Charles Bannerman

Thank you for that insight into what seems to be a legally complex situation! It continues to seem to be that the need otherwise for a General Meeting is fairly central here. (And on the subject of General Meetings, the AGM is now 13 days overdue.) There is possibly an issue of trust here since I don’t think that there is huge supporter confidence in how “up front” the operation of the club has been of late. By the way, Wikipedia is already listing 77 as “Owners” and I have started a new thread on that.

Pardon me if this has been picked up in another thread, but according to the club’s Wikipedia entry, Seventy7 is already listed as the “Owner” of ICTFC. Because Mr Makwana has said he doesn’t expect significant movement until the end of this month, I am taking this more likely to be one of these things that can happen on Wikipedia when an entry is made by an unofficial source, and that a “Citation Needed” should be in place. Or is it? I imagine that Seventy7 would become “Owners” when or if the company legally acquires the 50.48% of the voting power that Ketan Makwana has said he intends to own…. if a narrow majority holding is considered to constitute ownership. So has Ketan Makwana now paid for a majority shareholding, or is this simply the kind of misinformation that can occur due to the way Wikipedia works?

Achfary… you clearly know a lot more than I do about the way companies work. I’ve just been doing some humble number crunching based on far more limited background knowledge, so you may be in a position to clarify whether the premises I’ve used are realistic. I’ve taken it that if Makwana has 50.48% of whatever the eventual voting strength is, then if the ST has a fixed 10%, original shares still held by their original owners will comprise 39.52%. As a result, whatever amount Makwana puts in added to whatever he may acquire from existing shareholders will have to be 50.48/39.52 = 1.277 times what existing shareholders retain. At the moment, 4.002 million ordinary shares are in ownership, so if KM we’re to acquire none of these, he would have to put in £4.002M x 1.277 = £5.1M to gain 50.48%. However, once he starts acquiring existing shares, every one he adds is also one the other side don’t have. The maths behind that are a bit more complicated but, for the £1, 2, 3, 4M examples I quoted for what he might put in, he would also respectively have to acquire 1.803, 1.364, 0.935 and 0.486 million shares from existing holders. Let’s take the example of him putting in £2M (which I personally don’t think would much more than scratch the surface of this huge problem). That would still leave him needing 1.364 million existing shares, either by purchase at whatever rate which would add to his obligation, or gift and that equates to quite a large proportion of the current largest shareholders’ holdings. That then leads me to a question - to what extent might the Charitable Trust be getting leaned on to part with their 729,000 (to a complete stranger) “in order to save the club”? There are two other areas in which my expertise is limited so I need to ask questions. Firstly, if they wanted to achieve their 50.48% by instead selling shares to KM with an enhanced voting power, would that require a General Meeting? I suspect so. Secondly, if they want to sell KM new shares, would they also have to put more on general sale? And thirdly, I believe there may be a limit to how many shares they can sell without asking a General Meeting for permission to extend the current limit. Is this the case? One way or another, as far as I can see, acquiring a 50.48% stake in this club looks likely to be a complex and expensive business, albeit with some scope to save on expense by increasing complexity - and vice versa.

I can’t quite agree there. I think that a guy with his “credentials”, which haven’t been difficult to establish, automatically creates scepticism by even embarking on a project like this, and the manner of some of the statements he has already made have only added to that scope for scepticism. That said, the way the club has gone about its business of late has created such a lack of public confidence in it that any agreement it came to short of a large, gold plated financial gift would be treated with some degree of scepticism. This latter consideration isn’t, however, created directly by Mr Makwana.

Agreed absolutely, and I see what you are saying but, given the scepticism he has created, I would be more comfortable if what he said was based more on providing reassurance and (within the constraints of commercial confidentiality) information about his bid.

Might it not be better if he retained statements like this until after he produces confirmation that he is the legal owner of the 50.48% of the shares that he has pledged to acquire?

You add yet another intriguing variable into an already complex situation there because, with the ST’s fixed 10%, 77 would have to find an extra £1250 for every £1000 raised by non-77 parties, should the process you describe become reality. Also, I’m not sure how many shares could be sold immediately without permission from a General Meeting to issue more. One other thought is that if, for instance, AS chose to throw in maybe a cheeky extra £200K, 77 would have to find an extra quarter million to neutralise that alone. But whatever happens there, Makwana has a major challenge in front of him providing new money and acquiring existing shares in large amounts on the sliding scale that I posted a few days ago.

Thank you, IcyT. I think that’s another very important piece of information here. If you haven’t seen this already, a few days ago on this thread, I posted various options of how many shares and how much new money 77 would have to acquire/provide in order to reach 50.48%.

