Club statement dated 17 July 2015
STATEMENT FROM ANDREW JENKINS, CHAIRMAN OF CUFC, ANNOUNCING THE TERMINATION OF THE SHAREHOLDING INVESTMENT PROPOSED BY A GROUP LED BY ANDREW LAPPING, WITH REASONS FOR DOING SO - AND ALSO DETAILING THE FIRST STAGE OF AN INTERNAL REORGANISATION OF THE CLUB.
The proposed investment of £1.26 million by a group led by Andrew Lapping has been terminated for the following reasons:
1 - Failure to agree heads of terms:
Heads of terms were drawn up in April this year after lengthy negotiations but several key areas remained incomplete despite specific requests from the club's lawyers for approval. These included there being:
* no evidence of a deposit of around 60% of the total investment into an Escrow Account (£800,000)
* failure to agree the make-up of the board should the £1.26 million not be realised
* removal of the club's request for an annual review of the major creditor status
* refusal to agree for a finance director to be appointed to the management board of the club
2 - The £1.26 million investment fell away under scrutiny:
After repeated written requests over many months, the club was eventually provided with a list of investors in May this year, with sums of money next to their individual names regarding the amount they were prepared to put up as part of the £1.26 million total investment. We were told not to contact them.
However, in a legitimate attempt to check the authenticity of the offer as part of our due diligence procedure, we made personal checks with three of the named investors and discovered that two of them who were listed to provide £250,000 each and another who was listed for £100,000 had actually only agreed to invest £100,00 in total between them.
With that information, the trio's total investment actually fell from £600,000 as laid out on the list to £100,000 in reality. Having checked only three of the 12 investors on the list, the £1.26 million total was already down by £500,000 to £760,000, casting serious doubts over whether the full investment could be made. This followed warnings we had received from our solicitor in April this year about increasing concerns over the financial commitment.
3 - Serious reservations over the business practices employed by Mr Lapping and/or associates with his group:
During negotiations stretching back to April 2014, the club has become aware of certain business practices used by Mr Lapping or associates of which it does not wish to be a part. Confidential matters involving the club and sometimes also the supporters' trust, including private emails and texts, have been allowed to enter the public domain.
INTERNAL RE-ORGANISATION OF THE CLUB:
A restructuring process is to be carried out within the football club, starting immediately and aimed to be completed as soon as possible. This will involve changes to both the upper level (holding company) and lower/operational level (day-to-day running), with the possibility of a new director being appointed to the former and a new, younger line-up for the latter.
The heart of the new board will consist of Suzanne Kidd (currently the club's finance controller who will become finance director), Phil King (the club's sales & marketing director) and a fans' representative to be chosen by the fans, after advertising and shortlisting, via a website vote for a one-year term.
It is anticipated that a new chairman will be appointed to succeed Andrew Jenkins and that John Nixon will only stay to help handle Football League and FA duties and to liaise with the first-team manager after stepping down from his position as MD and vacating his office by July 31 this year.
Hopefully these changes will come into force while investment talks continue with any other parties, including the current overseas interest.