Dick Knight Share Dispute - Unnamed Director offer £0.01 per share

jamie the seagull · May 23, 2014

Did anyone else hear the interview this morning with Dick Knight on the BBC Sussex breakfast show.
An unnamed director has offered to buy Dick Knights shares for 0.01p each.
The club in a statment (they would not talk on radio) said it is in the club rules that if a director wants to sell their shares if must be offered to the existing directors first.
Dick says he wants to sell them to fans for £1.00 each (via his book).
Apparently it now goes to arbitration to put a true value on the price of Dick' shares.

For those of you that applied for shares you may not be getting them....

Gritt23 · May 23, 2014

Is this his shareholding in the Football Club or the Holding Company?

Gritt23 · May 23, 2014

I make the distinction, as I assume this is for his shares in the Holding company, in which he holds 1,002,500 shares. Therefore the offer from another director of £0.01 would be a token 51p for his 51 shares in the football club, but a far more respectable £10k for his shares in the holding company.

However, I would still say that offer is no more than a token, as his shares represent 1.54% of the total share count, so an offer of £0.01 only values the club at £650k. I know you don't get full value as a minority shareholder, but that does seem a bit extreme.

Comes down to whether you are expecting fair value, or an old school football sale of a token payment from the richest man in the Boardroom, so that the power and the money are together.

Westdene Seagull · May 23, 2014

I wonder why the director making the offer wants to remain anonymous ?

jamie the seagull · May 23, 2014

Gritt23 said:
Is this his shareholding in the Football Club or the Holding Company?

It is the shares he wants to sell to fans which I believe are the football club.

"Mr Knight said 262 fans had expressed an interest in buying the shares at £1 each.
But he said the club blocked the move and instead put forward an offer from an unnamed shareholder to buy his 100,000 shares for a “derisory” 1p each.
If an agreement cannot be reached Mr Knight can withdraw his offer to sell – or allow the club’s auditors to come to a ‘fair value’ price which will be legally binding".

glasfryn · May 23, 2014

Someone is taking the piddle

Albion 4ever · May 23, 2014

Thank you for your patience. Other club issues aside, I need to let you know where things stand on my proposed share sale.

Before reporting the latest developments, let me recap…

As I explained earlier, the Albion’s Articles of Association mean that before I could sell any of my shares to supporters I first had to offer them via the club to existing shareholders. I informed the club of my intention to sell 100,000 of my shares, and I then received a letter from the club containing an offer from an unnamed shareholder to buy the £1 shares for a penny each.

This was unacceptable, as I am sure they knew it would be.

(It was also surprising. The Articles, which I helped to draft in the 1990s, were designed to stop shares being sold to predators who would damage the club. They weren’t intended to stop them being sold to supporters.)

The next stage set out in the Articles was that the club’s auditors would be asked to come up with a Fair Value price for the shares. The figure would be binding on me and the unnamed person wanting to buy them.

After a delay the club’s auditors, Mazars, have now detailed the fees they will charge for valuing the shares. Given that the shares represent a minute proportion of the club’s issued capital, and that their sale would have no effect on the running of the business, one would expect this to be a simple matter and the charges to be low. Especially as a strong valuation guide has just been created by supporters willing to pay £1 each for 100,000 of my shares.

In fact, Mazars inform me the process is likely to cost tens of thousands of pounds. Presumably reflecting a brief given them by Albion’s board, a team of staff from the auditors would be involved at hourly charges of up to £450.00. And there would be a lot of hours involved – the first item in the details Mazars sent to me is a series of meetings to consider the terms of reference for the scope, methodology and timetable for their work. And I am expected to be personally responsible for 25 per cent of these charges.

This is entirely unreasonable – I would be forced to pay what could be a five figure sum to the auditors to consider a proposal - almost certainly instigated by a club director - to reduce the value of my shares by 99 per cent.

A situation of this kind was not envisaged when the Articles of Association were drawn up. The club cannot claim ‘’we are simply following the rules’’. This is a deliberate misinterpretation of Articles written to protect the Albion from predators, not its true fans.

Whether these actions are aimed at me or to stop supporters being shareholders I don’t know. I suspect that the former is a major consideration and that saddens me – like every true supporter I believe that because of its history the Albion is at its best when marching as one. This latest development suggests that not everyone in the club agrees.

The club and auditors also want me to sign a Non-Disclosure Agreement to keep this whole matter out of the public arena. While of course I would never disclose information commercially sensitive to the club, one can understand why they want to keep this private – but an impossible task given that they are aware I need to keep share applicants (over 270 now) informed of developments.

The overwhelming message I received from people following my Share Update of March 31, is that they are hugely disappointed by the club’s response. Because they genuinely wanted to show their commitment to the Albion beyond just as fans – as privileged owners of a tiny part of the club they love, and have fought for. Proud possessors of a share certificate they can frame and display on the wall – and hand down to future generations of their family.

