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The Jim Kerr/Kenny Dalglish 1998 consortium statement
Jim Kerr/Kenny Dalglish Consortium StatementSee Also: Celtic Finances
CELTIC PLC 22nd December 1998
Re: Celtic PLC Statement by the Consortium
Further to the statement released by the board of directors of Celtic PLC ("Celtic" or "the Club") at 5 pm on Friday 18 December, 1998 the consortium comprising BT Capital Partners Europe and Messrs. Jim McAvoy, Kenny Dalglish, Jim Kerr and Paul Hewson ("the Consortium") has today released the following statement:The Consortium is disappointed by the manner in which Mr. Fergus McCann and his fellow board members have dealt with its proposals for the future of Celtic PLC.
Prior to the onset of the publicity surrounding its proposal, the Consortium attempted to conduct discussions with Mr. McCann in private. These discussions were initiated through a written proposal, the content of which was intended to serve as a basis for discussion. Mr. McCann required that any proposals be placed in the hands of his advisors and that ultimately they be submitted to the Board of Celtic PLC. The Consortium complied at each stage with Mr. Mc McCann's requests.
At no time did the Consortium or its advisors secure a meeting with the Board of Celtic PLC to discuss the content of its proposals. The first indication that its contents were not of interest to the Board came in a letter from the advisors to the Board, Greig Middleton, received by the Consortium's advisors at 4.30 pm on Friday 18 December, 1998. As a result of the subsequent press release issued by Celtic PLC, the Consortium feels it has no choice but to withdraw the current proposal, which was in any event subject principally to detailed due diligence of the Club and a recommendation from the Board of Celtic PLC.
However, the Consortium continues to believe its proposals was in the interest of Celtic PLC, its supporters and shareholders, and regrets that the Board did not wish to enter into discussions. The Consortium also recognises that without the support of Mr. McCann in relation to his majority shareholding, any formal bid for the Club could not succeed. The Consortium has at all times expressed Mr.McCann's support to be a pre-condition to a bid for the entire issued share capital of the Club.
The Consortium would like to make the following specific points in relation to the Consortium's proposal.
1. The Long Term Interests of Celtic PLC - The Consortium believes that Celtic PLC requires immediate and substantial investment both in players and in the development of training facilities if it is to return to the top tier of European football. The Consortium is not aware of any substantive plan currently in place to address this requirement. The Consortium's proposal included the provision of substantial amounts to be available for immediate investment in both areas.
2. Ownership/Exit - In its proposal, the Consortium recognised the importance of securing continued supporter involvement, and included arrangements to cater for this in the structure of its proposal. However, to remain a top tier football club in today's market requires continued and significant investment, the best source of which is not necessarily supporter shareholders alone. As a result, the Consortium views the involvement of a professional investor with substantial resources as a major strength of the proposal.
Although the Consortium at all times maintained a willingness and expressed a desire to discuss appropriate exit mechanics and corporate governance provisions, this opportunity was never provided by the Board or its advisors.
3. Price and Value - The requirement for detailed due diligence, particularly in relation to current financial performance, makes a detailed discussion of price and value inappropriate. However, the Consortium would like to point out that: (i) its proposal valued the Club in line with the valuation multiples used by potential purchasers of other publicly traded football clubs; and (ii) the market value of the ordinary shares does not appear to take into account the dilution which will occur on conversion of the preference shares.
4. Gearing - The Consortium's proposal envisaged that the acquisition would have been in part funded through long-term debt. The Consortium firmly believed this structure to be both prudent and appropriate. Contrary to press speculation, there was no intention to fund the operations of the Club through an overdraft facility, and the proposal would have allowed the Club financial flexibility to make further investments as required. As well as the debt and equity capital to have been invested by BT Capital Partners Europe, each of the individuals in the Consortium had agreed to commit substantial personal funds to the proposal. Neither BT Capital Partners Europe nor the individuals would have made this commitment had the proposal not in their opinion been prudently and appropriately financed.
5. Commercial Development - The Consortium expressed a strong interest in working with the Club's existing commercial management team to optimise the daily operations of the Club. In addition, the members of the Consortium possess considerable commercial expertise and experience. In Kenny Dalglish, the Consortium would have been able to offer the services and commitment of one of Europe's leading football experts, and a man uniquely qualified to lead an effort to return Celtic to the elite tier of European football.
6. Process - The Consortium also notes the Board's comment that BT Wolfensohn, the financial advisers to the Consortium were asked to consent to the release of detailed information relating to the proposal, and that this consent was refused. The Consortium wishes to state for the record that this request was received from Greig Middleton at 4.30pm and that a response was required by 4.45pm. When BT Wolfensohn asked for a copy of the proposed detailed statement by the Board prior to consenting to its release, this request was refused.
At no time during the period from November 11th, 1998 when the Consortium's proposal was first made available to Mr. Cann's advisors, to December 19th, 1998 when the Board's statement was released, were any meetings held between the Consortium and Mr.McCann. At no time during the period from December 3rd, 1998 when the Consortium's proposal was provided to the Board, to December 19th, 1998 were any meetings held between the Consortium and the Board.
The Consortium continues to have an interest in the development of Celtic. However, in light of the Board and the majority shareholder's stated unwillingness to deal with the Consortium, the Consortium regrets that it cannot unilaterally advance its proposal further.
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