Trust Legal Action Called Off

[Darran]

I have just emailed the Trust and resigned my membership.

They won't give a tuppenny fuk mush, I've felt it for a long time that, some of those on the board loved the fact they could go to games and sit where it would satisfy their own self importance, the wag the tail clown was a prime example.

I couldn’t give a f*ck if they care or not. The Trust is dead to me.

 

[monmouth]

It’s a little known fact that when the new board was formed I was asked to get involved again with the legal sub group despite no longer being a board member. I didn’t contribute much because my involvement was to be around communications and helping with that when the case proceeded to court. I’m not a lawyer or a financial expert. Anyway, it quickly became obvious that the new board was absolutely determined to settle at any cost despite and against the very strong advice of the actual experts on the sub group, mainly Lisa and Andy G. As Lisa has confirmed above, they both resigned as a result, Lisa also resigned from her position as finance affiliate to the board. Todays capitulation is no surprise to me or I’d imagine to either of them. The day the Swans Trust effectively committed suicide. Still, at least they’ll get their spots in hospitality. I’m more than happy to say publicly that’s what many if not most of the current board are in it for.

Fucking hell. These fuckers need to be run out of town.

 

[Swanseafan]

The trust members voted for legal action unless the club came up with an acceptable offer.

Maybe the trust should at least ask their members.

 

[Vetchonian]

Ive just submitted the following e-mail

As a longstanding member I am very disappointed that this decision has been made without consulting the membership. As a result I want you to accept this e-mail as my resignation from the Swans Trust and will not be renewing next year. Good luck increasing the membership after your glaring disregard for those current members and their wishes

Have you any reply?

 

[monmouth]

They should put their decision to the members. I accept that it's too late to change the decision now but the membership should be allowed a vote on whether it was the right and acceptable decision. If the membership back the decision then fine but if the membership vote against it the entire board should resign.
A new board couldn't change it but at least the board members who have betrayed the membership would be out and not enjoying prawn sandwiches in the club boardroom.

100% this. If it’s such a great deal, they can answer questions on it, and the membership will ratify it. If not, each and every one of them should resign and not benefit from their tawdry sellout.

My initial reaction was we have another set of sellouts. I see no reason to change my view. They should be subject to the same contempt.

 

[BLAZE]

Sorry if this has been discussed, I don't have time to read the whole thread atm

£500k settlement... How much did it cost to build the case for legal action?

 

[SwanseaJames]

Fully agree as I've already posted.

Not sure if anyone can answer this, to a very simple person.

If the loan is now taken as shares at today's value and the Trust drop from 21% to 15% holding.

Does that mean the current majority holders drop pro rata from 68% to 48%?

I know other shareholders will take a hit as well, but if now 48% plus voting rights does not now give them the equivalent 75% voting rights.

In short, if that makes some sense, is Silverstein now the holder of power, even though he will vote with the majority

My understanding is the the current majority owners also loaned the club money, essentially matching Silverstein. I believe this is to avoid the “watering down” of their shares.

So, essentially, Silverstein is buying the 6% from the trust (plus whatever the majority shareholders or others are giving up) for the £5m he “loaned” the club.

The trust is just not receiving that money (only £500k) as they didn’t match the loan.

Someone in the know please correct me if I’m wrong, but the trust lost 6% of the club because we couldn’t temporarily match the other owners loans? The interest rates were favorable, so I don’t understand how we couldn’t have taken out a bank loan using the shares as collateral and the interest would have at least nullified one another.

Essentially, we just got leveraged out of 6% of the club.

Not quite.

Silverstein has loaned £5,000,000. Those loans were (I understand) non interesting bearing, convertible loans. Silverstein had the contractual option to convert the debt to equity.

Silverstein appears to be close to exercising his contractual right to convert. This will dilute the Trust, because the Company will issue more shares. He won't take shares from the Trust, he will receive "new" shares.

The trust will keep the number of its shares, but its percentage goes down. For example, if there are 100 shares, and the trust currently owns 3, that's 3% shareholding. If Silverstein is given 10 shares, the Company will have 110 shares; the trust will still own 3, but they will have a 2.7% shareholding.

