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Update from tonight's Trust forum @ Landore

Phil opened with a recap of how we got to the current position i.e. to pursue legal action, or not. Basically a run through of the voting paper pack with a few bells and whistles.

Jonathan (Trust lawyer) confirmed the defendants will be both the existing owners and previous owners. The way they get to previous owners is quite complicated due to various investment vehicles. But no concrete decision on names on papers will be made until final meeting with QC (depending on vote in favour of course!).

Confirmed once again - as per the voting pack - that £20m is the figure they're going after. 

Estimated cost of action to the Trust will be circa £1.64m.

They reckon the cost to the defendants is circa £2.5m. 

The funders and/or insurers the Trust is enlisting to help fund the legal action would probably take a cut of damages awarded of about £5m (that's based on a full value return of £20m). 

Jonathan confirmed that his solicitors fees for the work so far and in the future have been (and will continue to be) at a discounted rate. Fair play.

Confirmed that an appeal at the end of the case - on either part - would be extremely unlikely due to British law. Only possible in extreme circumstances - eg point of law, judge having a meltdown.

They are still hopeful mediation could happen and are receptive to it happening before court. This could be with just the main shareholders, the old, or both (interesting).

If the club is sold during the legal action, then they can and would still pursue action. 

Phil was asked a long rambling question about whether or not legal action jeopardises the football club - for instance if the club borrows money or sells more players to pay in the event of a Trust win. Phil was unequivocal that it is the right thing to do in the long term interests of the club. It is unlikely the owners would borrow against the club as it devalues their investment. Likewise selling the crown jewels. Phil is adamant that this is about getting back what is rightfully the Trust's and that it is the right thing to do.

Lot of reticence in the room from several people worried about the worst case scenario i.e. the Chuckle Brothers "remortgaging" the club to pay up if they lose. Counterargument seems to be that no one's queueing out of the door to buy the club right now, so if they do that, they've got even less chance of shifting the club on. Also argued that from their point of view, going back to their consortium/hedge fund/whatever they are saying we've just got a bill for £20m is not a very good look at all. 

Birch, according to Phil, is neutral - he's here to run the football. He's not interested in getting involved with the dispute on either side.

A possible outcome is that the Trust could retain a shareholding and take a smaller financial amount. 

Birch has equity as part of his contract which dilutes the value of shares for all other shareholders. For obvious reasons, the Trust - while backing the appointment - opposed the package. 

Jonathan is now talking about the strength of the case and he maintains, from the hours he has spent on it, in his considered opinion the Trust has a very strong case.
ColinNorthamptonSpringheeledJackWebmasterbigoak
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Comments

  • Was any time scale for all this mentioned
  • @Gingergit

    no mention of timescales on the night however I believe the voting pack indicated a minimum of 18 months.
    Gingergit
  • edited July 16
    Jesus, another 18 months of uncertainty. Let's hope the others go for mediation like they should have done in the first place. Thanks for the update Gary. I must say I am surprised that the Trust is going for all-out sale of their shares (ie the full £20m). I would have expected them to hold on to 15% and a seat on the board.
  • edited July 16
    @cadleigh I imagine the legal advice would be, there is a cleaner , stronger case for sale of all shares, once you start choosing a retention element, it allows the other side a stronger argument in court, along the lines of ‘why would we have bought an additional 5%...’

    ..and it would also depend on the exact wording of the shareholders agreement.
  • Surely it would truly only be a 'symbolic' seat on the board without any real power or influence.
    Natterjack
  • Thanks Gary for both attending and the report.
    We must hope that the membership will support the trust and their legal advisor by voting in favour of action.
    This situation was not of the Trust's making,but is the inevitable outcome of what happened between the new principal shareholders and the shareholders who were given the chance to sell to them,when the Trust were not afforded the same opportunity.
    The shareholding reflects the role the Trust played,with others,in the saving and rebuild of the club after asset strippers had taken possession of the club.
    It is a significant share of the club,yet the Trust were not likely to be able to respond to any cash call made by the board,old or new.
    The restitution of the value of the full shareholding at the price of the original deal by the new owners is the fair outcome to correct the wrong done.
    The Trust should then invest that net sum in a secure investment as a hedge against further mismanagement and the club going into bankruptcy.

