Oct 04, 2021 9:18 pm
snip...
According to the OP, the club is offering to buy the shares, not ALK.

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Re: Shareholders' letter

Post by beddie » Mon Oct 04, 2021 9:41 pm

If I had any shares I’d write back to the club offering them for sale at their offer price but only for the full cash value. You never know.

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Re: Shareholders' letter

Post by RammyClaret61 » Mon Oct 04, 2021 9:51 pm

beddie wrote:
Mon Oct 04, 2021 9:41 pm
If I had any shares I’d write back to the club offering them for sale at their offer price but only for the full cash value. You never know.
I have one share. The club credit is useless to me. I’ve spent approximately £80 in the last 10 years.

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Re: Shareholders' letter

Post by ClaretTony » Mon Oct 04, 2021 9:51 pm

Chester Perry wrote:
Mon Oct 04, 2021 8:01 pm
so all of you who objected to the club's cash holding to buy the shares of the previous board - are you going to object to selling your shares in a way that eats the clubs revenues (albeit at cost that is less than the benefit you are trading for)

do we know where the cash is coming from for the other portion of payment? - is that additional loans or more of the club's cash holding

there appears to be much that needs to be made clear - it sounds like ALK are trying to progress to a complete takeover - it can be forced once a certain threshold is reached whether people want to sell or not.

I seem to remember that a number of posters have long been keen on the idea of the club being in part supporter ownership - this seems to be going into a different direction and appears timed to beat the publication of the supporter led government review and anything that the likely introduction of a football regulator may want to introduce.

at the end of the day this is aimed at making ALK a greater return on the club's investment - (I don't say ALK's investment as there is still no evidence that they have ever put any money into the club where as we know the club carries the risk and liability of the debt and has (and possibly continues too?) effectively paid towards the transfer of ownership)
I'm not so much quoting you but asking a question regarding shareholdings. Is there a point at which one shareholder (in this case ALK) reaches a level which forces other shareholders to sell?

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Re: Shareholders' letter

Post by dandeclaret » Mon Oct 04, 2021 10:00 pm

Reckon there might be hyperinflation on clubshop vouchers..... they'll be so available you'l need a wheelbarrow full of them to buy a birthday card.

I'll offer £100 cash, no questions asked for your vouchers now..... it's a deal you can't turn down.

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Re: Shareholders' letter

Post by boatshed bill » Mon Oct 04, 2021 10:00 pm

What if all of the shareholders invited to sell werre to decline the offer?
What if they said they'd sell if they could be paid up in full?
Just asking for a friend ;)

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Re: Shareholders' letter

Post by GodIsADeeJay81 » Mon Oct 04, 2021 10:04 pm

ClaretTony wrote:
Mon Oct 04, 2021 9:51 pm
I'm not so much quoting you but asking a question regarding shareholdings. Is there a point at which one shareholder (in this case ALK) reaches a level which forces other shareholders to sell?
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Re: Shareholders' letter

Post by Rodleydave » Mon Oct 04, 2021 11:16 pm

If you only get 50% as actual cash and the other %50 in shop vouchers, does this not mean that ALK are acquiring the shares at half price. The club is paying you the rest via the shop. Is this a canny crafty way of doing it. It has already been asked but again, where are ALK getting the money from even to buy them at half price? The motives and financing behind this merit some scrutiny.

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Re: Shareholders' letter

Post by CrosspoolClarets » Mon Oct 04, 2021 11:26 pm

Paul Waine wrote:
Mon Oct 04, 2021 9:18 pm
Buying 84% has put ALK in full charge of the club. With no limitations on what they can do
Is that legally true? There is a legal obligation to treat all shareholders fairly. That could be important because by default it places limitations though in an area notoriously difficult to prove in court.

I know 75% is needed for a special resolution, which could include going into administration, so they are already over that. I would wonder what is in the Articles of Association? That could be important but articles can probably be changed under a special resolution.

In short, I think fans are probably going to see an improvement in various areas in the coming years, I’m glad ALK have bought the club, but long term there is now much uncertainty, so it would be good to see Mr Pace come out with a frank and honest statement about the reasoning behind wanting full ownership.

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Re: Shareholders' letter

Post by aggi » Mon Oct 04, 2021 11:54 pm

Tall Paul wrote:
Mon Oct 04, 2021 9:21 pm
According to the OP, the club is offering to buy the shares, not ALK.
It's a nuance that most won't appreciate. It will be interesting to see whether it is the club or the shareholders trying to buy them. If it is the club then one thing that leaps straight out is that the club must have sufficient reserves to fund the buyback, it can't be funded via a loan.