Clach went into administration in 2009 and seemed to emerge from it without too much difficulty. However the figures involved in ICT are of a different order of magnitude so it would very much depend on what commitment any rescuer might have. I would imagine that if there is an effort to rescue from admin, those behind it would have costed it as far as possible. If you don’t mind me splitting hairs, Muirfield Mills, acting as a single unit, have more of the cards than anyone else, but by no means most of them. Currently they have 18.5% of the voting power and that brings me back to the figures I posted the other day which appear to show that, for every £1M short of £5M that Makwana puts in, he is going to have to acquire around 450,000 shares from existing holders to reach his 50.48%. It therefore looks as if he’s going to have to do a fair bit of acquisition.

Maybe Alan Savage has come to a calculated business-based conclusion that he doesn’t believe that the 77 plan is going to work, so administration is highly likely anyway. At the meeting in the Social Club Allan MacKenzie, a former Vice Chairman and a financial lawyer, did seem to be suggesting that there was some support from unspecified places for administration and a possible rescue out of it (but not, of course, any points loss.) Achfary raises the legitimate question of a General Meeting and I can see three different roots towards one, which might provide some clarity. This would also create the first occasion in more than two months where the people running the club could be held directly accountable by shareholders, if not fans as a whole, since all that’s been said so far is in a handful of uninspiring “statements”. Queries from the media- and there have been many of them - are routinely ignored. Firstly, Achfary says a General Meeting requisitioned by 5% of the shareholding. AS is one of half a dozen or so holders of 5+% of the total shares. Secondly, I wonder if a General Meeting may be needed if 77 are going to be able to purchase all the new shares they need for their claimed 50.48% stake. And thirdly, the club (for the second time in a row) is already in default over holding an AGM. My final thought… how much longer can this go on before the club simply runs out of money?

Thank you… but Morrison said it “Generated £250-300K for the club?” These shares were security against a loan from Morrison and Munro so it looks as if all this may have done is to reduce the debt. And then there’s the revelation that if they don’t get their act in gear, the BF company will be struck off.

I’m not in any way doubting this, but can you show me where to establish that the club owns even that 1%? There are Companies House entries that name Messrs Morrison, Munro and Cameron as persons with significant control of the BF company, amounting to 25-50% each, which means that collectively they have 75-100%. Given that these shares were (are?) the subject of a Charge against some loan from Messrs Munro and Morrison, does this mean that it has been paid back? That might be relevant in terms of Mr Makwana’s task of disposing of the debt. Bottom line again, though - I’m still struggling to see how whatever Makwana can rustle up can address the sheer magnitude of the problem, current and ongoing.

OK then, so let’s try and work some of this out for ourselves. Unless they are going to reduce the value of existing shares - which I don’t think would be possible without a potentially contentious general meeting - I’m going to assume that he aims to get to his 50.48% by some combination of direct purchase of new shares and acquiring some existing shares from their current owners. These figures are also based on the ST’s 10% voting power being part of the 49.52% that Mr Makwana wouldn’t have. On that basis:- To get his 50.48% with all the current shares (totalling 4.002 million) remaining with their present owners, he would need to buy £5.1M worth of new shares. Moving down the scale.. If he were to put in £4M, he would need also to acquire 486,000 existing shares. A £3M payment would further require 935,000 existing shares. £2M would have him looking for a further 1.364 million and a £1M uptake would have him looking for current shareholders to part with 1.803 million shares. Let’s now look at current share ownership. If you take the 8 or 9 participants in Muirfield Mills as a single entity (???) they have 820,000. The Charitable Trust has 729,000, the McGilvrays have 487,000, Alan Savage/Orion (whom we can presumably take as a definite “NO”) has 467,000, the Sutherland family has 300,000, David Cameron has 175,000 and Roddy Ross has 170,000. Thereafter, it falls away rapidly through over 500 individuals to the most common holding which is 250. It’s interesting to try to reconcile the numbers of shares he would need to acquire for the various options in the previous paragraph with the numbers stated in this one. There’s also the question of how many shares remain unsold from previous issues and are hence available for immediate purchase without recourse to a general meeting. Around 2M is in the back of my head, but that may not be correct. It’s also interesting to reconcile the various examples of money that might come from Mr Makwana as exemplified above, before we even think about additional ongoing sums, with the sheer magnitude of the club’s plight. And however much he’s putting in… where is it coming from?

