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DFCSS Email - Purchase of Shares

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Check your inbox everyone.

Some very interesting stuff.

Dear Member,

The Society Board wishes to inform you that since July 2018 the Directors have been involved in strictly confidential discussions with DFC/FPS on the subject of the Society’s shares. The purpose of the discussions has been to address the desire of FPS to acquire 75%+ of the shares in DFC with the intention of transferring the shares to Dark Blue Property Holdings Ltd. These discussions are referred to without detail in the online Board Meeting Minutes dating from 14/08/18:    

As a result of the situation the Society Board is receiving legal advice from a national firm of Solicitors with a local office in Dundee, and also governance advice from Supporters Direct UK. 

Despite the strictly confidential nature of the discussions agreement has now been secured with FPS to allow the information and details in this document to be released to the Society’s Members for consultation purposes. 

Background:

Currently FPS owns 68.2% of the issued share capital in DFC and has - without putting a price on them - proposed to purchase the Society’s ‘A Ordinary’ shares which amount to 7.7% of the issued shares (in addition to the Society’s 12.7% ‘Ordinary’ shares). This would result in FPS owning 75.9% of the share capital in DFC.

This proposal is a response to the initial talks between the Society and Club aimed at creating a ‘Shareholder Agreement’ between the Society and FPS to safeguard the Society’s entrenched rights* in exchange for the Society agreeing to the Club’s request for a renewed authority to issue shares as the Club’s Directors see fit rather than the fall back option of a general rights share issue to all shareholders. At present the ‘Articles of Association’ of DFC contain the entrenched rights attach to the Society’s ‘A Ordinary’ Shares. A ‘Shareholder Agreement’ would provide greater protection and establish a stronger (contractual) relationship between the Society and FPS.

It’s clear that under the terms of the Society's ‘Model Rules’ the Board is not required to put this proposal to a Members vote as it's within the Board's competence to decide on the matter in the best interests of the Society as a whole. However, the Directors feel that it’s very important that Members should be given an opportunity to express their views on such a significant proposal prior to the Board arriving at a final decision, and the Board would very much welcome any comments you may wish to enter in the ‘box’ on page 3 below: 

 

*Described in Guidance Note 2 on page 2 below.

 

Guidance Notes for Members:

To assist the Members in forming a view the Directors agree that the following key points should be taken into consideration:

1.      Sale of the ‘A Ordinary’ shares may result in the permanent loss of some of the currently established entrenched rights that were agreed between DFCSS and FPS when FPS took over the Club in 2013.

2.      The Society’s entrenched rights include rights of veto over: (a) the sale of the Club,                 (b) dividend payments, (c) any borrowing by the Club in excess of £50,000, (d) change of stadium location, (e) changes to home club colours or badge, (f) stadium sharing,                    (g) amalgamation or merger with another club.      

3.      It’s been proposed that along with the sale of the ‘A Ordinary’ shares to FPS some entrenched rights could be transferred from the Club’s ‘Articles of Association’ into a ‘Shareholder Agreement’ between DFCSS and FPS offering better legal rights of remedy for any breach subject to wording being agreed that may or may not differ from the wording of the current entrenched rights.   

4.      It’s also been suggested that should the Society agree to sell its shares to FPS the owners would be willing to engage positively with the Society, and close collaboration could result between the Society and the Dundee FC in the Community Trust. The Society’s Directors have been informed that this is a unique chance for the Society to play a supporting role with the owners through various fundraising and other activities.     

5.      The Camperdown property development which is being promoted by Tim Keyes and John Nelms through Dark Blue Property Holdings Ltd includes the proposed 15,000 seat stadium which is a key factor for FPS and supporters alike – The Society’s entrenched rights within the ‘Articles of Association’ could potentially constrain the stadium development, therefore to demonstrate support for the new stadium DFCSS could agree to relax the rights for an appropriate period of time.

