Yesterday, Dodgy Dave King lost his court appeal against the Takeover Panel’s attempt to enforce their instructions that he make an offer to buy the shares of the club’s other existing shareholders. The media didn’t even try to spin it, but there’s been no real analysis of it anywhere either, except for on the blogs.
This is the first of two articles I’m going to do on it today, and I want to pay tribute to Phil and Rugger Guy, his mate who analyses all things Sevco and finance related, for their sterling work up until now. This first piece is due to their hard graft.
Later on I’ll do a piece which owes much to the guys over on the Scottish Football Monitor who continue to offer truly excellent coverage of these events and a close analysis which the rest of us will be endlessly grateful for one day.
This verdict is going to hurt Sevco in so many ways.
First, King had promised the club £4 million to get them through the rest of this campaign.
It’s been my contention that he made this offer knowing full well the Takeover Panel ruling would effectively put the brakes on it. He knew how this ended and always has; King, as ever, was stalling for time but he was also trying to pull a fast one on his fellow board members and he largely succeeded.
This left them with the shortfall that sent them running to Close Brothers, a move born of desperation and puts the club in serious peril for next season.
Now that justice has caught up with King he’s in a real bind.
Now, there are two potential ways that he could stall for even more time; he could appeal the decision to the Supreme Court for one. I’ll tell you now that the chances of him succeeding are somewhere, to quote John Major today, between “zilch and zero.”
The initial court proceeding in this was held by what’s known as the Outer Court.
From there, an appeal went to the Inner Court, which is where this week’s hearing was held. The Inner Court verdicts can be appealed to the Supreme Court … but usually only if the Inner Court agrees that the issue merits this and is of “significant public interest.”
The Supreme Court has to agree on top of that, and they will listen carefully to what the Inner Court thinks before agreeing to such a thing.
The speed with which Sevco’s appeal was dismissed – the court had actually set aside two full days for legal arguments alone; the verdict wasn’t expected for months – suggests, on its own, that they viewed the attempt itself as frivolous and without merit whatsoever.
The chances of them agreeing to a Supreme Court appeal are non-existent.
Furthermore, if Sevco tries to appeal anyway, as I said, the Supreme Court will ask the Inner Court for their view on its virtues … and presumably they will tell the Justices that there are, in their view, none warranting it at all.
The appeal avenue appears to be dead and buried.
King could try and stall by “waiting” on NOAL and then basically having NOAL tell the courts at the last minute that either they can’t do it or won’t comply. This opens up a whole new legal battlefield and in the event it won’t work anyway; the verdict says that if NOAL can’t or won’t make the bid that King himself has to … but he could try this and buy time.
Eventually though he’s going to run out of thread for stringing this out, if he hasn’t already.
There appears to be no mechanism for him slithering off the hook.
And that’s problematic for King and for the club, because in order for King to put together a prospectus which offers those shareholders a complete picture – necessary under the law – he is going to need to open the books to independent scrutiny.
He can’t just pass off profit and loss statements as the full story. This requires full disclosure, to a qualified analyst. The document that will be produced here will be signed off on by lawyers and specialists and people who won’t gild the lily on his behalf.
You cannot offer to buy shares in such a way as this without a prospectus offering people a fair examination of the deal. The document must set out what a fair value for those shares is, and the only way to assess that is doing an assets and liabilities comparison, with some future financial projection data thrown in.
And I am confident – as Phil and Rugger Guy are – that any such evaluation, far from dismissing the 20p price as not good value, will make it clear that in fact that is the deal to end them all. Sevco shares might be “trading” for more than that, but one of the reasons King pulled the club off the exchange in the first place is that he doesn’t want them subject to the fluctuations you get at annual reporting time and other moments of crisis.
Those shares aren’t worth a fraction of that 20p, and that is the first thing that independent scrutiny of their financial positon and prospects will make plain. They will also have to detail the full size of the hole the club is in and offer some sort of plan for the way they get out of it. Otherwise those shares are worth nothing at all.
Don’t let anyone fool you that King and his people are sanguine about all this; the guy knows he’s in big bother here and as I’ll make clear in the article later the trouble is far worse than he’ll ever let on, and it puts the remaining members of his “concert party” in a very bad spot indeed.
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