Articles of Association - Minority Shareholders

[Woodstock Jag]

The fact of soft loans left the Club still in a vulnerable position (as they could fall to be repayable at any time and regardless of the Club’s cash position).

And, as Jim points out, they left anyone making them in a vulnerable position (because they were unsecured loans).

Those facts point to why it was that a more structured investment of at least £500k was required for proper stability on cashflow.

Which TJF indicated very clearly in June.

Now investment can take any number of forms, but essentially the choice is:

(a) unsecured debt (unattractive to any investor for any prolonged period of time without conditions)

(b) secured debt (unattractive to the Club as it’s likely to attract debt interest, unattractive to other potential investors as they rank behind as a creditor)

(c) non-voting shares (unattractive to investors without more up-front conditions about how the Club would be run, and probably requiring some sort of premium/redemption model for it to be worth them risking it)

(d) voting shares (less attractive to the existing shareholders, but perhaps easier to sell to an investor without heavy conditions up front, and it’s equity rather than debt so better for the Club’s liquidity and balance sheet)

TJF tried their best to get the fans non-voting preference shares (c) as the vehicle, but it didn’t come off.

So the choice was really (a), (b) or (d) for a structure.

And (a) already had an expiring shelf life.

So the question is would you have preferred secured lending (in the current environment!) to address cashflow? Or would you rather have a vehicle that sees a reversible dilution of shareholdings, with no debt interest at all and no premium on repayment?

We’d all rather (e) someone somewhere willing to donate silly sums of money for no strings attached, but the Thistle fanbase doesn’t buy that many Lottery Tickets, I’m afraid!

Even when Colin Weir put just shy of £1 million into the Club in 2015, it wasn’t done unconditionally. It was done in exchange for 10% of new share capital plus a further 19% of share capital for the newly created PTFC Trust. Only those shares represented a permanent dilution for existing shareholders. And a much more drastic one than this deal at that!

Dilution isn’t inherently bad for affected shareholders if it makes the underlying business more viable. Not having to worry about running out of cash this season is a really important outcome. It buys the Club time and security to restructure its off-field operations, and to become a more sustainable entity.

And if the Club becomes profitable over a sustained period as a result of that breathing space, such that the shares eventually fall to be redeemed? Frankly I don’t grudge any investor getting their money back. Under any other arrangement: unsecured debt, secured debt, or another type of share? They’d have been seeking the same thing.

[Lenziejag]

9 hours ago, Woodstock Jag said:

The fact of soft loans left the Club still in a vulnerable position (as they could fall to be repayable at any time and regardless of the Club’s cash position).

And, as Jim points out, they left anyone making them in a vulnerable position (because they were unsecured loans).

Those facts point to why it was that a more structured investment of at least £500k was required for proper stability on cashflow.

Which TJF indicated very clearly in June.

Now investment can take any number of forms, but essentially the choice is:

(a) unsecured debt (unattractive to any investor for any prolonged period of time without conditions)

(b) secured debt (unattractive to the Club as it’s likely to attract debt interest, unattractive to other potential investors as they rank behind as a creditor)

(c) non-voting shares (unattractive to investors without more up-front conditions about how the Club would be run, and probably requiring some sort of premium/redemption model for it to be worth them risking it)

(d) voting shares (less attractive to the existing shareholders, but perhaps easier to sell to an investor without heavy conditions up front, and it’s equity rather than debt so better for the Club’s liquidity and balance sheet)

TJF tried their best to get the fans non-voting preference shares (c) as the vehicle, but it didn’t come off.

So the choice was really (a), (b) or (d) for a structure.

And (a) already had an expiring shelf life.

So the question is would you have preferred secured lending (in the current environment!) to address cashflow? Or would you rather have a vehicle that sees a reversible dilution of shareholdings, with no debt interest at all and no premium on repayment?

We’d all rather (e) someone somewhere willing to donate silly sums of money for no strings attached, but the Thistle fanbase doesn’t buy that many Lottery Tickets, I’m afraid!

Even when Colin Weir put just shy of £1 million into the Club in 2015, it wasn’t done unconditionally. It was done in exchange for 10% of new share capital plus a further 19% of share capital for the newly created PTFC Trust. Only those shares represented a permanent dilution for existing shareholders. And a much more drastic one than this deal at that!