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Re: Shareholders' letter

Post by Paul Waine » Mon Oct 04, 2021 11:58 pm

Tall Paul wrote:
Mon Oct 04, 2021 9:21 pm
According to the OP, the club is offering to buy the shares, not ALK.
As I said, I'm not a shareholder, I haven't seen the letter.

However, are you sure that's what the OP says? And, how would that work? It doesn't sound like a "share buy back" offer?

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Re: Shareholders' letter

Post by Awayfromburnley » Tue Oct 05, 2021 12:00 am

Sorry to rain on everyone's parade but apparently the letter was written by the usual club proof reader and it is actually meant to be £16.99 per share.

Gutted really.
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Re: Shareholders' letter

Post by Paul Waine » Tue Oct 05, 2021 12:03 am

CrosspoolClarets wrote:
Mon Oct 04, 2021 11:26 pm
Is that legally true? There is a legal obligation to treat all shareholders fairly. That could be important because by default it places limitations though in an area notoriously difficult to prove in court.

I know 75% is needed for a special resolution, which could include going into administration, so they are already over that. I would wonder what is in the Articles of Association? That could be important but articles can probably be changed under a special resolution.

In short, I think fans are probably going to see an improvement in various areas in the coming years, I’m glad ALK have bought the club, but long term there is now much uncertainty, so it would be good to see Mr Pace come out with a frank and honest statement about the reasoning behind wanting full ownership.
Hi Crosspool, I'm speaking in terms of appointing directors and having the majority required to vote on actions where shareholder votes are required.

Minority shareholders are always in a tricky spot, especially when they hold shares in a private company.

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Re: Shareholders' letter

Post by aggi » Tue Oct 05, 2021 12:06 am

CrosspoolClarets wrote:
Mon Oct 04, 2021 11:26 pm
Is that legally true? There is a legal obligation to treat all shareholders fairly. That could be important because by default it places limitations though in an area notoriously difficult to prove in court.

I know 75% is needed for a special resolution, which could include going into administration, so they are already over that. I would wonder what is in the Articles of Association? That could be important but articles can probably be changed under a special resolution.

In short, I think fans are probably going to see an improvement in various areas in the coming years, I’m glad ALK have bought the club, but long term there is now much uncertainty, so it would be good to see Mr Pace come out with a frank and honest statement about the reasoning behind wanting full ownership.
There's a few bits and pieces that could be done if a lot (probably about 1,000 of them) of fans got together but realistically it's very unlikely and they're generally pretty minor things. Bear in mind that once you add in the other board members it's up to 94% ownership or so. There are a few legal rights but it's unlikely they'd be an issue, particularly as the quantum of potential loss would likely be small.

I imagine the main reason they're buying them is that the eventual route to a significant return on investment will be selling the club and the more shares they own the more profit they'll make.

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Re: Shareholders' letter

Post by Tall Paul » Tue Oct 05, 2021 7:24 am

Paul Waine wrote:
Mon Oct 04, 2021 11:58 pm
As I said, I'm not a shareholder, I haven't seen the letter.

However, are you sure that's what the OP says? And, how would that work? It doesn't sound like a "share buy back" offer?
I haven't seen it either but the OP says the email offering to buy the shares is from the club. What does a share buy back offer sound like?

It would be good to have some clarity.

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Re: Shareholders' letter

Post by bfcjg » Tue Oct 05, 2021 7:45 am

For that sort of cash I don't care where its coming from they could be mugging grannies for all I care....hello new settee 😁

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Re: Shareholders' letter

Post by Swizzlestick » Tue Oct 05, 2021 7:47 am

Half being offered as a credit note is very cheeky. While I’m sure the cash element will come in handy to a good number it’s one to think long and hard about.

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Re: Shareholders' letter

Post by longhair » Tue Oct 05, 2021 7:51 am

£13,592 in club shop vouchers for me,ime 62 will take a long time to spend.not had the e mail yet
for my 16 shares

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Re: Shareholders' letter

Post by Burnley Ace » Tue Oct 05, 2021 8:15 am

What’s the CGT provision for the club voucher portion?

