Special CUSG meeting summary - Remote meeting via Zoom 13.12.21
Attendees:
- Barbara Abbott (Disabled Group)
- Billy Atkinson (CUOSC Holdings Board Director)
- Dave Brown (Chair London Branch)
- Simon Clarkson (SLO)
- Nigel Clibbens (CUFC CEO)
- Nigel Davidson (CUOSC & CUSG EDI)
- Andy Hall (CUFC Media)
- Jim Mitchell (CUOSC 1921 Board Director)
- Amy Nixon (CUFC Media)
- Keith Ward (Chair Scottish Supporters)
- Alastair Woodcock (CUOSC & CUSG Secretary)
- Gary Wylie (LGBTQ+ Supporters Group)
- Apologies – Keith Elliott (CUSAT), John Ireland (West Cumbria Travel), Terry McCarthy (London Branch)
Simon Clarkson chaired this meeting.
Special Meeting:
On 10 December 2021 Nigel C contacted the SLO and offered to attend a CUSG meeting next week to talk to fan groups on Monday or Tuesday if members wanted to, about the recent Holdings Board announcement.
On Saturday lunchtime 11 December 2021, the SLO contacted the CUSG members as requested to check their interest and their availability for a special CUSG meeting, given the significance of the Holdings Board statement.
Options for Monday or Tuesday evening were offered, if there was interest from members to meet. Over the rest of the weekend members then responded with their availability. Finally, on Monday 13 December 2021, in the morning, the SLO confirmed a special CUSG meeting was to take place at 7pm Monday and suggested groups try at short notice to contact their fans and ask for questions. It was only at this point that the meeting was confirmed.
There was no agenda other than to discuss the situation at the club on the back of the statements from the Carlisle United Holdings Board and CUOSC last week.
Barbara Abbott asked if this was to be treated as “normal” meeting [with minutes and minutes published]. This was confirmed and it was agreed the minutes of the special CUSG meeting will be posted online.
Dave Brown stated he had questions from the London Branch committee and asked if they could be sent in later if they weren’t answered in the discussion that evening, which was agreed. Nigel C said he would stay to answer all questions rather than leave some unanswered. If that was not possible, he would answer later.
Nigel C made the point before the meeting started that the disposal of shares by AJ, JN & SP and Lord Clark and CUOSC was not a club decision, or a board decision, it was individual.
Billy Atkinson stated that questions from CUOSC members either have or will be answered in the members meeting on 18 December. This ensured its members had the full opportunity to ask questions directly.
Dave Brown asked what was the detail behind not giving reassurances to the EFL for the takeover?
Nigel C responded by saying under EFL regulations, a takeover requires those involved to pass a fit and proper person test, plus for a “change of control” satisfaction of source and sufficiency of funds (S&SF) to run the club and cover it’s financial needs in future. The specifics of the EFL requirements were covered by answers to questions at previous CUSG meetings.
The deal process began in March 2019, the proposal was then put to the EFL in summer 2019 for it to consider the S&SF in place. However, at the same time the ramifications of the Bury FC failure was being felt and this impacted on the evidence required to satisfy the S&SF test. Nigel C went on to say that the detail of this was legal and highly technical, the detail didn’t really matter, it was a normal procedure. The deal could have been done but was firstly delayed, and then other events intervened, as detailed in the statement. This was also referred to in a previous fans’ forum by John Nixon.
Jim Mitchell stated that there was an opportunity at that point to make the deal happen, but it didn’t. That deal was then replaced with a revised deal, which would meet the EFL needs, the individual shareholders accepted, but CUOSC did not.
Billy Atkinson made it clear the first deal put to CUOSC and referred to in other updates was accepted. It reduced its voting rights but still was accepted by CUOSC. It wasn’t easy to get approval from the CUOSC board, but a full change of control and a takeover would have happened. This was a desired outcome, so CUOSC backed it. He also made it clear that ‘CUOSC did not hold the deal up’ in any way.
Dave Brown suggested that it looked as if the Holdings Board were putting blame on CUOSC? Also asking why did it take so much time to abandon it?