Dilution isn’t inherently bad for affected shareholders if it makes the underlying business more viable. Not having to worry about running out of cash this season is a really important outcome. It buys the Club time and security to restructure its off-field operations, and to become a more sustainable entity.

And if the Club becomes profitable over a sustained period as a result of that breathing space, such that the shares eventually fall to be redeemed? Frankly I don’t grudge any investor getting their money back. Under any other arrangement: unsecured debt, secured debt, or another type of share? They’d have been seeking the same thing.

What’s been missing here is communication and fan involvement around the whole thing. Unless, I missed it, we are only just learning that the loan to Alistair Creevy has been paid back. When did that happen ?
And you mention not grudging investors getting their money back . When do we(TJF members) get our money back for our ongoing investment in PTFC. The club just seem to be taking our money and paying lip service to fan inclusion in the decision making, in fact not just fan inclusion but TJF inclusion, if I read the statement correctly.

[javeajag]

10 hours ago, Jordanhill Jag said:

Im sorry - there is a Budget - according to TJF it was increased ( if reading correctly they were not impressed by the increase given the financial pressures ) 

One Director cannot simply change the Budget ? 

And if they did-  the others can simply disagree and change it back at the next Board Meeting? 

What your suggesting ( or has been suggested to you ) doesn't stack up 

 

 

 

You may be right…..we don’t know who on the board individually or collectively made the decision…..we do know it was a ‘punt’ and not financially prudent, the Tjf were not informed and it was driven by the former chairman.

[Jordanhill Jag]

1 hour ago, javeajag said:

You may be right…..we don’t know who on the board individually or collectively made the decision…..we do know it was a ‘punt’ and not financially prudent, the Tjf were not informed and it was driven by the former chairman.

He has one vote like the rest of them - at least two others supported it - to try and lay this at the former Chairman's  Door is nonsense - anyone can suggest anything at a Board Meeting - it has to get support from fellow Directors - for all we know it was a unanimous decision ?- this simply sounds like spin towards the former Chairman from -parties unknown-  ( I'm not saying he didn't suggest it ) I'm saying the others had to support it to make it a reality   

Edited October 20, 2023 by Jordanhill Jag

[Woodstock Jag]

1 hour ago, Lenziejag said:

What’s been missing here is communication and fan involvement around the whole thing. Unless, I missed it, we are only just learning that the loan to Alistair Creevy has been paid back. When did that happen ?

I don’t know the exact date but all director loans, not just that one, were repaid long in advance of any boardroom dispute arising. The loans were short-term and purely concerned with an immediate cashflow situation.

As we (TJF) explained back in June the Club’s actual cash crunch point was in May 2023 (and would have been February but for unbudgeted income in the Rangers game).

Over the summer the cash position obviously recovered, as SPFL prize money was paid out and season tickets were purchased for the 2023-24 season. The business has high points and low points each year in terms of cash, and you need to make sure that, at the low points, you don’t run out.

What hadn’t been resolved was the need for new working capital. Even with a break-even budget for 2023-24 there would be a cash “trough” during the season, posing liquidity problems. TJF highlighted this problem in June and even put a figure on it of at least £500k being needed. We said this had to be over and above the TJF donations to the Club.

1 hour ago, Lenziejag said:

When do we(TJF members) get our money back for our ongoing investment in PTFC. The club just seem to be taking our money and paying lip service to fan inclusion in the decision making, in fact not just fan inclusion but TJF inclusion, if I read the statement correctly.

At the moment TJF donates money to the Club. This is a core part of the Club’s budgeted income for 2023-24. It is also the most tax efficient way to get members’ funds to the Club.

If our members think that we shouldn’t be putting money into the Club, that is of course entirely their right. If a critical mass of members were to tell us that they wanted TJF to stop putting money into the Club on a monthly, we as the TJF Board would obviously listen to that and act accordingly. I should say we have had zero emails from members (or in fact anyone else) saying this.

If your point is that you think TJF should also receive shares for the money it puts into the Club, this is a position with which I have considerable sympathy. Indeed, it’s why TJF originally explored pulling together a group of Thistle-minded investors earlier in 2023 (TJF would have been part of the consortium).