These are not my words, but those of supporters like yourself disillusioned that the Albion, of all clubs, is taking this hard-nosed stance against the worthwhile wishes of a small group of its fans.

Some Albion fans who don’t share your intentions will no doubt accuse me of trouble-making in continuing to pursue this share sale at a difficult time for the club – and dismiss it as an irrelevance.

But this is nothing to do with the club getting prepared for the Premier League – it is about the club never forgetting its roots. About giving a few more of our supporters the chance to maintain the family traditions of the Albion, a cause that not only myself, but Tony Bloom, holds so dear.

The club can easily end the auditors’ valuation procedure farce by the mystery shareholder withdrawing his derisory 1p offer for my shares. But I suspect they want to drag this process on – seemingly prepared to pay tens of thousands of pounds in auditors’ fees to stop me selling a few of my shares to you, the fans.

I truly hope the club recognises the ludicrous and ill-judged nature of this situation, and allows your share dream to be realised.

Blue Valkyrie · May 23, 2014

All a bit sad, really.

seagullsovergrimsby · May 23, 2014

Westdene Seagull said:
I wonder why the director making the offer wants to remain anonymous ?

Because he has the right to remain anonymous ? DK may have more than a million shares but in reality they're only worth what another individual is prepared to offer for them. DK has been out manoeuvred by someone brighter than him using the club's rules and regulations to snaffle up the shares.

Gritt23 · May 23, 2014

Blue Valkyrie said:
All a bit sad, really.

Very sad. This is no way to treat the man who saved this club.

I know some on here feel we have moved on, and are sick of hearing about how DK saved us, BUT HE DID.

MattBackHome · May 23, 2014

Blimey.

Lord Bracknell · May 23, 2014

The issue is whether this mean and vindictive move by an anonymous shareholder (almost certainly a director of the club) is aimed at Dick Knight personally, or at the fans who have expressed an interest in buying a few shares. Or both.

Either way, there's something unsavoury about it.

Gritt23 · May 23, 2014

seagullsovergrimsby said:
Because he has the right to remain anonymous ? DK may have more than a million shares but in reality they're only worth what another individual is prepared to offer for them. DK has been out manoeuvred by someone brighter than him using the club's rules and regulations to snaffle up the shares.

There are rules protecting the rights of minority shareholders though. You can't just marginalise them to the point of their shares being worthless.

"out manoeuvred by someone brighter" is a sad state of affairs when it comes to the treatment of someone as vital to the Brighton story as Dick Knight. If that is really what our boardroom has come to, then the whole situation is rather upsetting. Who can out manoeuvre who, does tend to end up being "who can afford the best lawyer", and only peril lies down that road.

Giraffe · May 23, 2014

Albion 4ever said:
Thank you for your patience. Other club issues aside, I need to let you know where things stand on my proposed share sale.

Before reporting the latest developments, let me recap…

As I explained earlier, the Albion’s Articles of Association mean that before I could sell any of my shares to supporters I first had to offer them via the club to existing shareholders. I informed the club of my intention to sell 100,000 of my shares, and I then received a letter from the club containing an offer from an unnamed shareholder to buy the £1 shares for a penny each.

This was unacceptable, as I am sure they knew it would be.

(It was also surprising. The Articles, which I helped to draft in the 1990s, were designed to stop shares being sold to predators who would damage the club. They weren’t intended to stop them being sold to supporters.)

The next stage set out in the Articles was that the club’s auditors would be asked to come up with a Fair Value price for the shares. The figure would be binding on me and the unnamed person wanting to buy them.

After a delay the club’s auditors, Mazars, have now detailed the fees they will charge for valuing the shares. Given that the shares represent a minute proportion of the club’s issued capital, and that their sale would have no effect on the running of the business, one would expect this to be a simple matter and the charges to be low. Especially as a strong valuation guide has just been created by supporters willing to pay £1 each for 100,000 of my shares.

In fact, Mazars inform me the process is likely to cost tens of thousands of pounds. Presumably reflecting a brief given them by Albion’s board, a team of staff from the auditors would be involved at hourly charges of up to £450.00. And there would be a lot of hours involved – the first item in the details Mazars sent to me is a series of meetings to consider the terms of reference for the scope, methodology and timetable for their work. And I am expected to be personally responsible for 25 per cent of these charges.

This is entirely unreasonable – I would be forced to pay what could be a five figure sum to the auditors to consider a proposal - almost certainly instigated by a club director - to reduce the value of my shares by 99 per cent.

A situation of this kind was not envisaged when the Articles of Association were drawn up. The club cannot claim ‘’we are simply following the rules’’. This is a deliberate misinterpretation of Articles written to protect the Albion from predators, not its true fans.