6.      If the Society sold its ‘A Ordinary’ shares to FPS it would still be the second largest shareholder in DFC with its 12.7% ‘Ordinary’ shareholding.

7.      If FPS does not purchase the Society's ‘A Ordinary’ shares, FPS would in all likelihood achieve a 75% shareholding through a rights issue.

Possible Options:

1.      Agree to the sale of the ‘A Ordinary’ shares to FPS and negotiate a ‘Shareholder Agreement’ containing reduced rights for DFCSS.

2.      Hold onto the shares and identify the rights that could constrain the new stadium development and relax the rights for an appropriate period to demonstrate support for the new stadium project. In addition, the Society could provide backing the Club’s request for a renewed authority to issue shares as the Club’s Directors see fit to avoid the option of a general rights share issue to all shareholders.

3.      Simply hold onto the shares and do nothing.

 

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Jesus tittyphuken Christ.....

Not sure what to make of this, will need to have a think.

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Can someone break this down into layman's terms please?. Would be as well being in Swahili as far as this Fucknugget is concerned.

Cheers.👍

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I don't know what percentage of TDB posters are DFCSS members, but (after people have had time to read & discuss the perceived risks/options), it might be worth setting up a TDB poll to see what the views are?

I'm not sure how it would be done, but if we do have a poll on this, it would also be useful to see this split by DFCSS members / Non-members.....given that only DFCSS members can vote on a Society proposal. 

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1 minute ago, Reverend Lovejoy said:

Can someone break this down into layman's terms please?. Would be as well being in Swahili as far as this Fucknugget is concerned.

Cheers.👍

Basically, DFCSS are wondering if we approve of FPS taking over Dundee United with a view to running them into the ground.

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2 minutes ago, Reverend Lovejoy said:

Can someone break this down into layman's terms please?. Would be as well being in Swahili as far as this Fucknugget is concerned.

Cheers.👍

Was thinking the same! 😂

 

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2 minutes ago, Cobra said:

Basically, DFCSS are wondering if we approve of FPS taking over Dundee United with a view to running them into the ground.

I've always liked the John Nelms, the great man is doing a sterling job that makes a mockery of his pitiful salary.

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My take was we can get into bed with FPS and get to fanny about with the fringes, community stuff, fund raising or hold out and they'll get the magic 75 percent another way and we'll be on the outside, albeit with a veto.

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15 minutes ago, Chomp my root said:

Jesus tittyphuken Christ.....

Not sure what to make of this, will need to have a think.

I'm the same, my mind isn't working well today either so I'm finding it hard to digest.

10 minutes ago, Reverend Lovejoy said:

Can someone break this down into layman's terms please?. Would be as well being in Swahili as far as this Fucknugget is concerned.

Cheers.👍

....that being said, this is what I'm reading:

  • Special shares held by DFCSS were created at the time of the Americans arrival - these give vetoes over the sale of the Club, dividend payments, any borrowing by the Club in excess of £50,000, change of stadium location, changes to home club colours or badge, stadium sharing, amalgamation or merger with another club.       
  • FPS have identified this as an issue in the stadium development project
  • FPS have proposed to buy the shares and come to a new 'shareholders agreement' which would give DFCSS legal protections - the wording isn't guaranteed to be the same as it is now.
  • FPS have pledged to DFCSS that their agreement to this will signal the start of a new relationship where DFCSS will be given an integral role in Dundee FC in the Community Trust
  • DFCSS have presented three options; agree and negotiate 'shareholders agreement', propose new wording to how the special shares are defined, do nothing. They don't need to have membership approval to choose any of these but they have felt it appropriate to put the consultation out
  • Not doing anything will result in FPS reaching the 75% ownership mark through other means and DFCSS losing their seat on the board

My initial thoughts here are that it can mean anything. It could just be the case of them seeing now as a good time to reorganise the current arrangements (which could be a bit legally murky I imagine) and DFCSS would obviously not want to do this behind closed doors - the optics are really not great. It could mean they want to turn us into 'Dundee United Tangerine Dynamos' managed by Davie Bowman at Tannadice and are trying to trick DFCSS into removing their vetoes.