As regards No 1, saving the club, I’m just not seeing how any of what we know so far might do that in the long term - or even in the shorter term. The most recent accounts show liabilities less what debtors (SFA?) owe within a year sitting at around £2 million; annual losses have been in the ballpark of £600K for some years; income streams have taken a hit by a plunge into League One; they have taken a further hit as a result of in some cases irreversibly low supporter morale and the battering that the club’s public image has taken as a result of how it has been going about its business. Against that, if Alan Savage’s estimate of Makwana hoping to put in a 20% stake and being donated shares to take him above 50% is correct, then that would raise approximately £1M which doesn’t even tickle the current problem, never mind the ongoing one. There has been no mention of ongoing investment and although Makwana may have a lifetime dream of owning a football club, he would need backers and they may well not share his so-far not very convincingly expressed dream. And then there’s the question - are the club’s biggest shareholders simply going to hand over 40-45% of the equity to some unknown guy who has suddenly materialised from the woodwork? Since this “deal” broke on Friday, I’ve been seeing countless unexplained red flags but not one iota of reassurance that this process might have any stability or credibility. Meanwhile, the narrative seems to have shifted slightly with some transposition of the chicken and the egg or the cart and the horse or whatever. It needs to be remembered that the whole purpose of what’s going on is to give the club financial stability and not how Ketan Makwana could achieve a majority shareholding at a knockdown cost to himself. Pardon my pessimism, but I’m really struggling to see any way out of this.

I’ve been doing a bit of number crunching based on what Alan Savage has said, although this is pretty provisional since the precise definition of the 20% he refers to isn’t clear. But VERY provisionally, in order to get 50%, (with the ST 10% factored in) by contributing “20%”, Makanwa may have to provide something like as little as 800K to £1.14M of new money IF he were able to acquire enough existing shares to top that up to 50%. That amount of new money, frankly, barely scratches the backside of the club’s financial plight and even to do this, he might need somewhere between 1.77 and 1.87 million of the current 4 million shares. Unless they plan chasing round dozens or even hundreds of smaller investors, this would involve a large commitment of the very top holdings, bringing in people like Muirfield Mills, the Charitable Trust, the McGilvrays and David Sutherland. On the other hand, there may be enough unsold new shares available to do that without recourse to a shareholders’ meeting.

That’s ten weeks since relegation and around two months since it was confirmed that the club’s financial situation was so desperate that radical action was essential. Since then, this time of year’s normal financial boost of season ticket money has been greatly reduced, there has only been one home game with a very modest attendance and no Sports Bar and there’s reason to believe that unhappy fans have been limiting their purchases of merchandise. So what has the club been doing for money? Have the Usual Suspects been continuing to dig deep, despite indications that the company they have been continually been plunging money into a company that’s going to have new owners? Or what?

Do you mean in 2004… when Hugh Keevins was ultimately made to look very stupid and Graeme Spiers failed to eat his hat as promised? Aye… I wonder what Pele is thinking?

I don’t have access to Linkedin but are you saying that he is claiming to have had discussions with HC but when it came to saying this on Linkedin he flagged up a completely different Highland Council - presumably in some other country?

I was thinking more about people actively involved in running the company which has only ever had two directors - Mr Jacobsen who resigned last September and Mr Makwana who remains as the sole director of a company which doesn’t appear to be on a position to have any employees.

Which raises another question. What did Mr Makanwa mean precisely when he was quoted yesterday as saying “WE at Seventy7….”?

The figure of 2 million vaguely sticks in my head, and that also seems to square with something CaleyD said in an earlier post. I’d guess there may be a fair chance that shareholder approval may be required to create more if this deal is to become reality.

Three other questions. Firstly if, as has emerged today, 77 is a one man band - a company with a single director - what would he want to do about a board that he can be confident would protect his investment? Secondly, 77 appears to be a tiny company that has dealt in five figure sums for its entire three year existence and has net liabilities. So where is the money going to come from in order to fund Caley Thistle? Is there any significance to this company having become the Borrower in a Charge that was created on 28th June, where the Lender is a Channel Islands-based finance company? And thirdly, if this deal went through and then the club went really badly wrong, could there be any danger of the remaining 69 years of the lease on the stadium site being asset stripped and sold lucratively by 77 to a buyer such as a large retail company?

But remember that cash spent in purchasing existing shares doesn’t benefit the club, it just makes it cheaper for 77 to acquire a majority. Here’s an example. As already said, with 4M shares issued and the ST having a fixed 10% voting strength, it would take £5M to acquire a 50% voting share. But, for the sake of argument and illustration, let’s say that 77 persuade current holders to part with 800,000 shares at just 50p each (and with that their voting power). This leaves just 3.2M of the 4M in other people’s hands so 77 now have to acquire 4M to get 50%. But they now already have 800,000 so they just have to buy another 3.2M for £3.2M. Then add the £400K that they paid for that 800,000 and you get a total cost that’s down from £5M to £3.6M, but only £3.2M of that would be new money for the club. If a relative devaluation of the voting power of the existing shares could also be brought about, that could make it less costly still. General Meeting of shareholders incoming? (The AGM is already three weeks overdue and counting.)

That is indeed one possible way of bringing the cost of acquiring a 50% interest below £5M, bit unless these shares could be acquired very cheaply, it wouldn’t make a massive difference to the total that 77 would have to put in, although it would reduce the new money, which is what needs maximised.

I was basing my sums on what would be needed for the new people to carry a vote.