The Loan notes and future dilution

[PSumbler]

SO these loan notes and I am by no means an expert on this but here is my take.

I just cannot see Silverstein right now converting the loan notes. Converting (an estimated)£10m into shares against a club valuation of (estimate) £35m just doesnt make sense against a side in the lower half of the Championship. If we were to come within a decent shot of the Premier League then he may be tempted to convert then as it would be financially beneficial to do it in the Championship before a move to the Premier League. So I firmly believe that the Trust talking about them being converted is again slightly misleading at best.

Andy Godden put a good question on the Trust members facebook page which read "Can you confirm if any agreement is in place regarding the future valuation of the club for any future capital calls? For example, will they be valued at the same valuation that is put in place for the Silverstein/Majority Owners loan? The reason I ask is that is there anything in place to protect against, for example, issuing new equity at a club valuation of £10m just to dilute the Trust down at a very significant level?" - The answer to this is critical for the Trust to have considered so I would hope they have. As Andy notes, if there is nothing in there to protect the valuation of the club a 16% shareholding could be all but wiped out with a small speculation ahead of say a promotion that could increase the value of the club by multiple times thus wiping out the Trust value overnight. Again.

It is certainly not inconceivable for the Trust to find themselves in position that they retain that 21% shareholding throughout any Championship campiagn (or lower) but expect that to go down very rapidly if there is a sniff of promotion back to the topflight.

All IMO of course.

 

[Uxy]

SO these loan notes and I am by no means an expert on this but here is my take.

I just cannot see Silverstein right now converting the loan notes. Converting (an estimated)£10m into shares against a club valuation of (estimate) £35m just doesnt make sense against a side in the lower half of the Championship. If we were to come within a decent shot of the Premier League then he may be tempted to convert then as it would be financially beneficial to do it in the Championship before a move to the Premier League. So I firmly believe that the Trust talking about them being converted is again slightly misleading at best.

Andy Godden put a good question on the Trust members facebook page which read "Can you confirm if any agreement is in place regarding the future valuation of the club for any future capital calls? For example, will they be valued at the same valuation that is put in place for the Silverstein/Majority Owners loan? The reason I ask is that is there anything in place to protect against, for example, issuing new equity at a club valuation of £10m just to dilute the Trust down at a very significant level?" - The answer to this is critical for the Trust to have considered so I would hope they have. As Andy notes, if there is nothing in there to protect the valuation of the club a 16% shareholding could be all but wiped out with a small speculation ahead of say a promotion that could increase the value of the club by multiple times thus wiping out the Trust value overnight. Again.

It is certainly not inconceivable for the Trust to find themselves in position that they retain that 21% shareholding throughout any Championship campiagn (or lower) but expect that to go down very rapidly if there is a sniff of promotion back to the topflight.

All IMO of course.

There's no way he converts that existing note IMO. Tells its own story that conversion wasn't part of this agreement.

 

[PSumbler]

SO these loan notes and I am by no means an expert on this but here is my take.

I just cannot see Silverstein right now converting the loan notes. Converting (an estimated)£10m into shares against a club valuation of (estimate) £35m just doesnt make sense against a side in the lower half of the Championship. If we were to come within a decent shot of the Premier League then he may be tempted to convert then as it would be financially beneficial to do it in the Championship before a move to the Premier League. So I firmly believe that the Trust talking about them being converted is again slightly misleading at best.

Andy Godden put a good question on the Trust members facebook page which read "Can you confirm if any agreement is in place regarding the future valuation of the club for any future capital calls? For example, will they be valued at the same valuation that is put in place for the Silverstein/Majority Owners loan? The reason I ask is that is there anything in place to protect against, for example, issuing new equity at a club valuation of £10m just to dilute the Trust down at a very significant level?" - The answer to this is critical for the Trust to have considered so I would hope they have. As Andy notes, if there is nothing in there to protect the valuation of the club a 16% shareholding could be all but wiped out with a small speculation ahead of say a promotion that could increase the value of the club by multiple times thus wiping out the Trust value overnight. Again.

It is certainly not inconceivable for the Trust to find themselves in position that they retain that 21% shareholding throughout any Championship campiagn (or lower) but expect that to go down very rapidly if there is a sniff of promotion back to the topflight.

All IMO of course.

There's no way he converts that existing note IMO. Tells its own story that conversion wasn't part of this agreement.

I agree

Which just adds to this line "The Trust currently holds just over 21% of the shares in the club. Over the coming months the Trust understands that convertible loans that have previously been made to the club will be converted into equity (new shares). This conversion (which affects all existing shareholders) will “dilute” our 21% shareholding to just above 15% of the shares in the club" from yesterday's statement. The Trust said here effectively they believe it was happening and yet under (yours I think) questioning last night they stated they didn't know (as surprise surprise the Americans would not tell them!)

 

[Uxy]

There's no way he converts that existing note IMO. Tells its own story that conversion wasn't part of this agreement.

I agree

Which just adds to this line "The Trust currently holds just over 21% of the shares in the club. Over the coming months the Trust understands that convertible loans that have previously been made to the club will be converted into equity (new shares). This conversion (which affects all existing shareholders) will “dilute” our 21% shareholding to just above 15% of the shares in the club" from yesterday's statement. The Trust said here effectively they believe it was happening and yet under (yours I think) questioning last night they stated they didn't know (as surprise surprise the Americans would not tell them!)

Aye, it was my question. No guarantees whatsoever. Also commented last night that I don't believe it will be converted. Might be wrong, I didn't predict yesterday either...

To be honest, I don't think the Trust can be anti-investment if it's for the good of the club. But it looks like we've just taken this loan to spunk it on player wages rather than cut our cloth accordingly. Winter's words about further funds needed hint that we're running above 100% of turnover. Should note I don't know for certain as obviously haven't seen a set of accounts in some time. I wonder if the Trust still gets them...