    Any deal whereby part of the shareholding is retained will be of little use as would any seat on the board (other than with non voting rights).The previous shareholders ensured that theTrust had no direct voting power when they pledged their own voting rights to the new owners.
    Natterjack
  • StephenPete - as a Trust member from the start I would rather have a representative on the board making sure the other board members are urinating outside the tent. That’s part of what made us unique as a club - 20% fan ownership and a seat on the board. All very well having a local charity with £20m in the bank but if the rainy day never comes and they never get the chance to use it, what is the point? We will just be another 109% rich men’s toy
  • Cadleigh said:
    StephenPete - as a Trust member from the start I would rather have a representative on the board making sure the other board members are urinating outside the tent. That’s part of what made us unique as a club - 20% fan ownership and a seat on the board. All very well having a local charity with £20m in the bank but if the rainy day never comes and they never get the chance to use it, what is the point? We will just be another 109% rich men’s toy
    Couple of points not just to Cadleigh
    The board meetings are so infrequent a seat on the board is not what it was, also, and as Phil said last night, the Trust are informed of major decisions, like the appointment of TB and SC but both were done deals and the Trust were not in the decision making process, which is where it should be.

    Gary: you say very strong case, I only heard strong case (makes a big difference), lawyers/ Queens Counsel are hardly going to say you only have a fair to middling case, they are going to lay it on a bit thicker to earn their coin. JHW did say that he believes that we have over 60% chance of success but would not commit to exact figure (and why would he)

    All: there's no doubt in my mind that the Trust have been wronged by both the buyers and the sellers, however, its Swansea City that will suffer if this ever gets to court and the Trust win, the Trust have to go for it as there seems to be little alternative but we have to be prepared to back the Trust if and when we see a major down turn.
    There is talk of a £20m pot if a case is proved successful, it will only be £15m as the insurers will take £5m success bonus. Even JHW said that it'll be difficult to force a Delaware company to cough up (messy) but he also said that we may be able to take a charge over the shares which are logged in the UK? Not sure how true that is and I can only go by what was said.

    The Trust: as you know, a win will see possibly £15m in the bank (a win is not a foregone conclusion), however, there will be calls each season for you to put some cash in to propel our season, this is short termism, I hope you are strong because the calls will get louder and louder especially if we start to plummet.


  • edited July 16
    Unfortunately to my mind the situation of local control of the Club is a ship that has left the harbour and will never return.If the current majority shareholders sell, once their investment plus a profit can be recovered,it is unlikely that any new owner with their heart in this community will surface.As for a' rich man's toy ' very unlikely if you ask me, it could only leave to  another 'Investor'.
    The original investors cashed in and that community dream went when they did it.
  • Perhaps I did not make myself clear.
    Notwithstanding the legal suggestion that were we to seek a small sale of some of our shares,in order to buy a seat in the boardroom,we would be predjucing our claim,we would also be left with an attendee who has no voting rights (as they will always be outvoted).
    We would hold little money after the costs of the legal action and would be of little use to the main owners as we could not financially support a cash call.
    The legal action is to get restitution after the Trust was urinated on from inside the tent by all those inside the tent,despite the fact that the Trust had two attendees at Board meetings.
    The Trust did not seek the situation and must now seek to meet its prime objective which is to safeguard the existence of the club,by holding an insurance against future bankruptcy.
    We are already an investment vehicle directed primarily by financiers and investors from abroad ,with little knowledge or understanding of  UK football ,nor any link with or interest in Swansea as a city.
    Natterjack
  • moorlands said:
    Unfortunately to my mind the situation of local control of the Club is a ship that has left the harbour and will never return.If the current majority shareholders sell, once their investment plus a profit can be recovered,it is unlikely that any new owner with their heart in this community will surface.As for a' rich man's toy ' very unlikely if you ask me It could only lead to another 'Investor'.
    The original investors cashed in and that community dream went when they did it.

  • edited July 16
    Not sure what Queens Counsel you have run across in the past. My experience of them is they certainly don’t ‘..... lay it on a bit thicker to earn their coin..’ in fact quite the reverse, they will tend to emphasise the risks.

    These individuals are extraordinarily bright and will be exceptionally clear in their language, so you are right to point out  There is a big difference between strong and very strong
  • A couple of other things I didn't put in my round up last night (as they happened after I'd pressed send):

    - Even the Trust themselves now admit that the 21% shareholding is just symbolic, rather than being of any substance. The changes to the voting rights back in 2016 mean that they no longer have a voice befitting a 21% shareholder and from that point of view the shares are pretty much worthless. 