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Re: Shareholders' letter

Post by CrosspoolClarets » Tue Oct 05, 2021 8:40 am

aggi wrote:
Tue Oct 05, 2021 12:06 am
There's a few bits and pieces that could be done if a lot (probably about 1,000 of them) of fans got together but realistically it's very unlikely and they're generally pretty minor things. Bear in mind that once you add in the other board members it's up to 94% ownership or so. There are a few legal rights but it's unlikely they'd be an issue, particularly as the quantum of potential loss would likely be small.

I imagine the main reason they're buying them is that the eventual route to a significant return on investment will be selling the club and the more shares they own the more profit they'll make.
I agree. The scenarios I can foresee are very unlikely ones, but the legal responsibilities to shareholders are tighter than the legal responsibilities to supporters so it would give ALK more power.

I also agree with your thinking about the reasoning from ALK’s perspective - buying them, or via a buy back, makes them more money if they sell the club in the future for a much higher value, which from our perspective as supporters is good because it means the team would have had some success. It may mean shareholders are better holding on (£800-£900 doesn’t seem much as a cash payment) but I can see why any money is attractive for minor shareholders.

On the flip side though, there may also be attractions to doing this if things do not go as planned. If the business goes to pot, e.g. from relegation a la Rovers, shareholders have some rights (e.g. the right to call a general meeting in some circumstances, certainly the right to attend one). The club has not had many general meetings recently but in the event of calamity one would be needed - in those circumstances it would be good to have fans in the room with options more in the public eye before they happen. It may, may, end up saving our club even if even ALK aren’t picturing or desiring those scenarios. Very unlikely but we see what happens in football.

So on a purely selfish level, as a supporter not a shareholder, I would want there to remain a minority holding.

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Re: Shareholders' letter

Post by strayclaret » Tue Oct 05, 2021 9:24 am

Don’t forget there might be a tax liability on the cash and credit value under capital gains tax. I am selling my 3 bought in the 80’s to help out the club. Then the £45 I paid was a lot of money to me, but I did it to help them. Now they can help me get a new bathroom 😁

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Re: Shareholders' letter

Post by lakedistrictclaret » Tue Oct 05, 2021 9:54 am

To clarify a couple of points, the e-mail is from BFC Holdings Ltd, who own Burnley Football Club. Sorry if my OP was ambiguous.

The e-mail states that the credit can be spent with the club or in the club shop, so will not be confined to club shop vouchers. In my case this will have to consist of many years of season tickets.

What shareholders who no longer attend matches, and there will be a lot of these, are suppose d to do I'm not quite sure.

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Re: Shareholders' letter

Post by steve1264b » Tue Oct 05, 2021 10:03 am

Im conflicted. Got some shares as 21st present, 56 now. Being a shareholder haa been a fun thing, enjoyed getting the accounts through the post. That stopped years ago.

I recognise that its a decent offer but it does feel like im giving something of thr club up.
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Re: Shareholders' letter

Post by dsr » Tue Oct 05, 2021 10:03 am

strayclaret wrote:
Tue Oct 05, 2021 9:24 am
Don’t forget there might be a tax liability on the cash and credit value under capital gains tax. I am selling my 3 bought in the 80’s to help out the club. Then the £45 I paid was a lot of money to me, but I did it to help them. Now they can help me get a new bathroom 😁
CGT threshhold this year is £12,300. Which means that there is no problem with 3 shares unless you have other asset sales.

Put simply, if your profits on capital assets (your house and car don't count) are less than £12,300 in a tax tear 6th April 2020 - 5th April 2021, there will be no tax to pay on the profit.

If the profit is more than £12,300 there may be tax to pay. The value of the credit at the club is a tricky question. It has a value, but it might (though I don't know) be possible to say it's worth less than face value. You won't be able to argue that it comes in a different year, I don't think.

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Re: Shareholders' letter

Post by Bosscat » Tue Oct 05, 2021 10:09 am

strayclaret wrote:
Tue Oct 05, 2021 9:24 am
Don’t forget there might be a tax liability on the cash and credit value under capital gains tax. I am selling my 3 bought in the 80’s to help out the club. Then the £45 I paid was a lot of money to me, but I did it to help them. Now they can help me get a new bathroom 😁
Are you going to decorate it with 4XL shirts 🤔

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Re: Shareholders' letter

Post by IanMcL » Tue Oct 05, 2021 10:10 am

lakedistrictclaret wrote:
Tue Oct 05, 2021 9:54 am
To clarify a couple of points, the e-mail is from BFC Holdings Ltd, who own Burnley Football Club. Sorry if my OP was ambiguous.

The e-mail states that the credit can be spent with the club or in the club shop, so will not be confined to club shop vouchers. In my case this will have to consist of many years of season tickets.