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Just now, Chomp my root said:

My take was we can get into bed with FPS and get to fanny about with the fringes, community stuff, fund raising or hold out and they'll get the magic 75 percent another way and we'll be on the outside, albeit with a veto.

Yeah I think so. That's my reading of it.

I'm really interested to see what posters have to say on this.

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7 minutes ago, Harry94 said:

I'm the same, my mind isn't working well today either so I'm finding it hard to digest.

....that being said, this is what I'm reading:

  • Special shares held by DFCSS were created at the time of the Americans arrival - these give vetoes over the sale of the Club, dividend payments, any borrowing by the Club in excess of £50,000, change of stadium location, changes to home club colours or badge, stadium sharing, amalgamation or merger with another club.       
  • FPS have identified this as an issue in the stadium development project
  • FPS have proposed to buy the shares and come to a new 'shareholders agreement' which would give DFCSS legal protections - the wording isn't guaranteed to be the same as it is now.
  • FPS have pledged to DFCSS that their agreement to this will signal the start of a new relationship where DFCSS will be given an integral role in Dundee FC in the Community Trust
  • DFCSS have presented three options; agree and negotiate 'shareholders agreement', propose new wording to how the special shares are defined, do nothing. They don't need to have membership approval to choose any of these but they have felt it appropriate to put the consultation out
  • Not doing anything will result in FPS reaching the 75% ownership mark through other means and DFCSS losing their seat on the board

My initial thoughts here are that it can mean anything. It could just be the case of them seeing now as a good time to reorganise the current arrangements (which could be a bit legally murky I imagine) and DFCSS would obviously not want to do this behind closed doors - the optics are really not great. It could mean they want to turn us into 'Dundee United Tangerine Dynamos' managed by Davie Bowman at Tannadice and are trying to trick DFCSS into removing their vetoes.

So do you reckon this new move is likely to turn out bad for us further down the line or is there any good news to come out of this?.

Scepticism is built into most Dundee fans who've lived through the last 40+ yrs.

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I'm not a member of DFCSS anymore (I don't think I am anyway). However, it's a hard one, I have a lot of time for Nelms and Keyes, they have made mistakes and they have done right things for the club too. No one can't say they haven't invested money into the club, because they have. We are very stable behind the scenes, which is something we haven't been for decades. Do we let go of our (fans) shares? I don't know. Either way, my reading is they will get the magic number needed with or without dfcss. 

 

I do think DFCSS should make a big push for new members though, not just now though as everyone is skint after xmas,  April time would do. DFCSS should help the Dee promotions/youth development etc... They still have a role to play. 

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3 minutes ago, Harry94 said:

Yeah I think so. That's my reading of it.

I'm really interested to see what posters have to say on this.

I'm missing the meeting on Saturday, if I'd known this was in the pipeline I'd have made sure I was there. 

My instinct is to hold onto the 'golden tickets' but that requires the Soc to put the effort in which must be a thankless task. It's good that the Soc are wanting to gauge the membership.

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11 minutes ago, Reverend Lovejoy said:

So do you reckon this new move is likely to turn out bad for us further down the line or is there any good news to come out of this?.

Scepticism is built into most Dundee fans who've live through the last 40+ yrs.

I really don't think any of us really have enough info tbh.

If the 'shareholders agreement' could be defined so it is consulted on and done concurrently (with similar wordings but approval of the Camperdown Project worded as the exception), then great, I don't see how the situation is really changing beyond what it is now and we've maybe improved some of the legal protections with an opportunity of the good faith agreement being built on.

If it turns out that the 'shareholders agreement' is non specific to come later or to involve confidentiality clauses (that prevent DFCSS from properly consulting), I see real problems there.

