What about the smaller shareholders?

[PenfoldClaret]

If the other 5 directors have resigned, they’ve presumably sold their shares - they had 15.7% between them.
ALK have acquired, we are told, 84% which would suggest that MG and JB have retained a shareholding between them of of around 9%.
There are hundreds of smaller shareholders who own the remaining 7%.
Are they to be given the opportunity to sell their shares? - not all will want to of course.
In the interests of equity, however, they should be given the opportunity.
Does anyone know what the Articles of Association say about this?

[BurnleyBob]

You make a very good point and I think the club owe the smaller shareholders some kind of explanation of what their status now is. A letter from the club to all remaining shareholders would be a courtesy.

[ClaretTony]

You make a very good point and I think the club owe the smaller shareholders some kind of explanation of what their status now is. A letter from the club to all remaining shareholders would be a courtesy.

Their status hasn't changed, still shareholders. Some on the main takeover thread were talking about getting offers for their shares and I warned it might not happen. They have bought shares from the larger shareholders and that has given them a controlling interest.

[aggi]

This would only be automatically triggered if ALK had bought 90% of the shares which hasn't happened.

It's at the discretion of ALK whether they do make offers for those minor shareholdings. I suspect they won't bother.

There's been no additional capital issued so nothing has changed for the small shareholders.

[claret wizard]

Why would they bother? As Aggi says they automatically would have to buy the shares if they reached 90% ownership. I’m not sure if they’ve paid £200m or valued the club at £200m, but if it’s the lower total value then it would cost £20m to buy out the remaining 10%. I’d rather that go on a player!

[Burnley Ace]

Will they reintroduce the AGM?

[Goddy]

I was one of the ones who was speculating about whether or not any bidder would have to make an offer to all shareholders or not. If BFC was a plc then the rules might be different but being bought out privately means ALK only ever need 51% of the shares.

I asked my son about all this stuff - he knows much more than me being involved in all this stuff - and he said he'd be surprised if any bidder went for more than 51% of the shares. In his words 'why would they - they'd have control and wouldn't have to find additional funds to buy out everyone else'.

If anything I'm surprised its as high as 84% that ALK are buying.

As a small shareholder myself, I'm not expecting ALK to make an offer for my one (ha ha) share.

As others have said, it seems that ALK are actually shelling out £170m for 84% of the shares which is roughly valuing BFC at £200m.

So, finally, in answer to the OP question....the small shareholders are very likely to remain small shareholders as it's very unlikely that ALK will (be forced to) make an offer for your shares.

[ClaretTony]

Some people on the other thread were misleading posters with suggestions of offers to all shareholders.

[Claret Till I Die]

Will they reintroduce the AGM?

They could introduce what they want but we wouldn't be able to attend at the minute...

[blake's wand]

I was one of the ones who was speculating about whether or not any bidder would have to make an offer to all shareholders or not. If BFC was a plc then the rules might be different but being bought out privately means ALK only ever need 51% of the shares.

I asked my son about all this stuff - he knows much more than me being involved in all this stuff - and he said he'd be surprised if any bidder went for more than 51% of the shares. In his words 'why would they - they'd have control and wouldn't have to find additional funds to buy out everyone else'.

If anything I'm surprised its as high as 84% that ALK are buying.

As a small shareholder myself, I'm not expecting ALK to make an offer for my one (ha ha) share.

As others have said, it seems that ALK are actually shelling out £170m for 84% of the shares which is roughly valuing BFC at £200m.

So, finally, in answer to the OP question....the small shareholders are very likely to remain small shareholders as it's very unlikely that ALK will (be forced to) make an offer for your shares.

Depends on the exact Articles of Association of BFC - but a lot of major company decisions require over 75% of shareholders to be able to do, so would make sense to own over this amount I think. Also the shareholdings of the individuals might have meant that to get over 51%, the totals combined to 84% but I'm not sure on the individual holdings

[aggi]

I was one of the ones who was speculating about whether or not any bidder would have to make an offer to all shareholders or not. If BFC was a plc then the rules might be different but being bought out privately means ALK only ever need 51% of the shares.

