Chairman Bob Dorrian answers more questions with regards to January's announcement that the Board had agreed new investment of over £500,000 via new share purchases.
1. WHY HAVE SHAREHOLDERS FOUND OUT AFTER A CLUB STATEMENT, RATHER THAN ANY FORM OF LIAISON?
When certain third party shareholders are considering investing material amounts of money in the Club it is essential to deal with these matters on a confidential basis otherwise such proposals would be prejudiced.
2. WHAT HAS BEEN THE TOTAL COST TO SET UP THE HOLDING COMPANY? HAS IT BEEN PAID FOR BY LCFC CO. LTD., LCH LTD., DIRECTLY BY THE DIRECTORS INVOLVED, OR BY THE THREE INVESTORS ONLY?
The clear terms upon which £522,000.00 have been committed as share capital to the Club included the legal and administrative costs being met by the direct beneficiary of the new funds, i.e. the Club.
The Board of the Club is satisfied that any professional and administrative costs incurred have been reasonable and for fair value. The Accounts of the Club will, in due course, show such costs.
3. WITH SHARES BEING TRANSFERRED FROM AN EXISTING LIMITED COMPANY TO A NEW LIMITED COMPANY, SHOULDN'T THIS REQUIRE AN EGM OR AT LEAST A MEETING WITH SHAREHOLDERS? IF NOT PLEASE EXPLAIN WHY.
The Board of the Club has obtained legal advice in relation to the revised structure and it is satisfied that the formation of a Holding Company and the transfer of some shares in the Club by some shareholders to a new Holding Company does not require an Extra Ordinary General Meeting of the Club.
4. WHAT CLASS OF SHARES WILL BE ALLOCATED TO THOSE TRANSFERRED FROM THE EXISTING COMPANY?
No new class of Shares has been created in the Football Club. All shares in the Holding Company are Ordinary Shares ranking equally.
5. ARE THE BOARD THE ONLY PEOPLE WHO CAN INVEST IN THE NEW COMPANY AT PRESENT?
One of the reasons for the formation of the Holding Company is to attract new investment. By definition, and if the Board approves such new investment, new investment can be made in the Holding Company which will then directly benefit the Club, as the Holding Company's sole purpose is to hold shares in the Football Club.
6. OTHER THAN BOARD MEMBERS, HAVE ANY EXISTING LARGE SHAREHOLDERS BEEN APPROACHED TO TRANSFER THEIR SHARES INTO THE HOLDING COMPANY AND THEN BUY NEW SHARES TO JOIN THE BOARD?
As of yet no other existing large Shareholders have been approached to become investors in the Holding Company. However, any existing Shareholder or third party is at liberty to approach the Board in relation to proposals to invest new monies in the Holding Company and/or the Club.
7. WILL THERE BE DIFFERENT CLASSES OF SHARES IN THE HOLDING COMPANY?
As mentioned above there are no different classes of shares in the Holding Company.
8. WILL DIRECTORS IN THE HOLDING COMPANY GUARANTEE NEVER TO CLAIM ANY EXPENSES OR DIVIDENDS?
The Directors of the Holding Company must at all times act bona fide in the best interests of the Holding Company.
9. WILL THERE CONTINUE TO BE AN AGM OF THE EXISTING COMPANY?
The Club will continue to operate as previously through its Board and Shareholders and there will continue to be an AGM of the Club.
10. ARE ANY CHANGES ENVISAGED IN THE PRESENT ARTICLES OF LCFC CO. LTD?
There are no changes envisaged to the present Articles of the Club.
11. WHAT IMPORTANCE DO THE EXISTING SHARES HAVE IN THE BUSINESS?
All shares in the Club rank equally. No share rights have been changed in respect of Shares in the Club.
12. IF AN EXISTING SHAREHOLDER DECIDES TO INVEST £75K TO BECOME A FULL DIRECTOR WILL HIS EXISTING SHARES BE TRANSFERRED TO THE NEW COMPANY IF SO REQUESTED?
If any one Shareholder wishes to invest new monies of £75,000.00 or more then the arrangements in respect of such investment will be discussed on an individual basis at the appropriate time.
13. HAVE ALL DIRECTORS NOW GOT THE REQUISITE MINIMUM SHAREHOLDING OF £75K?
By the end of this financial year all directors will have paid the requisite amounts that entitle them to main board status.
14. IF A DIRECTOR RESIGNS DO THE SHARES REMAIN IN THE HOLDING COMPANY?
The circumstances of a Director resigning from either the Club or the Holding Company are matters to be dealt with at the relevant and appropriate time.
15. WITH £400K OF NEW MONEY INVESTED, HOW LONG DO YOU CALL SHORT TO MEDIUM TERM? THE £150K DIRECTORS LOANS ALREADY INVESTED AND USED TO EASE CASHFLOW HAS MORE OR LESS GONE WITHIN 6 MONTHS. DOES THIS MEAN AT CURRENT INCOME LEVELS ADDITIONAL INVESTMENT WILL BE REQUIRED BEFORE THE END OF NEXT SEASON?