    - Touching on the above point, understandably the relationship between Trust and the Club is such that they are now merely informed rather than consulted on anything. 

    I found both these things very telling. 
  • Not sure what Queens Counsel you have run across in the past. My experience of them is they certainly don’t ‘..... lay it on a bit thicker to earn their coin..’ in fact quite the reverse, they will tend to emphasise the risks.

    These individuals are extraordinarily bright and will be exceptionally clear in their language, so you are right to point out  There is a big difference between strong and very strong
    My point remains that most people think this is a foregone conclusion, a court of law is never that, a strong case is certainly not a win. The proof will be in the pudding, if an insurer comes on board, then I would agree, its a strong case. They won't get embroiled in the emotion and treat the case as business.
  • Thanks for those insights but none of the above changes my view that having a 20% supporter shareholding and a supporter director on the board marks us out as different from other clubs. And although they can be outvoted every time at least they have a right to be in the room to object if, say, the owners suggested relocating the club to Slough, or selling the stadium to a third party.

    Yes the Trust were treated appallingly and are right to fight for restitution, but playing devil’s advocate for a moment: they did not have the money to buy any shares if they had been allowed to take part in the purchase, and the US consortium could have turned round and said ‘I want THOSE shares but I don’t want THOSE ones’ and still have ended up in the same situation surely? Unless the shareholders agreement specified that all shareholders have to put all their shares in a pot if anyone wants to sell, which can’t be right because that would stop any single shareholder from selling up if the others didn’t want to go?

    So I just don’t see the degree of harm justifies completely changing the nature of the Trust’s relationship with the club for good (or until we go into a nose-dive and the then owners are willing to sell to the Trust and no one else).
  • If a substantial award is made,it will, after paying off the insurers,be held by the Trust in order to be used to take the club out of bankruptcy.

    The current main shareholders or any future shareholders would have no call on the Trust for funds to help them operate the business,as the Trust would no longer hold shares.

    If the shareholders wished after settling the matter,to have some form of relationship with the fans and community,they could invite a representive of the Trust to Board meetings,they would hold no voting rights(meaningless anyway due to actions of minor shareholders in their actions with the US
    buyers and proxies of their own voting rights)
  • As could any club in the football pyramid. We would be no different from any other club, apart from having a rich charity sitting on a mound of cash, waiting for a disaster that may never happen. 
  • I regret that you continue to refer to theTrust as a charity, it is a group that people can voluntarily join on payment of an annual subscription.It exists to enable fans to  have a close relationship with the club and to undertake educational activities in support of the club.If they were successful in their action and received net of expenses,the amount claimed ,they would hold the money to guard against the club going out of existence.
    "The disaster that may never happen " has happened with each of the last two sets of shareholders,the current group show little interest in their investment and certainly not in injecting further funds.As such there is every likelihood of the disaster happening again,particularly looked across the whole of the football league.
    Arch_StantonenaitchWynJeff_CowbridgeNatterjack
  • I mean no disrespect in referring to the Trust as a charity. I know it is a community interest organisation rather than a charity but to all intents and purposes they are the same thing. Easier to refer to it as a charity than spell out the full title.

    I am not sure the disaster you describe has happened twice like you describe. Unless the Trust plans to lend money to the shareholders (whoever they may be at that time) to help them avoid the club going into administration (and I think that would probably be illegal), the only way the £15m could be used would be to buy the club off desperate shareholders and use whatever remained to run the club until it was stable again, at which point I presume the Trust would sell on a majority of shares to someone more experienced in running football clubs. 

    Apart from Petty and perhaps the point when we previously came close to going bust, how many times has that happened to us?
  • Cadleigh said:
    I mean no disrespect in referring to the Trust as a charity. I know it is a community interest organisation rather than a charity but to all intents and purposes they are the same thing. Easier to refer to it as a charity than spell out the full title.

    I am not sure the disaster you describe has happened twice like you describe. Unless the Trust plans to lend money to the shareholders (whoever they may be at that time) to help them avoid the club going into administration (and I think that would probably be illegal), the only way the £15m could be used would be to buy the club off desperate shareholders and use whatever remained to run the club until it was stable again, at which point I presume the Trust would sell on a majority of shares to someone more experienced in running football clubs. 