I asked my son about all this stuff - he knows much more than me being involved in all this stuff - and he said he'd be surprised if any bidder went for more than 51% of the shares. In his words 'why would they - they'd have control and wouldn't have to find additional funds to buy out everyone else'.

If anything I'm surprised its as high as 84% that ALK are buying.

As a small shareholder myself, I'm not expecting ALK to make an offer for my one (ha ha) share.

As others have said, it seems that ALK are actually shelling out £170m for 84% of the shares which is roughly valuing BFC at £200m.

So, finally, in answer to the OP question....the small shareholders are very likely to remain small shareholders as it's very unlikely that ALK will (be forced to) make an offer for your shares.

Although 51% gives control it's easier to do some other stuff with a higher shareholding.

Also, I suspect part of ALK's endgame is to sell the club at a substantial profit. The more shares you hold the bigger the profit you can make.

[Goddy]

I get your points (blake's and aggi) - I was merely trying to say there's a reason as to why small shareholders are less likely to be made an offer. I appreciate there are also benefits, if you're ALK, in buying more shares (if you have the cash readily available) but there's no obligation to do so if all you want is control of the club (unless written into the Articles of Association, of course).

[BurnleyPaul]

It’d be nice if all the small shareholders can find a way of clubbing together and using their combined shareholding to have a place on the board...a “fan’s representative” so to speak to give our perspective and to put forward our issues.

Perhaps this could be a way of keeping Barry Kilby on the board...?

[GodIsADeeJay81]

You're assuming Kilby wants to be on the board still.

[blake's wand]

Assuming there is an AGM - small shareholders can be a real pain for owners. I'm pleased there are still lots of claret shareholders to keep people in check!

[MT03ALG]

Will the other directors, apart from Mike Garlick and John Banaszkiewicz, remain as directors ?

[Chester Perry]

Will the other directors, apart from Mike Garlick and John Banaszkiewicz, remain as directors ?

doesn't appear so - they may well have sold all their shares

[bfcjg]

Has Brian Flynn got a share ?

[Boss Hogg]

No need to acquire them. As stated above they have the controlling interest.

[aggi]

Will they reintroduce the AGM?

The rules on whether an AGM was required changed a few years ago and the club took advantage by stopping them. ALK can take the same exemption if they like and probably will.

[dibraidio]

It's a curious situation. 130,000 shares so 1300 is 1% and that's roughly how many people have a single share. Of the 1700 shareholders I believe there are fewer than a hundred who have 20 or more. That would have been a LOT of admin if they'd tried to buy those too.

[strayclaret]

This would only be automatically triggered if ALK had bought 90% of the shares which hasn't happened.

It's at the discretion of ALK whether they do make offers for those minor shareholdings. I suspect they won't bother.

There's been no additional capital issued so nothing has changed for the small shareholders.

Spot on, my lawyer daughter agrees. She'll inherit a piece of history and I am pleased about that.

[PenfoldClaret]

My point in starting this thread ( I declare an interest- I am a small shareholder) is that the motivation , certainly for me , was being involved, albeit in a very small way, in our community club where even the directors / major shareholders were Clarets through and through.
Now we’re owned by an overseas corporate money man who (we hope) has the best interests of the club at heart,
it would, in my view, be a gesture of good faith if ALK were to offer to buy out those small minority shareholders who wished to sell. They wouldn’t necessarily have to offer the same amount per share as offered to MG and JB.
Be interested in the views of others.

[IanMcL]

My one share stays with me.

[Nonayforever]

Although 51% gives control it's easier to do some other stuff with a higher shareholding.

Also, I suspect part of ALK's endgame is to sell the club at a substantial profit. The more shares you hold the bigger the profit you can make.

They may have probably had to buy some shares ( that they may not have actually wanted ) to get rid of some directors in order that they can put their ideas through unhindered.

[Leisure]

Will the other directors, apart from Mike Garlick and John Banaszkiewicz, remain as directors ?

No, all gone.

[whentheballmoves]

My one share stays with me.

I've got three...I've been slowly plotting my takeover for years LOL

[IanMcL]

That's 4 between us! I'll vote for you as director, if you vote for me. Must be in with a chance!

