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Hereford United shareholders meet next Monday evening to discuss and vote on five resolutions which if passed would enable the board to go head with their proposed share issue.
To date postal votes received from shareholders are said to be in favour of the proposals but it is thought there will be shareholders at the meeting who might take a different view.
The first resolution is the proposed 'Conversion' which needs a simple majority of those voting, based on the number of shares held.
In essence, if passed, this will allow current loans to the club to be converted into shares. For example someone who has loaned the club say £100,000 will receive 400,000 x 25pence shares. The board have suggested that around 75% of the total loans may be converted, remaining loans will stay on the balance sheet. It's understood the 75% is not a cap, but an estimate.
The second resolution is to allow the directors to administer a share issue. If approved then the board can offer current shareholders a 'multiplier' which is expected to be four new shares for one existing share.
Assuming the second resolution is passed then the third resolution, again if passed, will allow the directors to issue shares to new shareholders. This will only happen after the current shareholders have had the chance to purchase any extra shares they may want. This resolution needs 75% approval.
Directors feel that approval for this is important as it opens up the possibility of new investment in the club from whatever source.
Resolutions four and five are about the clubs Articles of Association. The directors feel these should be updated to reflect the present not the past.
The directors are hopeful that shareholders will reflect on the fact that the balance sheet at present is negative which means that the shares are, in essence, worth nothing.
They appreciate that shareholders % stake in the company will fall if the issue is approved, unless a shareholder decides to purchase extra shares, but point out that without the issue the club will find it difficult to attract new investment.
Finally BN understands that the 'up to £100,000' mentioned in the details as the cost of the issue is unlikely to be reached even if the issue is fully taken up. The figure of £100,000 is the usual cost of an issue of this kind but the board expect costs to be much less mainly because they have not needed to produce a full prospectus at great expense.
