Albion plan Rights Issue

27 October 2000

West Bromwich Albion plc have notified shareholders of their plans to raise further funds for the Club through a Rights Issue. The issue, which comprises 52,468 Ordinary Shares, which will be offered to existing shareholders at a purchase price of £70 on the basis of three new shares for every five they currently hold. Shares will NOT be available to anyone who does not currently own shares in the plc; this would require a public offering and is a far more complex operation. However, any shares offered to existing shareholders, but not taken up, may be bought by other shareholders, which still leaves the door open to anyone wanting to invest significant funds in the Club. To qualify for the Issue, shareholders must be on the record by the 3rd November - so you might just about have time to get in there...

One of the key reasons behind the issue is to allow new investors to bring money in. Chairman Paul Thompson told members of the Supporters Club "We've had people in the past who've said they wanted to buy shares in the Club, but wanted the money to go to the Club rather than into the pockets of the existing owners. The Rights Issue gives those people the means to put that money into the Club, assuming they are still interested". Thompson has said in the past that he'd like to bring two new Directors onto the Board, putting a million pounds each into the Club, and has now provided the mechanism to do it. One of the clauses in the resolution to be put to shareholders to approve the issue is the consent for the Directors to allocate otherwise unwanted shares as they consider appropriate, which allows them to use them to attract new investors who are not already shareholders.

If every single available share is bought, the Issue will raise a total of £3.67 million, which will be used to fund the construction of changing facilities at the new Football Development Centre as well as providing some of the funds needed to replace the Rainbow stand. The Club has already spent £861,000 on the 46 acres of land required for the Development Centre, and now has to find the half a million pounds required to build the facilities. It also plans to start building work on the new stand just after Christmas, for completion by the start of next season at a total cost of £5.25 million.

The existing Directors have already committed themselves to taking up various quantities of shares as part of the issue. Joe Brandrick, Barry Hurst and Clive Stapleton have committed to take up the shares allocated to them under the terms of the issue - a total of 2310 shares, raising £161,700 in total. In addition, Barry Hurst and Clive Stapleton have each committed to buy up to a further 823 and 797 shares respectively, providing they are available through other shareholders not wanting to take up their entitlement, raising up to a further £113,400 between them.

Paul Thompson's situation, unfortunately, is a bit more complicated. He already holds 30% of the shares in the plc, the maximum he is allowed to hold under Stock Market regulations. Although he has committed to put up to £931,000 of his own money into the Club, he will only be able to do this if the rest of the shares are all taken up and he can therefore maintain his holding at 30%. If the rest are not all taken up, the amount Thompson is limited to could fall as low as £525,000. Together with the other Director's contributions, this means that the issue is guaranteed to raise at least £800,000 - more than enough to complete the work on Albion's Football Development Centre.

There are two key issues involved with the issue. First, it won't happen at all until it has been put to the shareholders at an Extraordinary General Meeting, to be held at the same time as the plc's AGM in November, and approved by a large enough majority. In accordance with the Club's normal procedure, the Resolution will be put to a show of hands, with a full ballot carried out if deemed necessary. As an Ordinary Resolution, it should require a simple majority in order to be accepted, and as the current Board have already committed their combined 34.7% of the shares in favour of the proposal, it shouldn't take too much more support to get it passed.

The real question, of course, is how much the issue will raise. The Board have stated that they expect it to generate £1.5 million, which would leave enough shares unclaimed to bring in two investors at a million each. However, it will be interesting to see how the other major shareholders - Tony Hale and Graham Waldron - react to the Issue. If both take up their allocation, that will bring in a further £895,000 and decrease the amount available for other investors (but, obviously, making the Club nearly a million pounds better off). At the moment they hold 24.4% of the shares between them, which with just a small amount of support from a few others would be enough to block any major constitutional changes proposed by the Board in the future. If they don't take up their entitlement under the issue, they will find their power to control the Club's future seriously eroded. And if they take the other course of action - to try and prevent the Issue from taking place - they'd be guilty of doing just what Tony Hale got into serious legal trouble for accusing Paul Thompson of trying to do.

Interesting times lie ahead...

Previous Stories:

  26 October 2000:  Kasper's in hot water!

  20 October 2000:  Ugo - About Bloody Time!

  19 October 2000:  Alternative Ticket Office!

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