It would help massively if we knew what the true motivations are. The sensational headline for these things is always the 'merger' part of the special shares and that's what the papers will run with tomorrow. The part I'm most interested in though is that DFCSS can prevent the club from accumulating liabilities - I didn't actually realise it was as low as £50k until I read that. If it's that the partnership funding for the new ground involves Dundee FC taking on some sort of payment commitments and the board want to eliminate or change this clause - we absolutely need to know about it.

There is the whole conflict of interest thing that I imagine FPS might be struggling with in the funding process. Taking out big loans and obtaining grants is all great but if they are going to a company who have basically just been made to own the property and don't have any agreements in writing for income (i.e. rent), I could see someone saying that's a bit of a problem - you need some evidence that the repayments can be serviced. I'm unsure if they could just write a draft rent agreement from Dundee FC now but I suspect that even just doing that won't be enough for the financiers as the clauses there do present a way to legally challenge any contract they agree now. Then, I think the contracts need to be confidential - that could be a problem to have to take to DFCSS every time.

I may be off on the wrong angle entirely but it's the process of the stadium project that Nelms specifically said is taking time to work on.

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5 minutes ago, Harry94 said:

I really don't think any of us really have enough info tbh.

If the 'shareholders agreement' could be defined so it is consulted on and done concurrently (with similar wordings but approval of the Camperdown Project worded as the exception), then great, I don't see how the situation is really changing beyond what it is now and we've maybe improved some of the legal protections with an opportunity of the good faith agreement being built on.

If it turns out that the 'shareholders agreement' is non specific to come later or to involve confidentiality clauses (that prevent DFCSS from properly consulting), I see real problems there.

It would help massively if we knew what the true motivations are. The sensational headline for these things is always the 'merger' part of the special shares and that's what the papers will run with tomorrow. The part I'm most interested in though is that DFCSS can prevent the club from accumulating liabilities - I didn't actually realise it was as low as £50k until I read that. If it's that the partnership funding for the new ground involves Dundee FC taking on some sort of payment commitments and the board want to eliminate or change this clause - we absolutely need to know about it.

There is the whole conflict of interest thing that I imagine FPS might be struggling with in the funding process. Taking out big loans and obtaining grants is all great but if they are going to a company who have basically just been made to own the property and don't have any agreements in writing for income (i.e. rent), I could see someone saying that's a bit of a problem - you need some evidence that the repayments can be serviced. I'm unsure if they could just write a draft rent agreement from Dundee FC now but I suspect that even just doing that won't be enough for the financiers as the clauses there do present a way to legally challenge any contract they agree now. Then, I think the contracts need to be confidential - that could be a problem to have to take to DFCSS every time.

I may be off on the wrong angle entirely but it's the process of the stadium project that Nelms specifically said is taking time to work on.

My take is that JM & FPS are pissed off that the January Transfer thread is now up to 55 pages and they've asked the society to create a bit of a smoke screen to buy them a bit of time.😂

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9 minutes ago, Reverend Lovejoy said:

Can someone break this down into layman's terms please?. Would be as well being in Swahili as far as this Fucknugget is concerned.

Cheers.👍

The document emailed to all DFCSS members will be discussed at the Society AGM this Saturday, so the issues/risks/options should be a lot clearer after that, but I've added my current understanding below.

 

When the DFCSS membership voted to agree to FPS buying the majority shareholding (ownership) in DFC, the agreement that was negotiated included a list of 'protected' items which DFCSS members had the right to 'block' by veto. These are:

(a) the sale of the Club - This one I'm not 100% sure of, as we effectively sold the club to FPS....and if they sell their shares to another buyer, I'm not so sure we could have any power to stop this, eg if we 'didn't like' the new buyers. Definitely needs clarified at the AGM.