The Company will likely decide to disapply pre-emption rights (i.e. the right of first refusal to shares for current shareholders).

This would mean the Trust would not have the chance to subscribe for further shares.

The Trust and the Majority Owners will be diluted, and there's nothing they can do about it.

However - and if pre-emption rights are not disapplied - the Trust and the Majority Owners will be given an opportunity to purchase more shares.

If they wished to retain a percentage shareholding, the Trust would need to meet a £5,000,000 cash call. The Trust does not have the cash reserves to be able to subscribe for more shares based on its accounts.The Majority Shareholders may have the funds to do so, who knows.

What does this mean in practical terms?

Well, in theory, Silverstein or the majority owners could lend on the same terms in the future - although next time, it could be £10,000,000 with convertible rights. This would dilute the Trust again, possibly below 5%.

The silver lining to this deal is that the Trust will always have 5% by hook or by crook.

Disclaimer - I am in no way condoning the deal at this stage, I need to hear what the Lawyers have to say next week.

 

[Cinio Dydd Sul]

The majority owners matched Silversteins loan of circa £5mill. And Winter said other shareholders contributed too. To take the total to roughly £13mill.

So Levein won't get diluted at all, Jenkins & Morgan might a bit, depending on how much they put in (if they did).

The loan is interest garnering, 5% I believe.

 

[exiledclaseboy]

There’s a lot of revisionism happening at tonight’s meeting. By revisionism you could argue I’m being kind. Some would call it lies.

 

[bakajack]

So we have gone from a situation where shares were sold with the club valued at £100m (so essentially £1m per 1%) to the trust accepting £500k?

Even though I was not a member of the trust I can totally see why people are livid with this "resolution". Considering that the shares that will now be diluted were worth £6m at the point of sale to accept £500k (which may not even cover the legal costs thus far) with zero discussion with the trust membership is diabolical.

I see and somewhat understand the argument that non disclosure agreements would have prevented a vote without hurting the trust case from a legal standpoint, but the trust could have put the decision to make that call into the hands of the membership without breaking any NDA first and then let the trust membership decide that.

As Phil said earlier, we have now changed from a trust into a supporters club. Anyone who thinks that 15% has any meaningful say in anything (let alone 5% guaranteed shareholding which I am not sure how enforceable that actually is) is having a laugh.

 

[SwanseaJames]

The majority owners matched Silversteins loan of circa £5mill. And Winter said other shareholders contributed too. To take the total to roughly £13mill.

So Levein won't get diluted at all, Jenkins & Morgan might a bit, depending on how much they put in (if they did).

The loan is interest garnering, 5% I believe.

They may have financially matched it, but it may not be convertible. I guess I am guessing at this point, mate. But, crucially, if the Majority Owners didn't have a right to convert, and pre-emption rights (i.e. first refusal rights) were disapplied once Silverstein exercised his contractual right, then they get diluted. Look at Vincent Tan - he has been converting debt to equity over at CCFC for years, and diluting minority shareholders as a result. That's the nature of converting debt into equity.

EDIT - Trust confirmed that £13m is convertible. My bad.

 

[BLAZE]

Sorry if this has been discussed, I don't have time to read the whole thread atm

£500k settlement... How much did it cost to build the case for legal action?

The £500k is probably less than paid out progressing the action mandated by the members and I wonder if the lawyers will want an extra payment from that given they can easily claim that they helped negotiate a settlement (remember they were always for mediation time and time again)

Please correct me if I'm reading this wrong, but as I feared we've settled for an amount that's probably less than what the pursuit of legal action had cost us to date? F*ck me.

 

[Cinio Dydd Sul]

The majority owners matched Silversteins loan of circa £5mill. And Winter said other shareholders contributed too. To take the total to roughly £13mill.

So Levein won't get diluted at all, Jenkins & Morgan might a bit, depending on how much they put in (if they did).

The loan is interest garnering, 5% I believe.

