Julian Winter update

[Cinio Dydd Sul]

I see Winter confirmed at tonight’s fan forum the Silverstein loan likely to be converted to shares.

The Trust is a major shareholder. I presume they‘d have known about that. Why weren’t the members informed in a short update? A two liner would have been enough. Which reminds me - tenner in the post for a renewal. Please prove it‘s worth it. Otherwise I‘ll be joining the WI next year.

What is the update? When he loaned the club money (at 5% interest) it was stated at the time that the loan could be converted to shares in the club at s later date.

I wonder if we'd won the play off final whether it would have been converted by now!? :roll:

 

[Longlostjack]

Just think that Winter is doing a better job at communicating than the Trust at the moment.

 

[Cinio Dydd Sul]

Just think that Winter is doing a better job at communicating than the Trust at the moment.

Hmm not sure how anyone could say that really. By Winter's own admission he hasn't really provided an update since the end of last season.

The trust tweets out updates, writes in the programme, email out monthly updates and there's new storys on their website at least weekly. So not sure realistically what more they can do? There's other stuff I've missed too.

 

[Cinio Dydd Sul]

I also believe he’s fibbing too there hasn’t been any investment from Silverstein it’s a loan.
I sit to be corrected.

the loan in which we are using the monies, surely that's an investment is it not?

An investment is where you HOPE to receive back your outlay and more.

A loan is where you are contractually GUARANTEED to receive back your outlay (plus interest).

So yes while Silverstein from his own personal viewpoint & finances could look at it as a zero risk investment earning interest in uncertain times, the club as it stands has to pay it back. Which wouldn't be the case with actual 'investment'.

 

[leighton]

The issue with the conversion is the price at which the loan converts to shares.

e.g. £5m loan converting at £1 per share gets 5 million shares
Same loan converting at £10 per share gets 500,000 shares

Has an impact in terms of rebalancing equity ownership - existing shareholders ‘diluted’ in the jargon.

You can (and I’m sure people have) also consider this in terms of overall value of the company (equity value - the value of all the shares in the company; not enterprise value). Say equity value is £100 million (rumoured to be the value at which the original American investment was made, IIRC) - if a £5m loan converts at that value it gets a short 5% stake. But if the conversion was at a value of £20m (recognising the deterioration in the business since relegation) that £5m gets a 20% stake (5/(5+20)).

Other shareholders are diluted - Where does the issue of new shares following the conversion leave the Trust stake?

 

[monmouth]

Other shareholders are diluted - Where does the issue of new shares following the conversion leave the Trust stake?

in front of a bloody judge at last I would hope, 5 years later.

 

[Cinio Dydd Sul]

The issue with the conversion is the price at which the loan converts to shares.

e.g. £5m loan converting at £1 per share gets 5 million shares
Same loan converting at £10 per share gets 500,000 shares

Has an impact in terms of rebalancing equity ownership - existing shareholders ‘diluted’ in the jargon.

You can (and I’m sure people have) also consider this in terms of overall value of the company (equity value - the value of all the shares in the company; not enterprise value). Say equity value is £100 million (rumoured to be the value at which the original American investment was made, IIRC) - if a £5m loan converts at that value it gets a short 5% stake. But if the conversion was at a value of £20m (recognising the deterioration in the business since relegation) that £5m gets a 20% stake (5/(5+20)).

Other shareholders are diluted - Where does the issue of new shares following the conversion leave the Trust stake?

I believe it's impossible to say currently. It would depend on things whether the other sellouts like Morgan choose to weigh in or be diluted, but the trust's share percentage would reduce.

However the 'imminent' legal action could result in the trust no longer being a shareholder and there not being affected by any dilution.

 

[Longlostjack]

The issue with the conversion is the price at which the loan converts to shares.

e.g. £5m loan converting at £1 per share gets 5 million shares
Same loan converting at £10 per share gets 500,000 shares

Has an impact in terms of rebalancing equity ownership - existing shareholders ‘diluted’ in the jargon.

You can (and I’m sure people have) also consider this in terms of overall value of the company (equity value - the value of all the shares in the company; not enterprise value). Say equity value is £100 million (rumoured to be the value at which the original American investment was made, IIRC) - if a £5m loan converts at that value it gets a short 5% stake. But if the conversion was at a value of £20m (recognising the deterioration in the business since relegation) that £5m gets a 20% stake (5/(5+20)).

Other shareholders are diluted - Where does the issue of new shares following the conversion leave the Trust stake?

I believe it's impossible to say currently. It would depend on things whether the other sellouts like Morgan choose to weigh in or be diluted, but the trust's share percentage would reduce.

However the 'imminent' legal action could result in the trust no longer being a shareholder and there not being affected by any dilution.

What Shareholder Agreement are we talking about though?

 

[leighton]

I’ve answered my own question … the document constituting the convertible loan is filed at Companies House. Conversion is at an equity value of £30 million.

Means the convertible would convert into 5/35 or about 14% equity stake. The Trust’s 20% would dilute to something slightly above that number.

Quite a write down for those who invested at £100 million.

Caveat: based only on a 2 minute read …