However, in the longer term I think the aim surely has to be to simplify the fan ownership situation and not to complicate it further by having all three parts of the fan ownership vehicle separately owning different shares.

But, just like the main investment, TJF’s pledge was borne out of short-term necessity. To withdraw a commitment like that would only have the effect of damaging the football club, jeopardising its ability to deliver its 2023-24 budget. That’s not a course of action I would support in the current context.

I would also point out that we will have a legally binding consultation process for any future investment process, as outlined in our document. So TJF members will have a say (indeed, being the lion’s share of the beneficiaries of the PTFC Trust, they will have the decisive say).

[Woodstock Jag]

It’s also worth remembering that fan consultation is being embedded at the football club.

TJF members were directly consulted in recent months on:

(a) the Conference league proposals

(b) the reintroduction of the matchday programme

The TJF Members’s survey is also due out later this month (and the blame for the delay on that is entirely with me as I’ve been trying to find the most suitable format for it).

A culture of fan involvement in decision making doesn’t happen overnight. It is completely accepted that the lack of fan consultation was a major shortcoming of the investment process and how it was handled. All involved know that that cannot be allowed to happen again.

If people feel that they’re being let down by their elected fan leadership the answer is very simple: get involved. Stand for election.

Edited October 20, 2023 by Woodstock Jag

[Lenziejag]

2 hours ago, javeajag said:

You may be right…..we don’t know who on the board individually or collectively made the decision…..we do know it was a ‘punt’ and not financially prudent, the Tjf were not informed and it was driven by the former chairman.

Which former chairman are we talking about here ? Not Alistair Creevy, as he had his own potential investors, so he said.

[Lenziejag]

45 minutes ago, Woodstock Jag said:

I don’t know the exact date but all director loans, not just that one, were repaid long in advance of any boardroom dispute arising. The loans were short-term and purely concerned with an immediate cashflow situation.

As we (TJF) explained back in June the Club’s actual cash crunch point was in May 2023 (and would have been February but for unbudgeted income in the Rangers game).

Over the summer the cash position obviously recovered, as SPFL prize money was paid out and season tickets were purchased for the 2023-24 season. The business has high points and low points each year in terms of cash, and you need to make sure that, at the low points, you don’t run out.

What hadn’t been resolved was the need for new working capital. Even with a break-even budget for 2023-24 there would be a cash “trough” during the season, posing liquidity problems. TJF highlighted this problem in June and even put a figure on it of at least £500k being needed. We said this had to be over and above the TJF donations to the Club.

At the moment TJF donates money to the Club. This is a core part of the Club’s budgeted income for 2023-24. It is also the most tax efficient way to get members’ funds to the Club.

If our members think that we shouldn’t be putting money into the Club, that is of course entirely their right. If a critical mass of members were to tell us that they wanted TJF to stop putting money into the Club on a monthly, we as the TJF Board would obviously listen to that and act accordingly. I should say we have had zero emails from members (or in fact anyone else) saying this.

If your point is that you think TJF should also receive shares for the money it puts into the Club, this is a position with which I have considerable sympathy. Indeed, it’s why TJF originally explored pulling together a group of Thistle-minded investors earlier in 2023 (TJF would have been part of the consortium).

However, in the longer term I think the aim surely has to be to simplify the fan ownership situation and not to complicate it further by having all three parts of the fan ownership vehicle separately owning different shares.

But, just like the main investment, TJF’s pledge was borne out of short-term necessity. To withdraw a commitment like that would only have the effect of damaging the football club, jeopardising its ability to deliver its 2023-24 budget. That’s not a course of action I would support in the current context.

I would also point out that we will have a legally binding consultation process for any future investment process, as outlined in our document. So TJF members will have a say (indeed, being the lion’s share of the beneficiaries of the PTFC Trust, they will have the decisive say).

OK - TJF is playing the long game. However, regarding the ongoing investment, it surely deserves more respect than it is currently receiving from the Club board. In little more than 2  and a bit years, it will equal the recent investment. TJF’s reps on the club board should keep reminding them of that. None of the others on the board have given free money to the club.