They may have financially matched it, but it may not be convertible. I guess I am guessing at this point, mate. But, crucially, if the Majority Owners didn't have a right to convert, and pre-emption rights (i.e. first refusal rights) were disapplied once Silverstein exercised his contractual right, then they get diluted. Look at Vincent Tan - he has been converting debt to equity over at CCFC for years, and diluting minority shareholders as a result. That's the nature of converting debt into equity.

The whole thing combined is being called a convertible loan note, so I presume Leveins chunk is also convertible and he won't get diluted because they matched Silverstein's loan.

 

[SwanseaJames]

They may have financially matched it, but it may not be convertible. I guess I am guessing at this point, mate. But, crucially, if the Majority Owners didn't have a right to convert, and pre-emption rights (i.e. first refusal rights) were disapplied once Silverstein exercised his contractual right, then they get diluted. Look at Vincent Tan - he has been converting debt to equity over at CCFC for years, and diluting minority shareholders as a result. That's the nature of converting debt into equity.

The whole thing combined is being called a convertible loan note, so I presume Leveins chunk is also convertible and he won't get diluted because they matched Silverstein's loan.

Yep - Trust AGM just confirmed that too. Sorry my bad!!

 

[crazedbison]

My understanding is the the current majority owners also loaned the club money, essentially matching Silverstein. I believe this is to avoid the “watering down” of their shares.

So, essentially, Silverstein is buying the 6% from the trust (plus whatever the majority shareholders or others are giving up) for the £5m he “loaned” the club.

The trust is just not receiving that money (only £500k) as they didn’t match the loan.

Someone in the know please correct me if I’m wrong, but the trust lost 6% of the club because we couldn’t temporarily match the other owners loans? The interest rates were favorable, so I don’t understand how we couldn’t have taken out a bank loan using the shares as collateral and the interest would have at least nullified one another.

Essentially, we just got leveraged out of 6% of the club.

Not quite.

Silverstein has loaned £5,000,000. Those loans were (I understand) non interesting bearing, convertible loans. Silverstein had the contractual option to convert the debt to equity.

Silverstein appears to be close to exercising his contractual right to convert. This will dilute the Trust, because the Company will issue more shares. He won't take shares from the Trust, he will receive "new" shares.

The trust will keep the number of its shares, but its percentage goes down. For example, if there are 100 shares, and the trust currently owns 3, that's 3% shareholding. If Silverstein is given 10 shares, the Company will have 110 shares; the trust will still own 3, but they will have a 2.7% shareholding.

The Company will likely decide to disapply pre-emption rights (i.e. the right of first refusal to shares for current shareholders).

This would mean the Trust would not have the chance to subscribe for further shares.

The Trust and the Majority Owners will be diluted, and there's nothing they can do about it.

However - and if pre-emption rights are not disapplied - the Trust and the Majority Owners will be given an opportunity to purchase more shares.

If they wished to retain a percentage shareholding, the Trust would need to meet a £5,000,000 cash call. The Trust does not have the cash reserves to be able to subscribe for more shares based on its accounts.The Majority Shareholders may have the funds to do so, who knows.

What does this mean in practical terms?

Well, in theory, Silverstein or the majority owners could lend on the same terms in the future - although next time, it could be £10,000,000 with convertible rights. This would dilute the Trust again, possibly below 5%.

The silver lining to this deal is that the Trust will always have 5% by hook or by crook.

Disclaimer - I am in no way condoning the deal at this stage, I need to hear what the Lawyers have to say next week.

It’s been some months, but I’m pretty certain that the loans that were £5m from Silverstein’s family trust and £5m from the US consortium were interest bearing at something between 5-10% but it wasn’t payable if the loan(s) was converted. I definitely could be mistaken.

I understand how share dilution works. At the end of the day we own less of the club and someone else owns more. The trust wasn’t fully compensated for it. Would you not consider it a form of being leveraged out?

Additionally, I cannot understand how the majority owners and our new corporate daddy, Jake the Snake, think this was going to look anything but horrible for both them and the trust board. If I were them I’d have anticipated a revolt.