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|Taking More Shares|
Fenty To Shell Out
By: The Grimsby Telegraph
GRIMSBY Town's bankers are set to cut the club's overdraft facilities by 50 per cent - leaving the Mariners to find additional funding of Â£250,000.
That is one of the harsh facts of life, which chairman John Fenty has revealed in a letter to shareholders. With Town insolvent and facing administration, he is willing to put Â£150,000 into the club in the form of a share purchase to help secure its future and allow it to progress the new stadium development.
But he wants shareholders to waive his obligation to offer to buy the rest of the club's shares - something that City takeover rules would normally require.
Shareholders will vote on this at the agm on December 29.
In the letter Mr Fenty details his and other directors' existing support for the club in the form of loans and guarantees.
And he pointed out that the club owed the Inland Revenue Â£685,773 (May 2005) and other clubs Â£75,000, while a former director wanted his Â£50,000 loan back.
On the positive side current trading had been much better, helped by the Carling Cup run, but the cash generated would not service the debts which would be close to Â£2-million by next May.
Mr Fenty detailed some of the work done to try and bring in money.
"Since the collapse of ITV Digital myself and my fellow directors have made strenuous efforts to secure additional financial support to help resolve the club's ongoing financial difficulties.
"We have sought to attract new directors by way of personal approaches and through the press as part of the 'Keep The Mariners Afloat' campaign. Although a number of informal discussions have been held, the financial implications of becoming a director were considered to be too onerous and nothing has come of these discussions.
"We have also tried to promote wider share ownership by appealing to supporters, sponsors and the people of Grimsby but to date this initiative has only raised some Â£24,000, an amount that falls considerably short of what is needed to fund the company's cashflow requirements."
Mr Fenty then gets to the crux of the letter - support for his share purchase: "You will no doubt recall in the recent past there have been a number of occasions when a significant block of shares has changed hands and on each occasion this has created uncertainty as to the direction in which the club was being taken. The last time this happened was shortly followed by the collapse of ITV Digital and this left the club in an extremely vulnerable position and one from which there was no certainty that we would be able to recover.
"After giving extremely careful consideration to the events of the past few years and the club's current financial situation, I am prepared to increase my financial support to assist in addressing the ongoing financial difficulties that we have and to progress the stadium project through the initial planning and consultancy stages with the objective of the new stadium becoming a reality.
"I have already informed the shareholders within this letter that I have committed substantial financial assistance to the club in the form of loans, guarantees and support for the Inland Revenue settlement.
"In view of the likely further amounts that it would be necessary for me to provide, particularly to progress the new stadium project, and the additional amount of risk that I would be exposing myself to in committing these further funds, I believe that it is only reasonable for me to have effective voting control during this time to ensure that the club is not subsequently destabilised through significant private share transactions.
"I would confirm to the shareholders and state quite categorically that I have no desire to increase my shareholding beyond the amount that would provide me with effective voting control, ie 51 per cent.
"I have no desire to increase my shareholding beyond this amount and effectively become the owner of the club."
He pointed out that in many areas a 75 per cent majority was needed to get resolutions through.
"I merely feel that it would be reasonable for me to have effective voting control while I am so heavily committed to providing financial support to the club. I am only considering this course of action as our attempts to attract new directors and widen share ownership have not produced the results we hoped for. "Therefore, I feel that I have no choice but to extend my financial support to the club in an attempt to secure its long term existence, but I am only prepared to do so on the basis that I secure effective voting control during this time."
It was not his preferred course of action, he said, but he felt it was now the only one available to secure and protect the existing shareholders' interests.
"Should we be unable to secure additional funding the threat of administration remains a very real possibility. At present your shares have no tangible value and although it may take some considerable time before we are able to rectify this situation, my proposals are intended to secure the future of the club and place it in a position whereby your shares will once again have a value and I may indeed be able to recover/be released from some of my financial commitment to the club."
"I hope that all of our Shareholders agree that I am being reasonable in my request for support to help the club through our ongoing financial difficulties and to take us forward to our new home.
"Naturally, however, should I not receive shareholders' support myself and the board would need to reconsider our plans."
With acknowledgement to the Grimsby Telegraph www.thisisgrimsby.co.uk
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