Mo's document-up to 1.2m? and Mos Clarification

[Princey]

Just having a look through Mo's new glossy document, available here. I think everyone, pro or anti bid, should have a read through if they havent done so.

 

http://www.mochaudry.co.uk/wp-content/themes/mo-chaudry/downloads/Documents/MoChaudryPortValePlan.pdf

 

One question. Can someone from B&G/Mo clarify what the bid means by "A Cash investment of up to 1.2m"

 

This "up to" point has gone back and forth a few times and it has me confused. I head it in mentioned in the jacksongate tapes when Jackson claims that mo's bid was for only "up to" 1.2m, only for Jackson to get shot down by the B&G protestors, who swore it was the full 1.2m cash (and even offered to call Mo there and then to ask him).

 

Now this document comes out and it appears jackson was telling something like the truth on this one (hey, maybe a first for everything).

 

So, what is "up to" 1.2m mean? Does it depend on how many existing shareholders decide to sell their shares to Mo? Ie, Will Mo just buy enough new equity to get control?

 

Genuine question.

 

5m, became 3m, became 1.2m becomes up to 1.2m..

Give it a month or 2 and it will be down there with the Newton bid...:D

[Trentham Lakes Valiant]

5m, became 3m, became 1.2m becomes up to 1.2m..

Give it a month or 2 and it will be down there with the Newton bid...:D

 

Your track record on predictions isn't the greatest. Maybe you should give them a rest.

[Jimmy]

I don't know why you even respond...To the bored moron 'Pikey' or whatever its name is.

[Trentham Lakes Valiant]

The concern for me (looking at the document objectively) would be the following:

 

".............by way of interest free directors loan, until such time as the club produces a reasonable profit whereupon MC reserves the right to claim interest AND/or convert the loan to equity"

 

"Reasonable" is an ambiguous term, nit picking I know but who defines this?

 

And unless I'm reading it wrong (please correct me if I am) then MC dictates the interest rate and when it is paid? Could MC claim part of the value of the club on the monies owed to him by way of his loan further down the line?

 

Not entirely sure if truth be told but it does prove that despite MC's undoubted support amongst Vale fans there are points that need clarifying.

 

TP, I don't have all the answers but what I can tell you is this:

 

The Directors Loan will be to replace the current Council Loan and would be repaid at a lower interest rate. Therefore, it's a better deal already.

 

When the Club returns to profit. Speaks for itself, really. I'll have a go at the worst pun ever: The Profit Mohammed.

[Birdy]

As this document is hopefully what people will be considering at an EGM maybe LB can clarify any queries regarding Mo's final plan (as the PDF). I know he's possibly sick and tired of answering question after question, most of them multiple times, but maybe a good opportunity to clarify any concerns people may have.

[Burslem Academicals]

Nobody can predict future interest rates and "reasonable" would be at or below the average obviously and actually suggests under the rate but such

Directors loans could simply convert to equity.

The 1.2 million is for 51% thereafter Mo Chaudry has control and intends to put in up to 5 million.

Once Mo Chaudry is the new owner of Port Vale there will be others who want to invest and this is money put into the club unlike the debt V2001 have run up.

Team Mo has the money and the plan while V2001 only have debt and a "Blueprint for the Conference."

[AVIM]

The Directors Loan will be to replace the current Council Loan and would be repaid at a lower interest rate. Therefore, it's a better deal already.:

 

It being a better deal - that's not obviously true though SH. The council loan is not convertible to equity. This optionality is added on by Mo as part of the deal's structure. Although he doesn't say at what strike price the debt-to-equity conversion can happen, lets just assume it will be 5 quid a share. Thus, any upside in stock value will belong almost exclusively to Mo. If someone wants to buy the club and pay a higher price per share, Mo will just exercise his option to convert some of the debt at 5 quid, diluting down the minority shareholders in the process. At the same time, Mo can take profits out of the company through interest, avoiding paying the same to the common shareholders.

 

All this means of course that each and every shareholder, acting rationally, should accept Mo's offer of 5 quid a share (in my honest opinion).

 

But then does that means he wont actually inject any new equity at all, as he wont need to, in order to get control? Does "up to 1.2m" in new equity actually mean 1.2m only if nobody sells , and as low as zero if 51% of the people decide to sell?

 

Thats the question I would like answered.

[Bycarsbill]

Did anyone else feel a sense of deja vu reading Mo's document? I felt like I'd read it all around 8/9 years ago!

 

Don't know about deja vu, but there seems a lot of 'pie in the sky' in the document--can't say I share Mo's view that with a bit of email/internet marketing 'engineering' he will double the average home gate to 10,000! There are some laudible aims like the one to be a more inclusive community-oriented club, but all this is a little fuzzy--like a definition of corporate advertising I once saw...."Like peeing in your pants, gives you a nice warm feeling, but nobody knows you've done it"! The real problems over the question of how to improve the playing side of the club, are not to my mind answered. And before the mortar rockets start to rain down on my head, neither do I see answers about this vital question from the current board--all a bit depressing really, especially after yesterday's result. Sometimes wish i'd been born near Salford instead of Burslem!!!

[Trentham Lakes Valiant]

It being a better deal - that's not obviously true though SH. The council loan is not convertible to equity. This optionality is added on by Mo as part of the deal's structure. Although he doesn't say at what strike price the debt-to-equity conversion can happen, lets just assume it will be 5 quid a share. Thus, any upside in stock value will belong almost exclusively to Mo. If someone wants to buy the club and pay a higher price per share, Mo will just exercise his option to convert some of the debt at 5 quid, diluting down the minority shareholders in the process. At the same time, Mo can take profits out of the company through interest, avoiding paying the same to the common shareholders.