[Woodstock Jag]

1 minute ago, Lenziejag said:

OK - TJF is playing the long game. However, regarding the ongoing investment, it surely deserves more respect than it is currently receiving from the Club board. In little more than 2  and a bit years, it will equal the recent investment. TJF’s reps on the club board should keep reminding them of that. None of the others on the board have given free money to the club.

This is precisely why we said in the statement that Working Together Protocols are being urgently prioritised!

I think we are animatedly agreeing with one another, just from slightly different starting points!

[scotty]

3 hours ago, Lenziejag said:

What’s been missing here is communication and fan involvement around the whole thing. Unless, I missed it, we are only just learning that the loan to Alistair Creevy has been paid back. When did that happen ?
And you mention not grudging investors getting their money back . When do we(TJF members) get our money back for our ongoing investment in PTFC. The club just seem to be taking our money and paying lip service to fan inclusion in the decision making, in fact not just fan inclusion but TJF inclusion, if I read the statement correctly.

Every week when we still have a club to go along and support.

[javeajag]

58 minutes ago, Lenziejag said:

Which former chairman are we talking about here ? Not Alistair Creevy, as he had his own potential investors, so he said.

The decision to increase the player budget beyond our income limits not the investment 

[javeajag]

2 hours ago, Jordanhill Jag said:

He has one vote like the rest of them - at least two others supported it - to try and lay this at the former Chairman's  Door is nonsense - anyone can suggest anything at a Board Meeting - it has to get support from fellow Directors - for all we know it was a unanimous decision ?- this simply sounds like spin towards the former Chairman from -parties unknown-  ( I'm not saying he didn't suggest it ) I'm saying the others had to support it to make it a reality   

Two others had to support who could have course not been members of Tjf 

[Jordanhill Jag]

4 minutes ago, javeajag said:

Two others had to support who could have course not been members of Tjf 

Agreed - but they are a Board - point is - its being muted it was done by the Former Chair - no it wasnt - it was done by the Majority of the Board - so why is he being mentioned ?  

[javeajag]

1 minute ago, Jordanhill Jag said:

Agreed - but they are a Board - point is - its being muted it was done by the Former Chair - no it wasnt - it was done by the Majority of the Board - so why is he being mentioned ?  

Well it was his idea and we don’t know how the decision was made or why

[Jordanhill Jag]

7 minutes ago, javeajag said:

Well it was his idea and we don’t know how the decision was made or why

We do know the decision was made by the Majority of Board Members  ( no matter whose idea it was ) - the fact its now being pointed as the decision of the former Chair frankly speaks volumes on the rewriting of History 

And my understanding - which may be wrong-  is that it was the Football Budget that was being increased - however to do this they should have made cuts elsewhere-  to balance the budget IMO     

[javeajag]

3 minutes ago, Jordanhill Jag said:

We do know the decision was made by the Majority of Board Members  ( no matter whose idea it was ) - the fact its now being pointed as the decision of the former Chair frankly speaks volumes on the rewriting of History 

And my understanding - which may be wrong-  is that it was the Football Budget that was being increased - however to do this they should have made cuts elsewhere-  to balance the budget IMO     

Well he did say publicly that he had increased the budget so let’s believe him.

[Lambies Lost Doo]

4 hours ago, Lenziejag said:

 When do we(TJF members) get our money back for our ongoing investment in PTFC. 

Whit?  Do you think this is a stocks and shares ISA?

[Lenziejag]

1 hour ago, Lambies Lost Doo said:

Whit?  Do you think this is a stocks and shares ISA?

No. I don’t want TJF to be taken for mugs. Putting money in and getting nothing back in return.

[Fawlty Towers]

I see that we are on the 3rd version of these in the last 3 weeks - I assume it is just some tinkering and nothing that changes the substance of what has happened recently?

https://find-and-update.company-information.service.gov.uk/company/SC005417/filing-history

[Woodstock Jag]

2 hours ago, Fawlty Towers said:

I see that we are on the 3rd version of these in the last 3 weeks - I assume it is just some tinkering and nothing that changes the substance of what has happened recently?

https://find-and-update.company-information.service.gov.uk/company/SC005417/filing-history

No substantive changes. From what I gather, one of them was to do with pagination problems with the final document, and the other fixes a couple of typos spotted later.