What shareholders who no longer attend matches, and there will be a lot of these, are suppose d to do I'm not quite sure.
Set up a 4XL replica shirt, campsite?

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Re: Shareholders' letter

Post by IanMcL » Tue Oct 05, 2021 10:14 am

Isn't this just like the Glazers at MU?
They acquired more than 90%, invoked the clause to take the rest, automatically and then switched all the debt into the club, to fulfil over the years, thus reducing club powers in the transfer market, as it was weighed down by its own debt.

If we are relegated, there would be no income to service the debt, let alone run the club.

Worried.

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Re: Shareholders' letter

Post by aggi » Tue Oct 05, 2021 10:23 am

dsr wrote:
Tue Oct 05, 2021 10:03 am
CGT threshhold this year is £12,300. Which means that there is no problem with 3 shares unless you have other asset sales.

Put simply, if your profits on capital assets (your house and car don't count) are less than £12,300 in a tax tear 6th April 2020 - 5th April 2021, there will be no tax to pay on the profit.

If the profit is more than £12,300 there may be tax to pay. The value of the credit at the club is a tricky question. It has a value, but it might (though I don't know) be possible to say it's worth less than face value. You won't be able to argue that it comes in a different year, I don't think.
I imagine HMRC would just view it as cash-equivalent, otherwise companies would start paying bonuses in store credit to avoid tax.

There are about 100 shareholders with double digit shareholdings which is probably what would roughly trigger CGT.

The Clarets Trust is obviously the interesting one. Their 176 shares are, theoretically, worth around £300k (although I imagine an adjusted cash only offer would be made to the larger shareholders).

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Re: Shareholders' letter

Post by Tall Paul » Tue Oct 05, 2021 10:24 am

lakedistrictclaret wrote:
Tue Oct 05, 2021 9:54 am
To clarify a couple of points, the e-mail is from BFC Holdings Ltd, who own Burnley Football Club. Sorry if my OP was ambiguous.
But is it BFC Holdings that are buying the shares or ALK?

Can you copy and paste the email? Obviously delete any personal info first.

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Re: Shareholders' letter

Post by aggi » Tue Oct 05, 2021 10:27 am

IanMcL wrote:
Tue Oct 05, 2021 10:14 am
Isn't this just like the Glazers at MU?
They acquired more than 90%, invoked the clause to take the rest, automatically and then switched all the debt into the club, to fulfil over the years, thus reducing club powers in the transfer market, as it was weighed down by its own debt.

If we are relegated, there would be no income to service the debt, let alone run the club.

Worried.
Man Utd was a PLC at that point so different rules applied. From what I remember they needed to get the shares so they could delist the company and take it private.

There is nothing to stop our current owners switching debt into the club at the moment. There were some amendments to allow this straight after the takeover. Buying additional shares makes no difference to this.

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Re: Shareholders' letter

Post by IanMcL » Tue Oct 05, 2021 10:31 am

aggi wrote:
Tue Oct 05, 2021 10:27 am
Man Utd was a PLC at that point so different rules applied. From what I remember they needed to get the shares so they could delist the company and take it private.

There is nothing to stop our current owners switching debt into the club at the moment. There were some amendments to allow this straight after the takeover. Buying additional shares makes no difference to this.
Thanks Again.
The sentence, 'There were some amendments, to allow this, straight after the takeover', says it all.

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Re: Shareholders' letter

Post by IanMcL » Tue Oct 05, 2021 10:36 am

It just occurs to me that without shareholders, there is no need to explain the financial dealings.

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Re: Shareholders' letter

Post by Aclaret » Tue Oct 05, 2021 10:39 am

Now on the website

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Re: Shareholders' letter

Post by Tall Paul » Tue Oct 05, 2021 10:43 am

IanMcL wrote:
Tue Oct 05, 2021 10:36 am
It just occurs to me that without shareholders, there is no need to explain the financial dealings.
They still have to publish annual accounts. Don't think they do much more than that now do they?

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Re: Shareholders' letter

Post by lakedistrictclaret » Tue Oct 05, 2021 10:47 am

Tall Paul wrote:
Tue Oct 05, 2021 10:24 am
But is it BFC Holdings that are buying the shares or ALK?

Can you copy and paste the email? Obviously delete any personal info first.
Sorry Paul, my technical ability is not up to that!

The shares are actually being acquired by Velocity Sports, which is the investment division of ALK.

A brief statement has appeared on the club's website, but the e-mail goes into much more detail.