(b) dividend payments - DFC haven't paid out a dividend (ie, pence per share) to shareholders for decades, but if FPS proposed to pay out a dividend to shareholders it would reduce the Club's working capital....and obviously most of this dividend would go to the FPS shareholders.

(c) any borrowing by the Club in excess of £50,000 -  This was put in place to prevent buildup of 'bank debt' again, or from other external lenders, which could put the Club at risk of liquidation if we couldn't repay the debt. It doesn't appear to prevent Club directors from loaning the club funds, as there have been director loans in recent accounts. These have, I think, all been converted to shares, rather than the Club paying the loan back to the director.

(d) change of stadium location - This was originally aimed at ensuring the team wasn't moved to another ground....but clearly needs to be amended or removed to permit the proposed move to the Noo Campy. 

(e) changes to home club colours or badge -  This was to stop the registered colours being completely altered (eg, to Tangerine, or Green, or Pink) & a completely redesigned badge used....ie, losing 'our historic identity as DFC'.

(f) stadium sharing - This was mainly aimed at preventing any proposals to play at Tannadice, but if the Noo Campy goes ahead, and it's to be shared with the arabs, this would need to be changed.                    

(g) amalgamation or merger with another club - Probably needs no explanation!....but if we 'give up' this 'veto', there would be nothing to stop FPS or subsequent owners of their shares from a merger. Definitely needs AGM discussion.      

I think my memory/interpretation is accurate, and hopefully this is enough to make these points a bit more obvious, especially to anyone who's not been involved in the previous meetings/discussions that led up to FPS becoming 'owners'. 

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3 minutes ago, WoodStein said:

The document emailed to all DFCSS members will be discussed at the Society AGM this Saturday, so the issues/risks/options should be a lot clearer after that, but I've added my current understanding below.

 

When the DFCSS membership voted to agree to FPS buying the majority shareholding (ownership) in DFC, the agreement that was negotiated included a list of 'protected' items which DFCSS members had the right to 'block' by veto. These are:

(a) the sale of the Club - This one I'm not 100% sure of, as we effectively sold the club to FPS....and if they sell their shares to another buyer, I'm not so sure we could have any power to stop this, eg if we 'didn't like' the new buyers. Definitely needs clarified at the AGM.

(b) dividend payments - DFC haven't paid out a dividend (ie, pence per share) to shareholders for decades, but if FPS proposed to pay out a dividend to shareholders it would reduce the Club's working capital....and obviously most of this dividend would go to the FPS shareholders.

(c) any borrowing by the Club in excess of £50,000 -  This was put in place to prevent buildup of 'bank debt' again, or from other external lenders, which could put the Club at risk of liquidation if we couldn't repay the debt. It doesn't appear to prevent Club directors from loaning the club funds, as there have been director loans in recent accounts. These have, I think, all been converted to shares, rather than the Club paying the loan back to the director.

(d) change of stadium location - This was originally aimed at ensuring the team wasn't moved to another ground....but clearly needs to be amended or removed to permit the proposed move to the Noo Campy. 

(e) changes to home club colours or badge -  This was to stop the registered colours being completely altered (eg, to Tangerine, or Green, or Pink) & a completely redesigned badge used....ie, losing 'our historic identity as DFC'.

(f) stadium sharing - This was mainly aimed at preventing any proposals to play at Tannadice, but if the Noo Campy goes ahead, and it's to be shared with the arabs, this would need to be changed.                    

(g) amalgamation or merger with another club - Probably needs no explanation!....but if we 'give up' this 'veto', there would be nothing to stop FPS or subsequent owners of their shares from a merger. Definitely needs AGM discussion.      

I think my memory/interpretation is accurate, and hopefully this is enough to make these points a bit more obvious, especially to anyone who's not been involved in the previous meetings/discussions that led up to FPS becoming 'owners'. 

I'm hoping that this new move is centred around the new stadium development rather than anything sinister. Obviously point (d) needs amended for the stadium to go ahead and an amendment to point (f) would probably make sense too.