Nigel C in response said that a line was drawn because of CUOSC’s final position and its implications for the % of shares that could be transferred. There was no blame – it was fact. CUOSC had explained why it held its final position. A maximum of 74.63% was still on offer from the non-CUOSC shareholders, regardless of CUOSC, but that option was not progressed either. At all times, it was always confirmed to the shareholders there was still a wish to complete a deal, even in November. Given those continual assurances, and the importance of a deal, all the shareholders wanted to give it every chance to happen. That is what determined the time.
Dave Brown asked if there was an attempt to resurrect the deal?
Nigel C said yes - attempts were made over a long period by the shareholders. The first deal from March 2019 had change of control immediately, but as CUOSC said the revised deal did not. CUOSC would not want to dilute, with no immediate change of control or certainty over when. Jim Mitchell highlighted that the main issue for CUOSC wasn’t dilution, but a change of control. Billy Atkinson confirmed he made CUOSC’s position clear in a statement to the Holdings Board in May 2021, regarding the revised deal.
Billy Atkinson clarified the change of control process. It was agreed the A/B shares would be combined to be all voting. As a result CUOSC voting rights would have diluted down to approximately 9.9%, with the new owner having the rest, giving a change of control at that point. Nigel C mentioned that once the initial dilution had occurred a new owner could issue as many shares as they wanted to dilute further as they wished.
Billy Atkinson said that no assurances were ever given about debt. Nigel C stated that the debt to EWM/PurePay Retail Ltd was payable by 1921.
Billy Atkinson confirmed that at all times he was fully aware of everything that was going on. He said CUOSC can't tell the other directors what to do with their shares. CUOSC would not have diluted for the second deal/proposal.
Nigel C stated the original deal was simple and straightforward in terms of the shares. They were being transferred for £1. The other four owners wanted a deal and thought that would happen. CUOSC was prepared to go from 25.37% to 10% or less. He also made it clear that the debt was ‘unconnected to share deal’ but he wouldn’t have expected guarantors to have kept their Personal Guarantees in place if they were no longer shareholders, and control had changed to others with the club taken over.
Billy Atkinson went on to clarify that ‘two shareholders would have been left in the Holdings company’ [The new owner and CUOSC]. He continued to make it clear that CUOSC was told that everything would be risked if their members were to be consulted on the original deal.
Billy Atkinson wouldn’t be drawn on whether CUOSC would agree a future dilution without member consultation. It would always depend on the deal being offered. The recent member survey was very helpful in confirming views on how it would approach any future deals.
Simon Clarkson suggested that this would be a ‘good opportunity to sound out members on whether a dilution would be acceptable with or without direct consultation’.
Nigel D stated that CUOSC would take [the dilution issue] very seriously next time, as they did on this occasion. For any future investment they’d be looking to work with parties that would want public member approval for a deal and would work ‘with’ CUOSC as outlined in the Fan Led Review, and the recent CUOSC Questionnaire.
Nigel C said that some people interested in clubs don’t want to operate or deal in public at all, and make offers subject to conditions accordingly. The requirement for members to vote on any deal first, may lead to a potential buyer pulling out. Fans may well see that as a good filter of who may be suitable owners.
Dave Brown then asked if the buyer ever came out with a vision for CUFC?
Jim Mitchell answered with ‘some semblance of a vision was provided, but nothing substantial’. This was from the buyers’ representative. There had never been any contact except with him. It sounded encouraging at the time but no further detail was ever forthcoming.
Dave Brown then asked, where do we stand with the loan?
Nigel C said there had only been preliminary discussions so far, but there is ‘an open door to discuss the loan, but nothing has changed’ and he hoped ‘there is an opportunity to put it on a different footing.’ It was uncertain if anything would change at all.
Billy Atkinson then asked what CUSG members want out of an owner?
Dave Brown replied with, ‘someone who puts the interests of CUFC first. We have been lurching from one bad takeover plan to another with a board of directors who aren’t in a 'mad rush' to leave the club.’ ‘Good work done by Nigel C and his team notwithstanding that situation.’ Dave went on to say that he ‘doesn’t feel club is for sale.’
