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.
There was a comment on this article: https://norwichcity.myfootballwriter.com/2023/02/13/a-percentage-game-city-65-and-nil-points-delia-and-michael-down-to-40/
… that the 30% rule does not apply to companies not listed on the stock exchange (i.e that it applies only to those that are listed on the stock exchange). That was my understanding also, that the rule applied only to publicly-listed companies, but I am not an expert.
My further understanding is that NCFC Limited is not listed and that the rule does not therefore apply.
I would be happy to be corrected by those with direct knowledge but I cannot see how the rule could be applied to, for example, the unlisted companies of which I am/have been a director.
In fact, curiosity got the better of me. The Takeover Code provides the governance structure for this: https://www.thetakeoverpanel.org.uk/wp-content/uploads/2022/07/343427_001_The-Take-Over_Bookmarked_13.07.22.pdf?v=14Jul2022
It states in Section 3:
“This section (except for sections 3(d) and (e)) sets out the rules as to the
companies, transactions and persons to which the Code applies.”
”’
“The Code applies to all offers for companies … which have their registered
offices in the United Kingdom, the Channel Islands or the Isle of Man if any of their
securities are admitted to trading on a UK regulated market or a UK multilateral trading facility or on any stock exchange in the Channel Islands or the Isle
of Man.”
It then goes on to include companies that have
A) been traded on a UK regulated market during the 10 years.
B) had public dealing for at least six months in the last 10 years (i.e publicly quoted).
C) had securities subject to a marketing arrangement in the last 10 years.
D) have filed a prospectus for the offer, etc
As far as I can see none of this applies to NCFC Limited and so the 30% rule does not apply.
MA, if indeed it is he, can, of course, choose to apply the principle but as I read it he is under no compunction to do so.
Attanasio is worth $220m apparently, so roughly £200m. Although that is a vast personal wealth, it is a mere drop in the ocean in the footballing world. Unless you’ve got a billionaire in charge, nothing will change in regards to investment. It will still depend on Premier league status.
But the Milwaukee Brewers, the baseball team he owns, are worth an estimated 1.2 billion US dollars. He personally has a net worth of approxiamately US$700 million. So we’re up to about two billion US$. Far from a middle eastern Emirate, but a vast increase from Delia’s “paltry”, in footballing terms, 20 mil or so. I assume he’s in this to make money so I also assume he sees a long term Premier League occupancy.
Thanks for the comments all.
Just one observation. The Takeover Code is some 433 pages. It’s a comprehensive legal tomb, so context and framing is vital. Any quotes need to be 100% accurate to avoid confusion and possible misunderstanding.
Therefore, rather than getting drawn into lengthy exchanges upon the interpretation of various rules and clauses, perhaps it is wise to await the pending further announcement from the Club and see how events actually transpire.
All I would add to that Gary is that the section of the code that defines its application is not 433 pages long, it is actually quite brief if you care to read it.
It seems to me as someone who is quite used to distilling the meaning from long and complex documents, that it does not apply to NCFC.
That is, of course, unless Mark A chooses to apply the principles of the code.
It’s disappointing that after I pointed out Gary’s incorrect assumption that the Takeover Code applied to Norwich City shares he should then write an article repeating his view. He also tries to dismiss ScotCan’s very detailed
rebuttal of his view by saying how complex the Code’s wording is and that it is wrong to jump to conclusions which might be wrong.
Can I suggest that he looks Wikipedia’s explanation of the Takeover Code which is very clear and easy to understand.
The scope of the code reaches beyond just those listed on the main stock exchange. It also includes (but is not limited to) those on its sub-markets, other authorised trading platforms, and, in certain circumstances, private companies that have recently delisted. It also includes various other public companies, as specified within the code.
One point I should have been clearer on is that there’s at least two options in this particular instance, but there’s little reason to expand on them at this juncture. The matter is not as clear cut as either of us suggested,
The underlying principle is to ensure that minority shareholders are treated fairly and that runs throughout the various applications of the code.
Mark Attanasio is the principal owner of the Brewers, but he made his money in, well, the money business. In 1991, he co-founded Crescent Capital Group, which now controls more than $26 billion in assets. According to Celebrity Net Worth, Mark Attanasio is worth $700 million.
He has as stated above the means to improve cities financial status
Whatever MA’s personal wealth may be, the fact remains that he does not spend.big on his Milwaukee Brewers, so let’s not get our hopes up.
In the most recent baseball ’offseason’, as it’s known, the top 30 Major League teams spent $3.6 billion on free agent players. Of this total, the Brewers spent $4.5 million on just 3 free agents. That’s peanuts compared to (say) the New York Mets.
Sound awfully familiar??? It does to me.
I’d think, given the complexion of the financial companies Attanasio is involved with, there is quite a viable tie-in for him business-wise.
One arm of his companies specialises in lending to distressed European companies.
There also might well be an attraction to the club selling Carrow Road for profitable re-development and moving the club out of town. The Carrow Road area is, after all, prime development land.
Steady Kev … I wrote a piece once about selling Carrow Road and building a new stadium and still have the bruises 😀
Oh I’m not suggesting it Gary, perish the thought!
I was really trying to see through other peoples’ eyes.
In case I need to be a bit careful when out and about – do I need shin pads to protect my legs, or American Football shoulder guards?
Honest, can’t sell the one and only Carrow Rd, it’d be sacrilege personified!