Having looked at issues surrounding the Mandaric bid in this article the Trust looks at various alternative funding options the City Board might put to shareholders at the EGM this weekend.
Back in June then newly appointed City Chairman Andrew Taylor answered questions from Trust members re the clubs finances & what he & his colleagues on the Board were doing to bring additional finance to the club.
Below we repeat some of Andrew’s answers & ask if they are still & how they compare, favourably or otherwise to takeover bid…
In answer to a question about the level of the clubs’ debt & owning the Walker Stadium Andrew replied…
“First, let's be clear about the level of debt. The only (significant) debt the club has is in the stadium. It's not a case of clearing debts and then working on buying the stadium. It's simply a case of working out what we do to fund the acquisition of the stadium. One of the ways to do it was to joint venture our interest in the stadium. There was some opposition to the Tigers ground share. Much of the criticism was well intentioned but emotive and ill informed when the underlying objective was to find a way of protecting the long term future of the club at the Walkers. The ground share remains one of the ways that we could raise the capital to do it……”
Trust comment: Clearly then the issue of ground share is something Andrew Taylor was not (at that time) ruling out. With that in mind & knowing when members were canvassed two years ago only just over half were in favour we decided to canvass opinion again in light of the bid by Mandaric….
What would be the benefit of a ground share compared to the Mandaric bid? It depends on how Mandaric would fund purchase of the stadium (see link – http://foxestrust.co.uk/site/index.php?option=com_content&task=view&id=246&Itemid=2 ). But the main benefit is that ownership of the stadium – or at least 50% – it would immediately come back to the club & the debt would be vastly reduced.
The draw back is the club would never be likely to entirely own the stadium again – at least for the foreseeable future.
Responding to two questions about further investment from existing shareholders Andrew commented…
“Maybe but certainly nothing in the order of the £6m-£7m that we received as a parachute last season……I think existing shareholders have been very generous already with many taking up the rights issue that took place a year or so ago. I take the view that we have to demonstrate new skills on and off the pitch. On the pitch RK has to maintain the momentum that he and his team generated over the last 16 games of last season and off the field we have to be sharper in every way. We have to change the trajectory of LCFC and our existing investors may feel more confident about our ability to use the capital well if they see greater professionalism in the management of the club's affairs.”
Trust comment: From the answers above it appears a further rights issue, while generating additional income, would not generate huge sums in the region of tens of millions of pounds that a wealthy owner might invest. Crucially however any monies raised via a rights issue would be additional income that would not be repayable – unlike a loan from a wealthy owner such as Mandaric.
There maybe other financing options the Board of Directors have been exploring prior to the bid by Mandaric being received. The decision for the Board & shareholders alike do these options either singularly or combined offer a better financial direction for the club than the bid by Mandaric?
News Update – The Trust has continued dialogue with a representative of Milan Manderic today posing a series of questions, some of the answers will appear in the media on Friday which should clarify elements of the bid & his plans for the club, dialogue is ongoing however assurances have been given to the Trust about their involvement in the new structure of the club should the bid be approved