Serious takeover talk

GOM has posted some info rtg....some new stuff on companies house.
Looks like the investment is £9m, and will be included as income.

 

Exactly. Who cares at this stage what that figure is? What we do know is it is a substantial amount for a League one club and it is highly likely that further investment will follow as we climb the leagues. Happy days!

 

It reads


When a company issues shares, they have what's called a nominal value - the face value of the share. In the case of Sunderland Ltd, this is 1p; for SAFC Ltd, it's £1. However, shares are normally sold for more than that when they're issued. That brings in more money than the nominal value of the shares - the difference is put into something called a share premium account, which forms part of the company's reserves. The other main part of a company's reserves are retained earnings, the accumulated profits over they years (or, in Sunderland's case losses). In the case of Sunderland, these reserves had grown piecemeal over the years, to the point where the club had a huge share premium, and equally huge losses.

The reason this is important is that a company can only pay dividends from what are known as distributable reserves, usually meaning retained earnings. Other reserves, including the share premium account, are called non-distributable and can't be used to repay shareholders. In Sunderland's case, the retained losses were so large that there was no prospect of the club having distributable reserves for the foreseeable future. It also makes that side of the balance sheet look really untidy, and gives a misleading view of its solvency if users only look at the retained earnings number

If a company is clearly solvent (and the directors have to submit a signed declaration to that effect), it can, with the agreement of 75% or more of the shareholders, either reduce its issued share capital, cancel its share premium account, or both. This has the impact of increasing the distributable reserves and making the balance sheet look much neater. It also opens up the possibility of dividends being paid in future.

Why is this important? Well, one potential initial investment method for FPP would be to take up what are known as preference shares. These usually have no voting rights, but are compensated for lack of control by a guaranteed dividend (usually x% of nominal value), which has to be paid before any dividends to ordinary shareholders (that's why they're called preference shares). This is the way MSD invested in the Florida Marlins. Obviously, to pay a preference dividend requires distributable reserves. Now. I'm certainly not saying that this is the intention, but it does make it a possibility. Quite often, preference shares also come with a right to conversion into ordinary shares - this could provide FPP with a means of taking control gradually if they went down that route.

 

Jesus do them figures not exist you learn something everyday, just saying.

 

He wasn't referring to that one. You're a few posts out. It was this:

Righty-ho, we now have a raft of filings at Companies House for Sunderland Limited. As a result of this, I think I've got a handle on what's happened.

Firstly, a mea culpa. I thought the share allotment was part of the tidying up. It's not. It's the actual investment coming in.

What has happened is:

1. The existing share capital of £1.608m was reduced to £1m.
2. The share premium of £251.6m has been cancelled
3. The amount thus released of £252.2m has been credited to reserves.

All this happened between 17th and 31st October

4. On 1st November £9m in new shares were allotted, presumably to Madrox.

The numbers are slightly different, but there are mirror entries to these in SAFC Ltd.

So, it looks as though the investment amount is £9m, and it's come in as share capital, meaning it will count as income for FFP purposes.

 

So we're now able to issue preference shares, which FPP have used in the past...

Haway the takeover!

 

I was told in September that this was a takeover and I still believe it is.

I'm not experienced enough in accountancy to debate the facts and figures and, tbh, don't much care.

I get the feeling people are realising this is just the start of things to come and is irriversable ....

... exciting times as far as I'm concerned.

 

I've asked Grumpy if he'd post on here but he's only just able to keep up with all the questions on one forum which I appreciate having recently been overwhelmed with pm's etc. However he's happy for me, or anyone else, to cut&paste his content from RTG.

This is one of his latest posts which seem to suggest a takeover may well be inevitable.

"When a company issues shares, they have what's called a nominal value - the face value of the share. In the case of Sunderland Ltd, this is 1p; for SAFC Ltd, it's £1. However, shares are normally sold for more than that when they're issued. That brings in more money than the nominal value of the shares - the difference is put into something called a share premium account, which forms part of the company's reserves. The other main part of a company's reserves are retained earnings, the accumulated profits over they years (or, in Sunderland's case losses). In the case of Sunderland, these reserves had grown piecemeal over the years, to the point where the club had a huge share premium, and equally huge losses.