[Stalbansclaret]

I know one small shareholder who has already written to Mr Pace and our CEO asking for full information about the equity disposal and whether there is going to be the same offer made to all shareholders. The premise is that in the present pandemic, some shareholders may prefer to exit and take up the same offer. He feels they should at least be asked. There were apparently 1,709 small shareholders in total at the time of the takeover with the vast majority owning one or two shares with what sets them apart being that we never get, nor appear to want, a dividend.

[Burnley1989]

Would those shareholders be selling at the original purchase price? There was quite a commotion from a few on here that Garlic and the shareholders are turning a large profit on their shares

[arise_sir_charge]

Personally think that MG and JB should have made provision in the terms of the sale to allow the smaller shareholders to benefit from the same offer.

In doing so they’d have reduced their own bounty by between 1% & 7% dependent on how many took up the offer.

My reasoning for this is that the majority of the smaller shareholders bought their shares when the club needed the money most and it would be fair reward for that commitment for them to benefit from the same deal that MG and JB have.

I’ve no issue with MG and JB benefiting to the level they have, just feel the smaller shareholders could and should have been catered for.

[aggi]

Personally think that MG and JB should have made provision in the terms of the sale to allow the smaller shareholders to benefit from the same offer.

In doing so they’d have reduced their own bounty by between 1% & 7% dependent on how many took up the offer.

My reasoning for this is that the majority of the smaller shareholders bought their shares when the club needed the money most and it would be fair reward for that commitment for them to benefit from the same deal that MG and JB have.

I’ve no issue with MG and JB benefiting to the level they have, just feel the smaller shareholders could and should have been catered for.

I suspect most smaller shareholders probably got them when we got promoted under Coyle. There's only about a hundred that have shareholdings in double figures.

[arise_sir_charge]

I suspect most smaller shareholders probably got them when we got promoted under Coyle. There's only about a hundred that have shareholdings in double figures.

I don’t know I think the majority will be from the rights issues in the 80’s and 90’s that were needed to generate income.

[Billy Balfour]

There's a couple of relatives of ours who bought shares (or a share) back in the 90s. I least I think it was in the 90s, though it might have been the early 2000s. I think they paid £100 per share. The share purchase was always only a vanity holding and in no way whatsoever an investment, but now they've sniffed a potential profit and both of them have been banging on about how it's so unfair.

[arise_sir_charge]

There's a couple of relatives of ours who bought shares (or a share) back in the 90s. I least I think it was in the 90s, though it might have been the early 2000s. I think they paid £100 per share. The share purchase was always only a vanity holding and in no way whatsoever an investment, but now they've sniffed a potential profit and both of them have been banging on about how it's so unfair.

I think they were £200 per share in the 90’s rights issue.

[ClaretTony]

I don’t know I think the majority will be from the rights issues in the 80’s and 90’s that were needed to generate income.

I bought mine in the 1980s, I think it was close season 1986. I bought 100 at a cost of £15 each. I don’t have them all now but I would want to keep those I do have.

[Billy Balfour]

I think they were £200 per share in the 90’s rights issue.

Cheers for that.

Like I said though. It was so they could feel that they 'owned' part of the club rather than an investment. In fact, I think one of my uncles still has his share certificate framed and hanging on his hallway wall. Now you wouldn't do that with a single BT share. I don't blame them for hoping for a windfall, but to moan and bang on about it being so unfair, and that they are somehow missing out, is a waste of energy, especially when they both knew it was 'dead money' when the bought them.

[Lowbankclaret]

Has anyone worked out the cost per share based on the theoretical 200 million value??

[Lowbankclaret]

I think a very rough estimate would be about £7,000.

Not bad if they would buy them off the holders.

[randomclaret2]

I think a very rough estimate would be about £7,000.

Not bad if they would buy them off the holders.

Wasnt c.£1500 the figure more commonly mentioned on the takeover thread ?

[Lowbankclaret]

I don’t know, didn’t read it.
I admit mine is a very rough calc based on approx 1700 people being Small shareholders , approx 100 of those have more than one share. Using 7% that’s on this thread and guessing they have a total of 2000 shares and working from there.

[Paul Waine]

I don’t know, didn’t read it.
I admit mine is a very rough calc based on approx 1700 people being Small shareholders , approx 100 of those have more than one share. Using 7% that’s on this thread and guessing they have a total of 2000 shares and working from there.

