Aberdeen Shareholders

[redscot]

So, has this gone quiet or has it been pushed through?

[Feck_the_Huns]

Meeting not till July 2nd

[Red Zone]

I've now had the chance to read through the document from AFC. The reason for taking the company private are well documented elsewhere so I won't labour them here but set out below are some points I took from the document that have not been highlighted as much.

1. Whilst £2M has been the headline figure quoted elsewhere, it is actually £4.5M of new shares being issued being £2.5M of new money and £2M of money loaned previously by Cormack now being converted to shares.
2. The £2.5M of new money is being invested by Crotty (£0.5M) plus £2M from 8 US investors. These 8 investors either are a partner or investor in a US Venture Capital company (Battery Ventures) or are related to these individuals. This VC specialises in investing in IT and tech companies so no doubt came across Cormack this way when he owned his company. Most of this £2M is coming from a partner in Battery called Roger Lee, with the other 7 new investors putting up the other £0.5M.
3. The new shares are being issued at the same 75p price that has been used for recent share issues so the £4.5M is buying 6 million new shares.
4. The current shareholding in AFC is Milne (35%), Cormack (20%), Mr and Mrs Donald (17%), Crotty (7%) and 2,986 other small shareholders (21%). After the new share issue this changes to Cormack (27%), Milne (25%), Mr and Mrs Donald (12%), Lee (9%), Crotty (8%) and others (19% - 16% original others plus 3% for the other 7 new US investors)
5. Cormack, Crotty, Lee and the other 7 new investors are seen as being connected investors. Together they will own 47% of AFC so clearly the dominant grouping with Milne reduced to 25%. (How long will Milne remain Chairman given these percentages I wonder?)
6. The resolution requires 75% to be passed. Clearly Milne, Cormack and Crotty will vote in favour and assuming they have not gone this far without the agreement of Mr and Mrs Donald that gets them to about 79% so the resolution will be passed regardless of how the other near 3,000 shareholders vote.
7. I understand the concern of TRF guys on allowing Directors to be included in any vote where there is a conflict, with the clear concern around Milne being involved in any decision around selling Pittodrie to a house building company. I don't have any concerns around the sale of Pittodrie (no way are hard nosed US investors going to allow any sale other than to the highest bidder at market value) but take their point about a future Romanov type investor if Cormack et al sell their shares in the future. However this is a done deal so nothing anyone can do about it I'm afraid. It's also worth noting that the articles are being amended in line with the best practice articles as set out in the Companies Regulations Act
8. The proposal gives the Directors authority to issue a further 19.3 Million of new shares. Presuming this would be for the new stadium and if the same 75p price is used that would raise £14.5M. Presumably Cormack and his US investors would buy the majority of these further increasing their percentage ownership and further diminishing Milne's influence.

I have consistently said I don't think the stadium would be built as they wouldn't get the funding. That's still my feeling but I have to say I'm less sure now given these US investors becoming involved. My previous devil v deep blue sea question of Milne+Pittodrie or Cormack+Kingsford feels a step closer.

[kkong]

I have consistently said I don't think the stadium would be built as they wouldn't get the funding. That's still my feeling but I have to say I'm less sure now given these US investors becoming involved. My previous devil v deep blue sea question of Milne+Pittodrie or Cormack+Kingsford feels a step closer.

Thanks for that write-up, very interesting.

Where do you think the US investors see their profit coming from by owning AFC?

Venture capitalists are used to making at least 2-3 times return on their investment within 5 years.

Even if you think Cormack is in it for sentimental reasons (which I don't), you can be sure the other investors will want their investment paid back in fairly short order - with a tidy profit.

[afc1903mad]

I

Thanks for that write-up, very interesting.

Where do you think the US investors see their profit coming from by owning AFC?

Venture capitalists are used to making at least 2-3 times return on their investment within 5 years.

Even if you think Cormack is in it for sentimental reasons (which I don't), you can be sure the other investors will want their investment paid back in fairly short order - with a tidy profit.

Yes thanks RedZone, very interesting post.

For kkong, maybe the new signing Jon Gallagher is a potential indication.
Get a few promising talents through Aberdeen for development and see a return on that investment.
Aberdeen have done well in recent years in that regard.

[krakowdon]

I would be surprised if hard nosed investors would want to rely on buying and selling players at our level as a reliable investment.

My worry would be that ownership of the stadium would be the investment. Is it possible that controlling directors could transfer it out of the club? That would not be good, they would have the club by the balls for rent and have control of its revenue. Milne would bow out having delivered the stadium, and leaving these boys with the benefit. Would he care? If Redzone is right, he is clearly happy to let others have control. Paranoid pant pishing?

[krakowdon]

There might be a useful hookup to take players from the US, but Jon Gallagher won't be making money for us or any investors, he's a loan. Worse, we become a farm club for the yanks.

[Red Zone]

Thanks for that write-up, very interesting.

Where do you think the US investors see their profit coming from by owning AFC?

Venture capitalists are used to making at least 2-3 times return on their investment within 5 years.

Even if you think Cormack is in it for sentimental reasons (which I don't), you can be sure the other investors will want their investment paid back in fairly short order - with a tidy profit.

It really is a very good question as to why those individuals are investing in a Scottish football club. I am familiar with VC return requirements but it's worth noting that it is not the VC itself that is investing but rather the 8 individuals so maybe that takes the pressure to make a return within a short timeframe away a little. However it doesn't change the fundamental question as to where they are making their profit. It won't be from dividends as AFC simply won't be consistently profitable enough. Could they flip their shares to another buyer - difficult to see how they could be confident enough that they would find a buyer to pay a bigger price for their shares in the future. Is there an angle around the stadium - doubt it as to spend £50M building the facility would require a rent of around £3M a year or so to get any sort of decent property returns and AFC simply couldn't afford to pay that unless naming rights will be much more valuable than I would expect.

It's all a bit of a mystery to me I'm afraid.

[Aldo1983]

ffs they are really keen to push this thing through. Dave square going folks.

[donsdaft]

I'll DM the b'astard.

Nae posh clize though.



Fars the Calgery, jist aff o George Street?