Whether these actions are aimed at me or to stop supporters being shareholders I don’t know. I suspect that the former is a major consideration and that saddens me – like every true supporter I believe that because of its history the Albion is at its best when marching as one. This latest development suggests that not everyone in the club agrees.

The club and auditors also want me to sign a Non-Disclosure Agreement to keep this whole matter out of the public arena. While of course I would never disclose information commercially sensitive to the club, one can understand why they want to keep this private – but an impossible task given that they are aware I need to keep share applicants (over 270 now) informed of developments.

The overwhelming message I received from people following my Share Update of March 31, is that they are hugely disappointed by the club’s response. Because they genuinely wanted to show their commitment to the Albion beyond just as fans – as privileged owners of a tiny part of the club they love, and have fought for. Proud possessors of a share certificate they can frame and display on the wall – and hand down to future generations of their family.

These are not my words, but those of supporters like yourself disillusioned that the Albion, of all clubs, is taking this hard-nosed stance against the worthwhile wishes of a small group of its fans.

Some Albion fans who don’t share your intentions will no doubt accuse me of trouble-making in continuing to pursue this share sale at a difficult time for the club – and dismiss it as an irrelevance.

But this is nothing to do with the club getting prepared for the Premier League – it is about the club never forgetting its roots. About giving a few more of our supporters the chance to maintain the family traditions of the Albion, a cause that not only myself, but Tony Bloom, holds so dear.

The club can easily end the auditors’ valuation procedure farce by the mystery shareholder withdrawing his derisory 1p offer for my shares. But I suspect they want to drag this process on – seemingly prepared to pay tens of thousands of pounds in auditors’ fees to stop me selling a few of my shares to you, the fans.

I truly hope the club recognises the ludicrous and ill-judged nature of this situation, and allows your share dream to be realised.

Good luck, I think you are going to need it.

I thought it was only tinpot clubs like Palace that had owners posting on message boards and creating more trouble than it is worth.

if you had half ownership of the club I would understand what you are saying, but your shareholding is so minute now that it is meaningless and for that small a shareholding to leave one person and be replaced by 300 is a ridiculous admin burden on the club, and one that they understandably are keen to avoid.

The club is already owned by fans. Which current shareholder is not every bit as big a fan of the club as all of us?

seagullsovergrimsby · May 23, 2014

Gritt23 said:
There are rules protecting the rights of minority shareholders though. You can't just marginalise them to the point of their shares being worthless.

"out manoeuvred by someone brighter" is a sad state of affairs when it comes to the treatment of someone as vital to the Brighton story as Dick Knight. If that is really what our boardroom has come to, then the whole situation is rather upsetting. Who can out manoeuvre who, does tend to end up being "who can afford the best lawyer", and only peril lies down that road.

My opinion is that the board see themselves as a "closed shop" and don't want the annoyance of c270 individuals with a single share or piffling amount of shares to consider.

Lord Bracknell · May 23, 2014

seagullsovergrimsby said:
Because he has the right to remain anonymous ? DK may have more than a million shares but in reality they're only worth what another individual is prepared to offer for them. DK has been out manoeuvred by someone brighter than him using the club's rules and regulations to snaffle up the shares.

By the criterion set out in this post, DK has had serious expressions of interest that value the shares at £1, not 1p. Does the Director involved really put such a low value on the football club that we support? The manoeuvre that you seem to admire is the sort of ploy that fans should be very critical of. The number 56.25 comes to mind.

Gritt23 · May 23, 2014

seagullsovergrimsby said:
My opinion is that the board see themselves as a "closed shop" and don't want the annoyance of c270 individuals with a single share or piffling amount of shares to consider.

Why would that be? Surely they have all worked in companies that have 1000's of shareholders. It's not as if Tesco have to ask everyone before any decisions are made. It only allows to attend an AGM and ask a few questions at that. That seems a very minor inconvenience, and tbh, is no more than they do for fans forums anyway. No, I don't see that as being a very likely motivation for this.

Giraffe · May 23, 2014

I should also add it is very unfair for one side to be posted on here, when the club act much more professionally and you therefore know they won't be able to reply to your comments on this forum.

How will dealing with nearly 300 extra shareholders help the club?
How will it help the club meet FFP?
How will it stop the club being sold to another Archer type?
How will it help the fans get closer to the club?
How will it help the club have any say in the decision making of the club?

The answer to all of this is it won't help at all on any of these points. All it will do will give a few hundred fans a certificate on their wall. They can't stop the club being sold, they can't change the way it is run. It will make no difference to the anything other than to add some cost and administrative burden and time to the club when they have better things to be dealing with.

Wozza · May 23, 2014

Did Dick Knight really not know that he was legally obliged to offer his shares to existing directors first?

Or was he just being, well, a dick?

stss30 · May 23, 2014

Would 'fans' really want to buy shares if it causes the club a huge administrative headache? I presume that is what the club are trying to prevent, not targeting Dick Knight.

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