 

All this means of course that each and every shareholder, acting rationally, should accept Mo's offer of 5 quid a share (in my honest opinion).

 

But then does that means he wont actually inject any new equity at all, as he wont need to, in order to get control? Does "up to 1.2m" in new equity actually mean 1.2m only if nobody sells , and as low as zero if 51% of the people decide to sell?

 

Thats the question I would like answered.

 

If the debt is converted into equity, does that not wipe out the debt? Presumably, in that case, there would be no interest payments so ultimately the Club would be better off. Also the £1.17m of shares not owned by Chaudry would be a lot safer from disappearing past the u-bend. Or am I being daft?

[TheLegalBeagle]

Dear All,

 

I have seen the thread re "up to" £1.2M.

 

Apologies for an unfortunate turn of phrase. This is an editorial oversight on our part - a result of too many cooks spoiling the broth.

 

The bid is and always has been £1.2M for 51% of the new shares at £5 per share as per the Articles.

 

I hope this clarifies any confusion that has arisen with the brochure.

 

As for the board's understanding, it has always been £1.2M for 51% and so no confusion there.

 

For want of stating the obvious, the bid is and always has been subject to due diligence and we await bid approval and then the opening of the books to our accountants.

 

I am happy to clarify any other aspects of the bid document - which is a summary / overview.

 

Kind regards.

[TheLegalBeagle]

Just having a look through Mo's new glossy document, available here. I think everyone, pro or anti bid, should have a read through if they havent done so.

 

http://www.mochaudry.co.uk/wp-content/themes/mo-chaudry/downloads/Documents/MoChaudryPortValePlan.pdf

 

One question. Can someone from B&G/Mo clarify what the bid means by "A Cash investment of up to 1.2m"

 

This "up to" point has gone back and forth a few times and it has me confused. I head it in mentioned in the jacksongate tapes when Jackson claims that mo's bid was for only "up to" 1.2m, only for Jackson to get shot down by the B&G protestors, who swore it was the full 1.2m cash (and even offered to call Mo there and then to ask him).

 

Now this document comes out and it appears jackson was telling something like the truth on this one (hey, maybe a first for everything).

 

So, what is "up to" 1.2m mean? Does it depend on how many existing shareholders decide to sell their shares to Mo? Ie, Will Mo just buy enough new equity to get control?

 

Genuine question.

 

Dear VFIM,

 

I have started a new thread by way of clarification given the importance of this matter.

 

Many thanks for pointing this out to me.

 

Kind Regards

[AVIM]

If the debt is converted into equity, does that not wipe out the debt? Presumably, in that case, there would be no interest payments so ultimately the Club would be better off. Also the £1.17m of shares not owned by Chaudry would be a lot safer from disappearing past the u-bend. Or am I being daft?

 

It depends on the value of the clubs equity at the time of the conversion and at what strike price the conversion takes place at (this is not stated in mos document, but I will assume par, eg 5 quid of debt can be converted to one share). If Mo does well and the club increases in value above this 5 quid strike and he decides to sell, he would convert at this point. His 3m of debt might double to be worth 6m to him in equity (just an example). If the club doesn't do well and he sells at less than the strike price, he will not convert the debt to equity and the club will still owe him the money. This gives him upside exposure and limits his downside risk. This option has a real intrinsic value and can be considered "good business", no real problem with that.

 

My real point is, is that the 1.17m of shareholding not owned by chaudry right now would be advised to sell to him in the event of his motion passing at the EGM. But what does that mean to the injection of fresh equity?

[TheLegalBeagle]

5m, became 3m, became 1.2m becomes up to 1.2m..

Give it a month or 2 and it will be down there with the Newton bid...:D

 

Dear Princey,

 

My apologies for being a bit direct on this occasion but utter nonsense. The bid has not changed. I appreciate you are not in support of the bid, as is your prerogative, but please allow me the courtesy of accurate posting and commenting when you set out your views.

 

£1.2M for 51% of new shares. The balance initially directors loan at preferential rate (ie no interest). The extent of Mo's investment and the depth of his pockets during his tenure is for him alone. Phase 1 of the investment as per the business plan is up to £5M to compliment an improvement in the business as a whole - not simply to prop up losses and poor business practice and performance.

 

I accept you have made your mind up but I sincerely hope you allow Mo the opportunity of investing to give PVFC a new start and hopefully some success on and off the pitch. The alternative is you perservere with the present board and their blueprint.

 

Kind regards

[Trentham Lakes Valiant]

It depends on the value of the clubs equity at the time of the conversion and at what strike price the conversion takes place at (this is not stated in mos document, but I will assume par, eg 5 quid of debt can be converted to one share). If Mo does well and the club increases in value above this 5 quid strike and he decides to sell, he would convert at this point. His 3m of debt might double to be worth 6m to him in equity (just an example). If the club doesn't do well and he sells at less than the strike price, he will not convert the debt to equity and the club will still owe him the money. This gives him upside exposure and limits his downside risk. This option has a real intrinsic value and can be considered "good business", no real problem with that.

 

My real point is, is that the 1.17m of shareholding not owned by chaudry right now would be advised to sell to him in the event of his motion passing at the EGM. But what does that mean to the injection of fresh equity?

 

Why should existing SHs sell? I would be inclined to purchase more.

[Andyregs]

".............by way of interest free directors loan, until such time as the club produces a reasonable profit whereupon MC reserves the right to claim interest AND/or convert the loan to equity"

 

"Reasonable" is an ambiguous term, nit picking I know but who defines this?

 

Sounds better than the current loan we have.

 

Or at least one side can it seems..

 

Where as the other resort to violence and racism you mean?