Trust update – pre-emption statement
We have been asked a number of questions relating to the recent statements issued by the Ogden family and the club in relation to the acquisition by existing shareholders of class A shares under pre-emption rights, so below we have summarised those questions and our answers:
Ø We thought pre-emption rights no longer applied after the EGM?
In their statement, the Ogden family have said “we have received legal advice that because the Club’s constitution is not entirely clear on the issue, it would be prudent for the new A Ordinary shares to be offered to all existing shareholders on a pre-emptive basis before we conclude our investment”
Although the club is confident of the position, the Ogden’s are clearly focussed on our ensuring that the deal is watertight and there can be no future legal challenge as to how their shares were acquired.
Ø What are pre-emption rights?
A pre-emptive right is a right of existing shareholders in a company to purchase newly issued stock before it is offered to others. The right is meant to protect current shareholders from dilution in value or control.
Ø As the largest shareholder currently, will the Trust be exercising pre-emption rights?
In our view, to do so would need an instruction from members via an EGM, at which we would disclose funds we currently hold and for what purpose they have been donated/raised. This would include consultation with our good friends, the fund raising group BOGS. We would then have to seek permission from donors for a change of purpose. We have not done the maths, but would expect that to maintain our current level of shareholding would run into 6 figures, which is clearly a non-starter.
We also need to consider what is best for the club and community as a whole. The Ogden family has expressed a desire to acquire 68% of class A shares, and the conversion of directors loans to class A shares will consume 21.4%, so effectively there are 10.6% available, assuming there is no uptake from any other existing shareholder(s).
Finally on this, the logistics involved in getting an EGM together with the necessary notice and within the 14 day period already started, may prove undoable.
Ø What does the Trust recommend existing shareholders do with regards acquiring class A shares under pre-emptive rights?
It is our firm view that we could not have wished, hoped, prayed, invented or created a better fit for investment in the club than the Ogden family.
Trust representatives have had 3 meetings with the Ogden family representatives, which have proven to be so different to other potential investors, in particular the Rochdale connection and clear desire to work with the community at large with a long term view of a sustainable existence whilst enabling the development of opportunities to flourish in professional sport. We firmly believe we a have sound, long-term future going forward with the Ogden proposals and accordingly would support their stated desire to obtain 68% of shares.
Should the Ogden’s acquire their desired shareholding, there should be c. 10% left, which we will seek clarification on whether or not these will be available to purchase afterwards, which is another question we have received.
In January 2023, the Trust was asked by the club directors what it could do to help fund the cash shortfalls in order for the club to survive, as is not uncommon in businesses that are struggling to approach shareholders for cash injections.
We advised of the various fund raising schemes we were involved in but the sum totals involved were way short of the required amounts to keep us going. We also advised of various approaches being made to individuals, one of whom has now come good, funded the club since March, and in our opinion, should be fully supported and welcomed in achieving their desired aims.
We hope this helps clarify our thoughts and recommendations that this fantastic opportunity affords our club, town and everyone associated, but feel free to email any questions to info@daletrust.co.uk
Dale Trust Board
25th April 2024