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Club 1872 Share Purchase Announcement


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As previously said, if that's a problem, increase the share issue by another 10m...

 

The amount that will be raised by the share issue is a fixed, finite number - as long as they don't allow it to be oversubscribed.

 

So when issuing the shares, you take that number and add 10m more worth of shares to convert the loans. The amount of cash you raise will not change by a penny.

 

The main thing is to make sure it's not over-subscribed, which would obviously restrict the amount of cash coming in.

 

As far as I can see, they also want to be careful of begin under-subscribed as that means they could lose control if they are unwilling or unable to maintain their percentage holding and someone else makes a move.

 

 

But that's my entire point , why the need to do it now , if you can raise £30 million raise £30 million , don't issue £30 million worth of share to only raise £20 million , I'm not disagreeing with your explanation , I'm arguing why now .

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But that's my entire point , why the need to do it now , if you can raise £30 million raise £30 million , don't issue £30 million worth of share to only raise £20 million , I'm not disagreeing with your explanation , I'm arguing why now .

 

Sorry, I still don't get you - it doesn't really matter how much you issue, it's just a notional share of the club whose value doesn't really change as the debt is gone.You seem to think the 10m is lost to us, when it's just rearranging the same furniture into different rooms of the same house.

 

You have to realise it's the same thing - the loans to shares is in the end no different from a share issue to those investors - they give 10m, we give 10m of shares - whose value will subsequently change. In the share issue, say the investors give 20m, we give them 20m worth of shares.

 

The "now" seems obvious to me - it's as soon as practicably possible. The investors want control by virtue of having the most shares, and it's good for the club to be debt free. The loan investors get absolutely nothing for the loan, not even interest (which effectively means they are losing money that could be otherwise working for them); for the shares they get power - which is needed to fend off the nefarious block of shareholders we inherited from Green et al.

 

A lot of this seems to be benevolence, where they are willing to lose money for the benefit of the club, as they can afford to, but they still want something for their money and a say in how it is spent.

Edited by calscot
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But that's my entire point , why the need to do it now , if you can raise £30 million raise £30 million , don't issue £30 million worth of share to only raise £20 million , I'm not disagreeing with your explanation , I'm arguing why now .

 

If you can raise £30m then issue £40m of shares.

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Ok I will try this way , if we have a £30 million share issue that's fully subscribed , taking costs out of the equation , how much goes into our bank £30 million .

 

If we have a £30 million share issue and £10 million of soft loans get swapped for equity but the rest is full subscribed , again taking costs out the equation £20 million goes into our account or am I incorrect .

 

But the club already got that 10 million. In essence the money they have already put in was the first tranche of your hypothetical 30 million issuance. So in the event that they could convert the debt to equity in an offering then the Club still gets the full 30 million - it just so happens that it has already received 10 million of it.

 

In fact, and I could obviously be wrong, I don't think that you can actually swap debt for equity in a share offering - when you have a share offering it would normally be a full equity issuance for cash. What would be required, I THINK, is a Special Resolution to convert the debt to equity. No specialist in Corporate offerings though.

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But the club already got that 10 million. In essence the money they have already put in was the first tranche of your hypothetical 30 million issuance. So in the event that they could convert the debt to equity in an offering then the Club still gets the full 30 million - it just so happens that it has already received 10 million of it.

 

In fact, and I could obviously be wrong, I don't think that you can actually swap debt for equity in a share offering - when you have a share offering it would normally be a full equity issuance for cash. What would be required, I THINK, is a Special Resolution to convert the debt to equity. No specialist in Corporate offerings though.

 

Think (but by no means certain) it's ok for them to convert the loans to equity up to what they'd be entitled to under the pre-emptive part of the issue, not sure if the proposed special resolution is enough to cover anything in excess of that but it may well be.

 

If the special resolution passes then they have 12 months (or to the next AGM whatever comes first) to issue the non-preemptive shares so in theory they may not be issued at the same time as the preemptive ones.

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