Hi Lowbank, the previous calculations were £200 million for all the shares - and, from memory think it was 130,000 shares. This results in £1,538 per share.

We know, because it's been announced that ALK have acquired 84% of shares. Media reports are that they've paid £170 million.... though there's no confirmation that this figure is accurate.

The current number of shares issued by BFC can be confirmed from Companies House website - which also shows all shareholder names (before ALK acquisition, of course - an update will be due sometime). I've not checked the 130,000 figure.

Clarets Trust, I understand have indicated that they hold somewhere around 170 shares (again can be confirmed on BFC Companies House filings). That may be why your estimate of 2,000 shares held by small shareholders is a little out.

I hope ALK do plan to offer to acquire all outstanding shares from small shareholders - at the same price as rec'd by the directors. On the other hand, I can understand some wanting to hold on to their share.

Happy New Year.

Exciting times.

UTC

EDIT: Just checked Burnley FC Holdings Limited - Confirmation Statement dated 11th Dec 2020. There were 122,478 shares issued. So, each share is worth a little over £1,600 - assuming £200 million is good estimate of ALK's valuation of the club.

[ClaretTony]

Has anyone worked out the cost per share based on the theoretical 200 million value??

If £200,000 is the total and we know that 4,000 shares is approximately 3.2% of the shares.

3.2% is valued at £6.4 million which means approx £1,600 per share.

[Lowbankclaret]

If £200,000 is the total and we know that 4,000 shares is approximately 3.2% of the shares.

3.2% is valued at £6.4 million which means approx £1,600 per share.

Apologies Tony,
Where did those numbers come from??
I was just looking at the small shareholders owning 7%.

That’s still a good amount above what people paid.

[Lowbankclaret]

Paul Waine and Tony

Thankyou , yes £1,600 it is.

[ClaretTony]

Apologies Tony,
Where did those numbers come from??
I was just looking at the small shareholders owning 7%.

That’s still a good amount above what people paid.

We know the 5 departed directors owned 16% between them and we know that they held around 4,000 shares each.

But that's not the value of the shares if ALK have paid £200 million - that's just the figure they were prepared to pay for the shares they have bought.

[Ilkley claret]

Personally think that MG and JB should have made provision in the terms of the sale to allow the smaller shareholders to benefit from the same offer.

In doing so they’d have reduced their own bounty by between 1% & 7% dependent on how many took up the offer.

My reasoning for this is that the majority of the smaller shareholders bought their shares when the club needed the money most and it would be fair reward for that commitment for them to benefit from the same deal that MG and JB have.

I’ve no issue with MG and JB benefiting to the level they have, just feel the smaller shareholders could and should have been catered for.

I think this raises some interesting moral and other issues.
It’s not clear yet what financial structure has been used to make the acquisition.

Typically a New Holding Company will be used to make the acquisition and where the majority of the funding sits.

If it’s a typical PE structure then there is no c£140m to £170m of debt ( plus built in returns) that sits ahead of any shareholder value that has been “left behind”. £140m to £170m depends on what happened to the “ cash on our balance sheet”

If the remaining minority shareholders are left in the acquired subsidiary it’s unlikely they will ever have any value.

Effectively we have gone from a club that had cash of c£30m to a club that now has net debt of c£140m to £170m.

This will only become clear and in the public domain when the New Holding Companies accounts are filed, which could be 20 months away.

[arise_sir_charge]

It’s the moral aspect that I think is most relevant to me.
I accept that there is no obligation on MG and JB to cater for the smaller shareholders but with things like “one club for all” etc trotted out I do think they should be looked after.

[Ilkley claret]

It’s the moral aspect that I think is most relevant to me.
I accept that there is no obligation on MG and JB to cater for the smaller shareholders but with things like “one club for all” etc trotted out I do think they should be looked after.

I think you are right, if the numbers speculated in terms of valuation, then the “small shareholding’s” as a “ class” in their own right are worth c£14m.

[ClaretTony]

It’s the moral aspect that I think is most relevant to me.
I accept that there is no obligation on MG and JB to cater for the smaller shareholders but with things like “one club for all” etc trotted out I do think they should be looked after.

One club for all is the Hart bullshit