The future financial position of the Club and the Holding Company depend on many different things not all of which are in the control of the respective Boards of the Company and Holding Company.
16. WITHOUT WAITING FOR THE DETAILS FROM COMPANIES HOUSE CAN YOU TELL US HOW MUCH NEW MONEY EACH PERSON/COMPANY HAS INVESTED INTO LCH LTD.
Lindum Group has committed £45,000.00 of new money.
Lincoln Co-Operative Limited has committed £70,000.00 of new money, £45,000.00 of which has been used to invest in new shares in the Club. Bob Dorrian has agreed to capitalise £121,000.00 of his existing loan in the Club for shares and to introduce a further £286,000.00 for subscription in new shares in the Football Club.
17. YOU SAY THAT AN INVESTOR WHO PUTS £75K INTO THE CLUB AT PRESENT HAS LESS THAN 2% OF THE EQUITY. YET WITH OVER 3 MILLION SHARES IN THE HOLDING COMPANY THAT WOULD RISE TO ONLY 2.4%. WHY WILL THE NEW BUSINESS MODEL BE MORE ATTRACTIVE TO NEW INVESTORS BASED ON SHARE OF EQUITY? SURELY AS NEW INVESTORS COME ALONG EACH SHAREHOLDING WILL BECOME DILUTED.
The circumstances of any new significant investment in either the Club or the Holding Company are difficult to predict but the Board of Directors of the Club believe that a large investor would be attracted to investing in the Club through the Holding Company.
18. IF AN INVESTOR ACCEPTED YOUR CAVEAT AND PUT IN THE £500K ALONG WITH A TAKEOVER PROPOSAL, WHAT PRICE WOULD YOU (AND THE BOARD) DEMAND PER SHARE FROM THE INVESTOR FOR YOUR SHAREHOLDINGS? WOULD YOU ALSO DEMAND THAT ALL OTHER SHAREHOLDERS IN LCFC CO. LTD. ARE PAID THE SAME AMOUNT PER SHARE.
Such a question is dependent on so many variables and future circumstances that it is not possible to answer.
Rest assured that the Board of Lincoln City Football Company Limited will continue to act bona fide in the best interest of it and any new substantial Investor would need to satisfy the existing Board of the Club that it is to invest a significant amount of new money in the Club before any shares in the Holding Company were transferred.
19. WHAT VALUE ARE EACH OF THE REMAINING SHARES IN THE EXISTING COMPANY WORTH COMPARED TO THE NEW HOLDING COMPANY. IF THERE WAS A SELL OUT IN THE FUTURE THE NEW OWNERS WOULD NOT NEED THEM AS THEY WOULD ALREADY OWN 75% OF THE TOTAL? DOES THAT MEAN THEY ARE NOW WORTHLESS?
It is not possible to make comment about the value of shares in the Club or the Holding Company. However the Board of the Club remain of the view that the creation of the Holding Company, the investment of new monies in to the Club, and the revised structure enhance the overall opportunities and thereby the potential future worth of all shares in the Club.
20. CAN YOU EXPLAIN WHY IT IS STILL AN ATTRACTIVE IDEA FOR ANYONE TO BUY SMALL QUANTITIES OF SHARES IN LCFC?
The Club remains in need of funds and every little helps the Club. For the above reasons the Board remains of the view that it is an attractive opportunity for small Shareholders to invest in the Club. In fact since the announcement of the re-structuring of the Club there has been an increase in interest for shares in the Club.
21. WITH LESS THAN 1% (8 OUT OF MORE THAN 800) OF THE TOTAL SHAREHOLDERS HOLDING CONTROL OF THE CLUB CAN WE NOW SAY QUITE CATEGORICALLY THIS IS THE END OF LINCOLN CITY BEING A COMMUNITY CLUB? DOESN'T THE FACT THERE ARE OVER 800 SHAREHOLDERS LEFT IN LCFC WITHOUT A VOICE CONFIRM THIS?
It has been made clear over the past few weeks that in the context of the commitment by The Supporters Trust, Lincoln Co-operative Limited, and Lindum Group in the Holding Company that the ethos of being a community Club, in the context of each of those entities having an interest in the Holding Company, retains for the Club a community interest. The remaining Shareholders of the Club retain the same voice as they had prior to the restructuring.
22. IF THE NEW ARRANGEMENT IS FAR MORE ATTRACTIVE TO INVESTORS, WHY HAVE THE TRUST, WHO ARE EXIISTING SHAREHOLDERS, LEFT AROUND 71,000 SHARES IN LCFC CO. LTD., YET THE CO-OP HAVE TRANSFERRED ALL THEIRS?
The Trust wished to retain a certain number of Shares in the Club and the offer to transfer Shares in the Club in exchange for Shares in the Holding Company was made at the particular figure of one million shares.
