Statement from Evans the Binman

MEI will, upon completion of the Investment and Refinancing, invest £12.0 million in the Club which will go directly for use by the Club to fund the purchase of new players as and when determined by the Club's board and to fund increased short-term losses including those arising from player wages.The investment will be made in the following way. First, in return for the payment by MEI of approximately £8.1 million to the Club, the Club will issue to MEI £8.1 million of "7 per cent. preference shares".These shares will not have any voting or control rights but will entitle MEI to receive from the Club, in priority to any dividend that can be paid on the ordinary shares, a return (by way of dividend) of 7 per cent. per year (which will equate to approximately £564,000 per year), which will only be paid if the Club is legally and financially able to do so.The obligation to repay the £8.1 million to MEI (by way of redemption of the preference shares) would be triggered in the event that the Club has remained in the Premier League for a continuous five year period.MEI has agreed that, if it were ever to sell a majority stake in the Club (which it would likely do by selling its stake in the ordinary shares), the only amount payable on the preference shares would be any accrued dividends.The £8.1 million would therefore be extinguished upon a sale thereby increasing any value that would attach to the ordinary shares in the Club (12.5 per cent. of which will, via IT plc, be owned by IT plc's shareholders).
Secondly, in return for the payment by MEI of approximately £3.9 million to the Club, the Club will issue to MEI such number of ordinary shares in the Club as will give MEI a stake of 87.5 per cent..The remaining stake of 12.5 per cent. will continue to be held by IT plc for the benefit of you, its shareholders.MEI and IT plc will have the same class of ordinary shares in the Club with the same voting rights (i.e. one vote per share) and dividend rights (i.e. in the event of a dividend being declared and paid by the Club, MEI would receive 87.5 per cent. and IT plc would receive 12.5 per cent. of the dividend). However, it is not anticipated that there would be any dividend payments on the ordinary shares in the foreseeable future. Marcus Evans has indicated a willingness to provide further investment were it to become necessary to achieve his and the Club's aims. summary, MEI could theoretically over time be repaid by the Club the debt acquired and redeem the preference shares all at face value. However, in practice such a return is unlikely to be available to MEI without the Club achieving a long run in the Premier League, which itself would be likely to require significant investment in the Club

Posted By: BSE Canary on December 3rd 2007 at 16:59:18

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