Question of the Week
Do you support Cleethorpes Town?
By: Rob Sedgwick
News From 7th May 2000
The Grimsby Town board are proposing to increase the company's authorised share capital to Â£5m, resulting in a further 4,400,000 shares being available for subscription.
Existing Shareholders would be able to buy two new shares for each one they hold at
par value. They would also be given the opportunity to buy more with the board seeking
authority to issue any shares left over to interested parties.
The board does not have the authority to issue shares to anyone (under its own rules),, and the proposal must be backed by a 75 per cent (in shares) majority vote of the existing shareholders, whose percentage stake in the club would of course be vastly diluted unless they fully take up their offer of new shares.
As a first stage, the club has written to existing shareholders asking them to fill in a questionnaire. This will tell the board whether or not they back the idea.
If shareholders do, then they will be called to an extraordinary general meeting during the summer to pass the proposals.
The board would then also be looking to increase the company's authorised share capital to Â£5 million.
The club's authorised share capital currently stands at Â£600,000, of which only Â£236,900 has been issued, a relatively small sum for a company of GTFC's size.
The board's letter to shareholders states:
"As part of the company's plans to develop the business and new stadium your board is proposing a rights issue to assist the club in raising additional working capital.
"The development of the business and relocation to a new stadium are Town shares vital to ensure that Grimsby Town can increase its income and keep pace with the ever increasing financial commitments of operating a professional Football League club.
"The board wish to ensure that the proposals regarding the rights issue have the support of the majority of shareholders before incurring the extra costs that would be involved.''
The developments come at a time when the club is said to be losing Â£15,000 a week with debts of over Â£1 million.
It has a financial commitment to the new Â£14 million, 20,000-seater stadium though would expect much of it to be financed by grants and associated commercial development. The shortfall is thought to be around the Â£3 million mark.
A picture of Rob Sedgwick's share certificate for a stake in 0.02% of the club can be seen below.
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