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Re: Shareholders' letter

Post by aggi » Tue Oct 05, 2021 10:48 am

So purchase by ALK rather than a share buy back, which makes more sense.

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Re: Shareholders' letter

Post by IanMcL » Tue Oct 05, 2021 10:50 am

aggi wrote:
Tue Oct 05, 2021 10:48 am
So purchase by ALK rather than a share buy back, which makes more sense.
Before they switch the debt, in its entirety...

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Re: Shareholders' letter

Post by Tall Paul » Tue Oct 05, 2021 10:51 am

lakedistrictclaret wrote:
Tue Oct 05, 2021 10:47 am
Sorry Paul, my technical ability is not up to that!

The shares are actually being acquired by Velocity Sports, which is the investment division of ALK.

A brief statement has appeared on the club's website, but the e-mail goes into much more detail.
No worries. You've answered the question and the statement on the website clears it up.

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Re: Shareholders' letter

Post by Tall Paul » Tue Oct 05, 2021 10:54 am

IanMcL wrote:
Tue Oct 05, 2021 10:50 am
Before they switch the debt, in its entirety...
They don't need to acquire the minority shares to be able to do that.

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Re: Shareholders' letter

Post by martin_p » Tue Oct 05, 2021 10:56 am

Has everyone had the email? I have a single share but have heard nothing.

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Re: Shareholders' letter

Post by claretonthecoast1882 » Tue Oct 05, 2021 10:57 am

martin_p wrote:
Tue Oct 05, 2021 10:56 am
Has everyone had the email? I have a single share but have heard nothing.
I have 3 shares but no email as yet

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Re: Shareholders' letter

Post by IanMcL » Tue Oct 05, 2021 11:09 am

Anyone sold theirs and got one of those new wraparound 4XLs yet?

Juan Tanamera
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Re: Shareholders' letter

Post by Juan Tanamera » Tue Oct 05, 2021 11:10 am

longhair wrote:
Tue Oct 05, 2021 7:51 am
£13,592 in club shop vouchers for me,ime 62 will take a long time to spend.not had the e mail yet
for my 16 shares
I haven't received an email either and if they're sending them in alphabetical order, then I would be one of the early ones.
And this explains who's putting the money up.

https://www.facebook.com/15757480092970 ... 822859726/

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Re: Shareholders' letter

Post by Burnley Ace » Tue Oct 05, 2021 11:11 am

There are a few shareholders with 50+ shares what are they meant to do with 50k of club vouchers?

What happens to these vouchers if the club is sold

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Re: Shareholders' letter

Post by gawthorpe_view » Tue Oct 05, 2021 11:12 am

claretonthecoast1882 wrote:
Tue Oct 05, 2021 10:57 am
I have 3 shares but no email as yet
I got the letter in the post this morning, my email address must not be listed with the registrars.

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Re: Shareholders' letter

Post by Marney&Mee » Tue Oct 05, 2021 11:45 am

Putting aside the £850 in credit, isn't £850 cash good value on its own anyway ?

Does anyone know if the credit can be used for hospitality as well as season tickets ? What about F&B on the ground ?

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Re: Shareholders' letter

Post by gawthorpe_view » Tue Oct 05, 2021 11:48 am

Marney&Mee wrote:
Tue Oct 05, 2021 11:45 am
Putting aside the £850 in credit, isn't £850 cash good value on its own anyway ?

Does anyone know if the credit can be used for hospitality as well as season tickets ? What about F&B on the ground ?
In the letter it says 'credit can be spent within the club or in the club shop', so I'd say probably yes hospitality but no to food and drinks.

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Re: Shareholders' letter

Post by cricketfield73 » Tue Oct 05, 2021 11:59 am

I'll be selling my solitary share though the credit to spend with the club isn't of any use to me, nor most non-season ticket holders I'd imagine.
Not sure on practicalities or legalities, but would it be possible to get something set up for those lumbered with an otherwise pretty useless £849.50 BFC voucher to recoup at least some of the money by purchasing a season ticket for someone else using the credit?

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Re: Shareholders' letter

Post by claretblue » Tue Oct 05, 2021 12:10 pm

gawthorpe_view wrote:
Tue Oct 05, 2021 11:48 am
In the letter it says 'credit can be spent within the club or in the club shop', so I'd say probably yes hospitality but no to food and drinks.
the claretstore serves chocolate bars! 8-)

that would ensure a 4XL shirt would be a tight-fit!

:D
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