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Think John Nelms needs to do a video brief again to the fans. IMO should be happening every 6months anyway, free to view video to the fans on the official website giving a brief on everything Dee related. It squashes rumours immediately and puts the fans at ease, 15mins would be enough. 

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11 minutes ago, GregTeamDee said:

Think John Nelms needs to do a video brief again to the fans. IMO should be happening every 6months anyway, free to view video to the fans on the official website giving a brief on everything Dee related. It squashes rumours immediately and puts the fans at ease, 15mins would be enough. 

Agreed .

And it should be every quarter, at least.

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26 minutes ago, Reverend Lovejoy said:

I'm hoping that this new move is centred around the new stadium development rather than anything sinister. Obviously point (d) needs amended for the stadium to go ahead and an amendment to point (f) would probably make sense too.

I don't think there's anything sinister in the background, Rev....things have moved on a bit since the original FPS 'takeover', and it's sensible to revisit this with the Society membership at the AGM.   

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There’s absolutely no way the society should be selling those shares. 

Relax wording to facilitate a move to a new stadium - yes.

Everything else - no.

The offer of fannying about with the community trust if the shares are sold is laughable. “Giz yer shares and we’ll start speaking to ye”. Awful stuff from the club tbh.

Much more info required on why the shares are so desirable to FPS and even if that’s provided I doubt it would be compelling enough to change my view on it. 

Personally, I’m growing more and more disillusioned with our clubs leadership as each week passes. Handing over the authority to merge us with United is the last thing we should be doing.

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3 minutes ago, Boba Fett said:

There’s absolutely no way the society should be selling those shares. 

Relax wording to facilitate a move to a new stadium - yes.

Everything else - no.

The offer of fannyig about with the community trust if the shares are sold is laughable. “Giz yer shares and we’ll start speaking to ye”. Awful stuff from the club tbh.

Much more info required on why the shares are so desirable to FPS and even if that’s provided I doubt it would be compelling enough to change my view on it. 

Personally, I’m growing more and more disillusioned with our clubs leadership as each week passes. Handing over the authority to merge us with United is the last thing we should be doing.

They're looking to isolate DFCSS completely by removing any power (veto) it currently has. I don't trust them (FPS) and believe the proposal will most likely lead to amalgamation and that hybrid club will play at the dump with tangerine in the strip - unacceptable, completely unacceptable. FPS is not offering an olive branch or compromise, it's systematically squeezing the fans out of the club. Let's face it many of us already no longer feel part of the club.

Unfortunately it looks like the DFCSS board might be simply disillusioned with all the (mostly undeserved) sniping at them by fans, the low membership numbers, inability to get anyone interested in taking a board seat and the futility of trying to talk to the BoD on a level and just want to get out by showing their a**e holes to JN and allowing him to shove it in without lube. (That last paragraph is just my feeling, I have no evidence to back it up).

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Just now, Prince Buster said:

They're looking to isolate DFCSS completely by removing any power (veto) it currently has. I don't trust them (FPS) and believe the proposal will most likely lead to amalgamation and that hybrid club will play at the dump with tangerine in the strip - unacceptable, completely unacceptable. FPS is not offering an olive branch or compromise, it's systematically squeezing the fans out of the club. Let's face it many of us already no longer feel part of the club.

Unfortunately it looks like the DFCSS board might be simply disillusioned with all the (mostly undeserved) sniping at them by fans, the low membership numbers, inability to get anyone interested in taking a board seat and the futility of trying to talk to the BoD on a level and just want to get out by showing their a**e holes to JN and allowing him to shove it in without lube. (That last paragraph is just my feeling, I have no evidence to back it up).

I don’t read the mail that way.. my guess is DFCSS favor the second option - don’t sell but amend wording to allow stadium development to be explored.

Whats the share rights issue all about? Seems to be pitched like a threat??

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