Billy Atkinson explained that ‘CUOSC agreed to dilute on previous deals (with Andrew Lapping and supported the Robin Brown proposal). The Kirdi deal was not acceptable to CUOSC or the club, plus we were willing to, on this one too. Any suggestions that CUOSC are blocking deals is totally inaccurate.’
Dave Brown suggested that social media has been 90% pro CUOSC’s position and stated that the Holdings Board statement was ‘awful’. He went on to say that ‘many people were relieved the takeover was over, but there has been silence from other shareholders, the buyer and PurePay.
Simon Clarkson moved on to ask, ‘the people linked to the buyer, will they stay in positions?
Nigel C made it very clear that ‘this announcement was about shares only, it doesn’t affect anything else’.
Billy Atkinson followed up by saying ‘the aim was to bring discussions over the takeover and shares to an end, as we need certainty and to be able to focus on the football heading into the January window.’
Gary Wylie asked if the ‘statements might put players off from signing?’
Nigel C said ‘as [club] finances are solid’ that was important to players. Unrest off the field is unsettling and doesn’t make recruitment or retention of players easier. It affects everyone within the club, including staff.
Nigel C went on to say everyone has had ‘over two years of try before you buy' and opportunity to act. People will see this both ways, some may blame CUOSC for running a potential buyer out of town and stopping a deal with some possible hope of change, but others will say well done to CUOSC for forcing the issue and being consistent since day one.’ Addressing the ongoing uncertainty from these lengthy takeover talks was important for the club at a crucial time. The club must come first, and this needed dealing with.
Billy Atkinson followed up with, ‘after trying since March 2019 and after December 2019, it was clear a takeover wasn’t going to happen.’ and ‘with the problem of a £2m+ debt hanging over club, Nigel C and the team have done very well to make the club solid financially through Covid and we weren’t prepared to risk that.’
Asked more about the debt, Nigel C said it was public record the debt to Pioneer was £0.4m and to PurePay was £2.4m.
Nigel C went on to ask members about their preferences, ‘If we get cash in, what do fans want the money spent on? The reality is the club needs £500k of cash every year to fill a gap to survive, from Football Fortune money, but there are choices to be made if we get above £500k’. Nigel C further explained that the club knows they are going to get a little cash from old deals in 2022. Anything more is unconfirmed but it may come in.
Simon Clarkson indicated that the potential Dean Henderson transfer could generate cash to help pay off the PurePay debt and that he would want to pay the loan off.
Barbara Abbott suggested that the ‘first priority this season has to be players.’
Nigel C asked rhetorically whether windfalls would be better if spent on the club rather than repaying debt to improve a balance sheet?
Dave Brown suggested that the club is ‘still stuck with regards to takeover and investment, but it has been run well in the short-term with Keith Millen helping on the pitch.’
Billy Atkinson explained that the club have ‘committed to giving the manager what he needs to do the job and he’s been told that twice by the Holdings Board.’ Nigel C explained that there was money available as the club was in a sound financial position day-to-day, as explained in his recent web update.
Billy Atkinson advised that chaos in the short-term won’t help our situation. The team and manager need support, (who he rates highly), to get us up the league.
Billy Atkinson rounded off by saying that ‘as a result of the way CUOSC have dealt with this situation, he felt potential new investors know CUOSC can be trusted to negotiate in good faith’.
He also asked for CUSG representatives to honour confidentiality regarding this meeting until after the CUOSC members meeting on Saturday 18 December. Keith Ward asked if there would be ‘any more detail on Saturday not given here?’ Billy Atkinson replied that there was no more to say but he wanted to be fair to CUOSC members who wished to ask questions. The timing and confirmation of this meeting (only confirmed on Monday morning) meant that it would not be right for CUOSC members to read further CUOSC comment before they had the opportunity to hear first-hand on Saturday.
Accordingly, the minutes would be released thereafter.
Keith Ward had spoken to ITV, as had Nigel Davidson and Andy Hall, with interview opportunities made available for next week.