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    11 April, 2005

    City: Club replies to my letter

    The Club has now replied to my letter of 10 March. As my scanner isn’t working I have typed it below. There is, I think, a typing mistake by the Club in paragraph 2 about the date of repayment of the Loan Notes. This should be 2011 not 2001.

    To be fair to the Club, this is a very full reply with more detail than I was expecting. I will comment on it further in the week.

    Dear Mr Andrews

    Thank you for your letter of 10 March.

    The concerns which you express in your letter are very understandable and the Directors are re-assured that your concerns are well meant and that you do wish the Club well in its continuing efforts to achieve a satisfactory resolution to the Stadium situation. The Directors hope that both you and other long standing Supporters like yourself also wish the Club well in its continuing efforts to overcome the recent difficulties which have now been widely reported in the Press. The reference in the accounts to a financial restructuring does of course refer to such difficulties; various alternatives are being considered and more details will be released in due course if the Board considers such re-structuring to be necessary.

    With regard to the Loan Notes, these were subscribed for last year by non UK resident investors who, by so doing, have expressed their confidence in the Club, the Club’s current Management and in the Stadium project. The Club is not obliged to advise Shareholders of the names of the party or parties who hold the Loan Notes but I can advise you they are independent parties. The Loan Notes were issued by the Club and not by Holdings and the monies raised were used to repay the Club’s substantial indebtedness to Citibank. The Loan Notes are unsecured and have been issued at a fixed rate of 7% per annum with a repayment date in 2001 and are, in the meantime, redeemable by the Club. The Club’s intention is to make the Stadium project successful and to redeem the Loan Notes as soon as possible. The Club is satisfied that the terms of the Loan Notes are favourable to the Club and the Club’s Board does appreciate that it was only through the good offices of Rudgwick Ltd that such favourable terms were achieved.

    You have inquired about two commercial agreements namely the Management Agreement between Rudgwick Limited and the Club and the loan agreement between Rudgwick Limited and the Club. Neither of these agreements are relevant to the accounts of Holdings of which company you are a Shareholder. Nevertheless, I can advise you that there is still a Management Agreement between Rudgwick Limited and the Club, but the Club has not been able to make payment of the Management Fee for some considerable time due to cash flow difficulties. The rate of interest on the Loan from Rudgwick to the Club was at market rate. The Loan was unsecured and, I believe, has been repaid, but I will check on this.

    Due to the considerable pressures which the Stadium project has put on the respective Managements of both Holdings and the Club, the approval of Holdings’ 2003 and 2004 Accounts has been delayed and the Board is therefore, proposing to call an AGM this Summer in order to lay before the Shareholders, for their approval, Holdings’ Accounts for the years ending 31 May 2003 and 31 May 2004.

    Shareholders are not entitled to see or to be provided with minutes of any Board Meetings but they are entitled to see and to have copies of the minutes of any AGM of companies of which they are shareholders and, therefore, if you so request, copies of the Minutes of the Holdings’ AGM to be called this Summer will be sent to you after the AGM.

    You have asked for a copy of the Share Register of the Club. I am not sure that is what you actually want since the Club is a wholly owned subsidiary of Holdings. As a shareholder in Holdings you are entitled under the Companies Acts to receive a copy of the Share Register of Holdings and whilst the Company is entitled to make a charge for supplying a copy of the Register I have been asked to send a copy to you, on this occasion, free of charge. However, if other Shareholders start asking for copies of the Share Register then the Company reserves the right to make a charge for providing any such copies. I will send your copy of the Register onto you just as soon as I receive my updated copy from the Management.

    I note what you say in the penultimate paragraph of your letter and I trust I have been able to answer your questions to the extent that I am able to do so and, of course, you will have every opportunity at Holdings’ AGM to ask questions about Holdings’ Accounts for 2003 and 2004.

    Yours sincerely,

    (Signed)

    Peter Lloyd-Cooper
    Company Secretary

    17 comments:

    Anonymous said...

    Leighton

    Thanks for pursuing this and publicising the outcome. I have two questions I'd be intested in hearing your opinion on:

    1) what would happen to the loan notes if the new stadium project collapsed and City went back into the lower divisions? As I understand it, there would be no hope of City paying this off in 2011 from that kind of position

    2) on the tangential issue of the new stadium, do you believe the LibDem council have been slack in pushing it through? Goodway warned they would be ditherers and had no business nous, and thus far, despite warm words from Berman, he seems to be right

    Richard

    Leighton Andrews said...

    I don't want to be party political about this at all. I am sure everyone involved in the Council understands the benefits to Cardiff and the Valleys of having a top-flight football team.

    I don't know the answer on the loan notes, but it would clearly be a stiff challenge for any lower division club - it would be a big challenge for a Premiership club. I guess it's better than short-term debt of the same size though.

    There are of course a lot of unanswered questions here, and I will continue to ask questions.

    Anonymous said...

    On the question of management fees.... although the letter states that they have not been paid for some time due to cash flow difficulties, can we establish whether the payments remain payable and, as such, see Rudghil (?) accruing as a creditor?

    Leighton Andrews said...

    I'm guessing, but I would assume they remain payable.

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