    Apart from Petty and perhaps the point when we previously came close to going bust, how many times has that happened to us?
    We sailed close the wind midway through the 1968/69 season that saw a group of businessmen led by Malcolm Struel take over the club. 

    In season 1974/75 the Vetch Field was sold to the local council to avert a financial crisis while the club had to seek re-election to the Football League after ending the season in the bottom four positions.

    Swansea City were formally wound up on 20 December 1985. But a group of directors put together a rescue package and permission was granted for the club to continue fixtures.

    During the 2001/02 season the club found itself facing bankruptcy and it took a supporters' buyout of controversial Australian businessman Tony Petty to rescue the Swans.
    SeaJack
  • Good memory Colin ,

    Remember  Christmas  1985 , the players  training on  the beach  ,  wondering whether  we would still have a team to finish the season ,

    Obviously  the Petty fiasco  is still fresh in people's  memory ,
  • Cadleigh said:
    Thanks for those insights but none of the above changes my view that having a 20% supporter shareholding and a supporter director on the board marks us out as different from other clubs. And although they can be outvoted every time at least they have a right to be in the room to object if, say, the owners suggested relocating the club to Slough, or selling the stadium to a third party.

    Yes the Trust were treated appallingly and are right to fight for restitution, but playing devil’s advocate for a moment: they did not have the money to buy any shares if they had been allowed to take part in the purchase, and the US consortium could have turned round and said ‘I want THOSE shares but I don’t want THOSE ones’ and still have ended up in the same situation surely? Unless the shareholders agreement specified that all shareholders have to put all their shares in a pot if anyone wants to sell, which can’t be right because that would stop any single shareholder from selling up if the others didn’t want to go?

    So I just don’t see the degree of harm justifies completely changing the nature of the Trust’s relationship with the club for good (or until we go into a nose-dive and the then owners are willing to sell to the Trust and no one else).
    That's fine Cadleigh.

    All I'm telling you is, the Trust themselves believe their 21% holding to not be worth the paper it is written on. 

    That says everything for me. 
    Jeff_CowbridgeJackaremeBigGNatterjackSeaJack
  • Of course its worth the paper it written on, whilst shares were valued at £110 PS, I doubt they'd be worth more than £30 PS now, so whilst it was worth in excess of £21m, it may now only realise £6.5m. There is no one beating the door down to buy us or the club but if we put a run together there'd be plenty of interest.

    Cadleigh, the Trust was interested in purchasing more shares but the sellers would never have let it get to 25.1% because it would have been able to veto certain things like excessive borrowing, the sellers also knew that there'd be no sale if one party (Trust) owned 25.1%, so whilst I would have like the trust to get to that figure, with the best will in the world, it was never going to happen.
    That's not the Trust's beef though, their beef is that by being excluded, they lost the right to sell at the 2016 price. Unfair Prejudice.


  • Jollyboy
    But it may have happened if Mel Nurse had sold his shares to the Trust. Unfortunately HJ insisted on implementing the shareholders agreement that required the selling shareholder to sell pro rata to the remaining shareholders. 
    Yes, that's the agreement that he now claims doesn't exist.
  • Well remembered Colin --the ups and downs of Swansea Town/City over the years.Not just Petty,but the earlier crises.

     l well remember in '85 an ex Swan(Tony Screen) collecting from us around the Guildhall to help to keep the Club in business .The nearest thing to that  these days  for the community connection to the Club , is for the Trust to have a fighting Fund from either mediation or if necessary litigation.
  • Lets not forget that we have in situ already a man, Trevor Birch, who is quite used to, and also friendly with people who broker deals for people interested in buying football clubs. Keith Harris is one such associate.
  • And let’s not forget that the Americans own roughly 70odd percent of the shares and not many would buy 70% of a football club so it would be in their interest to come to some agreement with the trust in my opinion ...
    Jeff_Cowbridge
  • enaitch said:
    And let’s not forget that the Americans own roughly 70odd percent of the shares and not many would buy 70% of a football club so it would be in their interest to come to some agreement with the trust in my opinion ...
    Yes, agreed @enaitch , and that won't happen without a 'legal action' vote.
    enaitch
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