With Hereford United currently unable to pay its bills, and unlikely to have much income other than season ticket sales until games recommence in August, some shareholders are considering asking for an EGM (extraordinary general meeting)
An EGM can usually be called by a small number of shareholders.
The main purpose of an EGM would be to extract as much up-to-date information from the board and then discuss what can be done.
There could be calls for the chairman to resign, or even the whole board, but if that was done, the meeting would need to appoint a minimum of three new directors. They would need some business acumen and/or deep pockets to carry the club forward. It might not be easy to find such people at present.
Again it might be felt better for the present board to stay in office. Pushing some or all of them out could backfire as they could demand their loans back and therefore put the club into administration with all that would mean. They got us in this mess, they should get us out is one view.
However if the directors are unable/unwilling to put their hands into their pockets then some might feel there's little point in them staying unless they have some, as yet, unpublished ideas. (What happened to the talk of a PFA loan to pay the players?)
Last week the chairman suggested two schemes to help the club. Firstly was a share issue. That will take time and, in truth, it's hard to see whether enough supporters would invest money into a club which is in such dire straits. In any case DK mentioned 'B' shares which might not give purchasers any voting rights.
Secondly a debenture issue which, in effect, is a scheme that asks supporters to pay upfront for five, it could be more, years of season tickets. Granted if 100 supporters did this then at say £250 per season for five years, then enough money would be raised to pay the immediate debts or at least those debts that have been made public. However supporters would probably need some assurance that the club would be in existance in five years time.
Both schemes could work, but would they raise enough much need finance quickly enough?
So what can be done?
If, and it's a big if, the directors would agree to turn their loans into gifts then the balance sheet would be that much better and so potential investors might then be persuaded to come on board.
That would assume the £135K (DK's figures) owing by the middle of May is all that is currently outstanding. £135K could then be covered perhaps by someone guaranteeing a bank loan.
Another worrying situation is the thought of the leases being substantially changed without shareholders at least being able to comment before they are signed. In truth few shareholders know what is meant to happen, whether the changes will benefit the club and whether the directors see the changes as a way to get their loans back. And it would to good to confirm in whose name the leases are. It has to be hoped they are in the name of Hereford United not individuals. More clarity is needed. (The current position regarding the lease at Edgar Street is understood to include a 'standard user clause preventing the land being used for anything other than a sports facility')
Action is required quickly. Whether an EGM is the best way forward is questionable but in the absence of anything else perhaps one should be called if only to flush out more detail and have the chance to ask questions of the board.
It's happened before. Back in 1998, when a CVA was being set-up, there were calls for an EGM. It took place and many questions were put to the board then chaired by Peter Hill.
Usually it needs 10% of the shareholders to call for an EGM. If, for example, HUISA and a couple of shareholders agreed then the directors would have to announce an EGM.
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