Norwich City Football Club and general meetings are beginning to resemble London buses. You wait an eternity for one to arrive, and then two come along almost together.
On the surface, they probably don’t seem to be of any significance. September’s meeting, which lasted barely fifteen minutes, with less than 30 in attendance, was surpassed in terms of briefness, on Monday night, when the latest EGM lasted only nine minutes and had only 19 shareholders in attendance.
It will probably rank as one of the quickest and, on the surface at least, one of the most insignificant in the Club’s history.
Dig a little deeper, however, and you sense that something big is bubbling along in the background.
Starting with what we know…
September’s meeting confirmed the appointment of Mark Attanasio as a club director, together with approval to allot 10,000,000 C-preference shares. These were subsequently allocated at their £1.00 notional value, but also carried the right to be converted into ordinary shares in anything up to seven years’ time, equivalent to 10 percent of the then ordinary share capital.
In the context of football transfers, this cash injection barely moves the dial but the announcement, just a couple of days later, confirmed that Attanasio had also acquired a variety of minority shareholdings (still unknown) including the shares of Michael Foulger.
The acquisition of a minority of shareholding of at least 16 percent, with a convertible option to acquire a further ten percent in the future, resulted in many questioning what all the fuss was about.
However, fast forward just four months, and the second meeting was called – this time seeking approval to allot a further 194,512 ordinary shares. Now the main question seems to be not by whom the shares are being purchased, that’s almost a given, but why that specific number of shares?
On the face of it, increasing the share capital by 24 percent is hardly likely to cause much a stir, nor did the subsequent announcement from the club – a 22-word final paragraph:
“The board will now work through the legal and regulatory process with a view to issuing a further update in due course.”
However, given that the Club has a two-week period to allot the shares (although there is the ability to extend this further) it would seem highly likely that this is already a done deal.
A formal announcement, via Companies House, will follow, with confirmation of the subsequent allocation price, this time almost certainly at a premium price.
This is of significance for two reasons.
First, it’s highly likely that Attanasio will then own more than 30 percent of the revised share capital, therefore meaning that there’s a requirement to comply with the Takeover Code.
This may explain the Club’s reference to the regulatory process in its announcement. And, although the Takeover Code gives more than one option, it seems likely that Attanasio will also have to make an offer to all minority shareholders to acquire their shares.
This leads on to the second point – the allotment price of the new shares. By implication, any offer to minority shareholders would have to reflect the best price paid in the previous year.
If the shares were to be allotted at their £1.00 notional value, the total consideration would be less than £200,000, which would hardly impact on improving the Club’s balance sheet, as announced within the calling notice for the recent meeting.
It would also leave a significant number of minority shareholders feeling somewhat aggrieved, especially when many paid a premium when acquiring their shares in the early 2000s, following the collapse of ITV Digital.
Naturally, however, if the shares were to be issued at a significant premium, shareholders would probably be more relaxed about accepting the pending offer.
For the moment there are far too many unknowns, with a lack of clarity on certain issues, resulting in too much speculation (much like this article) but the further announcement to shareholders is likely to be a landmark moment for shareholders and fans alike.
Let’s watch this space.