The reason this is important is that a company can only pay dividends from what are known as distributable reserves, usually meaning retained earnings. Other reserves, including the share premium account, are called non-distributable and can't be used to repay shareholders. In Sunderland's case, the retained losses were so large that there was no prospect of the club having distributable reserves for the foreseeable future. It also makes that side of the balance sheet look really untidy, and gives a misleading view of its solvency if users only look at the retained earnings number

If a company is clearly solvent (and the directors have to submit a signed declaration to that effect), it can, with the agreement of 75% or more of the shareholders, either reduce its issued share capital, cancel its share premium account, or both. This has the impact of increasing the distributable reserves and making the balance sheet look much neater. It also opens up the possibility of dividends being paid in future.

Why is this important? Well, one potential initial investment method for FPP would be to take up what are known as preference shares. These usually have no voting rights, but are compensated for lack of control by a guaranteed dividend (usually x% of nominal value), which has to be paid before any dividends to ordinary shareholders (that's why they're called preference shares). This is the way MSD invested in the Florida Marlins. Obviously, to pay a preference dividend requires distributable reserves. Now. I'm certainly not saying that this is the intention. However, it does make it a possibility. Quite often, preference shares also come with a right to conversion into ordinary shares - this could provide FPP with a means of taking control gradually if they went down that route."

 

Always explains in a canny way does GOM. Very good poster, especially to folk like me who can't make head nor tail of some of the official stuff. It's still hard to work out, but it gives a good insight to what certain bits could mean.

 

There's a massive difference between mathematics and accountancy.

That's why it needs someone like Grumpy who's part Sherlock Holmes to make sense of it.

 

This. Although he makes me feel daft because he writes about it, I don't understand, he then puts it in layman's terms and I still don't understand, and I wouldn't ask him to try and make it any simpler, I think accountancy is just never going to be my thing! Looks like long story short we've got the boost in funds which will help us spend on the academy and recruitment, two areas we've been poor at recently, and they've done it in a way which might mean they take shares later. Sounds spot on, I don't need any more detail than that (just as well, since I wouldn't be able to understand it!)

 

Let's hope that coton and hill have very little to zero input as to how and who is is spent because frankly they are a shambles.

 

That's definitely a legitimate worry. I'm just hoping the underperformance has been due to being under resourced (which should now be rectified), but I agree there's big question marks over them

 

I'm not sure how fair or accurate it is to knock the recruitment team. For example we tried to sign Lyle Taylor ahead of Grigg but he didn't want to make the move, if he had then things could have been very different.

Their first round of recruitment was mainly about plugging huge gaps in the squad and it was unlikely there'd be many gems. However for every Flanagan there was an O'Nien and they managed to put an end to our keeping nightmare in style.

Second time around they've nailed the CB positions with two freebies and De Bock looks quality. Dobson looks a player. All this with no scouting network with people who were all new to the league from the manager to the owner unlike the teams around us.

Could have done better? Sure. Shambles? Not at all.

 

I have been very critical of Coton and Hill aka as the chuckle brothers , however at the recent talk in Charlie Methven seemed pleased with their contribution to date . Like yourself I have reservations and hope Phil Parkinson does not accept the players they want to recruit but stands his ground and tells them what HE wants or what HE or rather the team needs . Stewart Donald needs to be supportive of Phil Parkinson in this regard if we are to progress .

 

Aye still a concern as any scouting getting put in place is gonna be more for the future, rather than the Jan window, i would think.We need to make sure whoever we bring in during the next window actually really make a difference to the team.We seem to have too many players on a similar level, and equally inconsistent. Any striker we bring in has to bang the goals in regular during the 2nd part of the season.
Sounds obvious i know, hopefully Parky can have a big say, and identify players he wants to play in his system

 

GOM gives us an Idiot guide may not understand everything but we get the jist of what is going on

 

Well done grumpy, always rely on him

 

I'll ask if he can do short video clips using glove puppets mate ...

.... might give us a fighting chance

 

I had a feeling it would have been along the lines of a gradual takeover.

Happy days!