 

[PSumbler]

Maybe under a cloak of 2 NDAs - one about the accounts and one about the NDA about the accounts

Traded it for a dessert on matchdays

 

[3swan]

Maybe under a cloak of 2 NDAs - one about the accounts and one about the NDA about the accounts

Traded it for a dessert on matchdays

Could I just clarify. The loans were in place without the Trust knowing? And still don’t know the details?

 

[Uxy]

Maybe under a cloak of 2 NDAs - one about the accounts and one about the NDA about the accounts

Traded it for a dessert on matchdays

Could I just clarify. The loans were in place without the Trust knowing? And still don’t know the details?

The Trust knew about the convertible notes being authorised by the board (the Trust was outvoted) and made several public statements about them, mentioned it in AGM etc. I know cos I wrote them . In fact, what was authorised hasn't fully been borrowed yet, so there is some confusion about the amounts. Not for me to talk about the terms of the loan, but from what I saw I'd be surprised if they were unless we were on the cusp of promotion, not hovering around relegation.

My point on the accounts is that we used to get monthly management accounts, but I don't know if that still happens. Previously those were reviewed by the Finance subgroup which was Stu, Lisa and myself, who all have some experience of reading financial reports. I'm not sure if the Trust still receives them, or what mechanisms are now in place for review with the likes or Gareth. Davies and by whom.

 

[3swan]

Thanks Ux. Just a final query , did the Trust find out before the vote took place. On the day etc or knew in advance that negotiations were under way of Silverstein involvement

 

[Uxy]

Thanks Ux. Just a final query , did the Trust find out before the vote took place. On the day etc or knew in advance that negotiations were under way of Silverstein involvement

The Trust knew when a board meeting was called. Had a short period of notice beforehand.

Of course, once 2016 happened, the other side had majority voting rights anyway.

 

[Cinio Dydd Sul]

Maybe under a cloak of 2 NDAs - one about the accounts and one about the NDA about the accounts

Traded it for a dessert on matchdays

Could I just clarify. The loans were in place without the Trust knowing? And still don’t know the details?

I wrote to the trust to clarify these loans. The reply I had was that the trust was informed prior to the loans going public, but at that point they were under the impression that the arrangements were not complete. The next thing they heard on it was the same time as we all did.

The trust were not invited to join and the trust apparently requested more information but they have yet to receive a reply.

Because the make up of them is murky. It was announced it was just Silverstein, matched by Levein. Winter then a while later mentions other shareholders being involved. Well in theory the only other shareholders are Morgan and Jenkins. Who could potentially have topped it up to £13mill and that could mean they do not get diluted if the gets converted.

 

[3swan]

Thanks Ux and Chief.

The reason for the clarification was the comment on Tuesday's joint announcement about working together etc. I acknowledge that there was the threat of a court case but I would still be wary of the undercurrent of secrecy that has been there from day 1

 

[monmouth]

Thanks Ux and Chief.

The reason for the clarification was the comment on Tuesday's joint announcement about working together etc. I acknowledge that there was the threat of a court case but I would still be wary of the undercurrent of secrecy that has been there from day 1

They have less incentive than ever to do anything than smile to their faces, tell them nothing and just call them 'w**kers' when they leave the room. I've seen it so often. Stoke their sense of importance to their face, tell them how vital they are, get them to help your PR and laugh at them behind their back as the brainless easily manipulated spineless turds that they are.

I thought I'd be over this today. I'm normally good with things that can't be changed, but I just seem to be getting more annoyed about it.

 

[Uxy]

Thanks Ux and Chief.

The reason for the clarification was the comment on Tuesday's joint announcement about working together etc. I acknowledge that there was the threat of a court case but I would still be wary of the undercurrent of secrecy that has been there from day 1

I've seen precious little evidence that anything has changed. Or ever will.

Last year I had a few conversations with Jake Silverstein. The last one was about a few days before I found out about Steve Cooper leaving. Until that point, he'd been saying about how he wanted to work closely with us and keep us in the loop on any major decision making, so I asked what the plans were for that summer. There was nothing meaningful in return. That told me everything I needed to know, as obviously there was.

 

[3swan]

Thanks Ux and Chief.

The reason for the clarification was the comment on Tuesday's joint announcement about working together etc. I acknowledge that there was the threat of a court case but I would still be wary of the undercurrent of secrecy that has been there from day 1

I've seen precious little evidence that anything has changed. Or ever will.

Last year I had a few conversations with Jake Silverstein. The last one was about a few days before I found out about Steve Cooper leaving. Until that point, he'd been saying about how he wanted to work closely with us and keep us in the loop on any major decision making, so I asked what the plans were for that summer. There was nothing meaningful in return. That told me everything I needed to know, as obviously there was.

Thanks I didn't want to give my full thoughts on my original post, but wanted to see where it got to. You have now confirmed my thoughts.

 

[3swan]

Thanks Ux and Chief.

The reason for the clarification was the comment on Tuesday's joint announcement about working together etc. I acknowledge that there was the threat of a court case but I would still be wary of the undercurrent of secrecy that has been there from day 1

They have less incentive than ever to do anything than smile to their faces, tell them nothing and just call them 'w**kers' when they leave the room. I've seen it so often. Stoke their sense of importance to their face, tell them how vital they are, get them to help your PR and laugh at them behind their back as the brainless easily manipulated spineless turds that they are.

I thought I'd be over this today. I'm normally good with things that can't be changed, but I just seem to be getting more annoyed about it.

Yes I've seen similar. As I've posted previously I didn't renew membership this season as imo it wasn't the Trust I believed in from day 1. When I think back, for years, for good or bad, the Trust was there for supporters. Now I don't think it's there to fight for us.