Dear Christine Seddon, Steve Rowland and Kevin Boroduwicz,
SUBJECT TO CONTRACT AND WITHOUT PREJUDICE
May I thank you for your cover letter, your letter of intent and your rationale for accepting the bid, together which I will call “the proposal”. Also for simplicity when I refer to “the Club” I am referring to both Blackpool Football Club Limited and its parent company Segesta Limited.
Firstly, may I say that in reading this proposal I have been most impressed with your creativity, innovation, your passion, your support for the Club and your concern for its future. I expected nothing less from devoted Blackpool fans like yourselves.
However, I cannot resist the temptation to correct your assertion in paragraph 2 of your cover letter that I bought the Club for £1, with its obvious implications. The facts are, and the financial references I make here are supported by the audited accounts of the Club, that I was invited by the Directors of Blackpool Football Club to help them over their dire circumstances. At that time I had recently sold out Oystons to the Royal Insurance Group and I was committed to running many other businesses. I never thought I would ever be involved with the Club although I had been a Blackpool Football Club fan all my life. After an emotional decision and with the support of my family I accepted the “poisoned chalice” and not only saved the Club from bankruptcy but also from demolition as the only other interested party at that time wanted to pull the ground down and build housing and/or a supermarket so if I had not stepped in there would be no Blackpool Football Club today to be passionate about.
Then, over the next 24 years, I poured into the Club (not £1) but multi millions of pounds in the form of my own and family money and in interest free loans from Zabaxe Limited and other Oyston Group Companies, not just to keep the Club afloat but to develop much of what you see in the modern stadium….and this before the arrival of Valeri, our President, and before our elevation to the Premier League. This was new money that had nothing to do with Blackpool Football Club which at the time was penniless and its stadium was just a series of old tin and wooden sheds. In fact if the wind blew over 40 mph during a game, we had to abandon the match. I enclose pictures of the state of the stadium when I inherited it.
If anyone had looked at the accounts they would have seen that I took a Club from bankruptcy and in serious debt with a minus net asset value to a net asset value today of £32m at cost in last year’s accounts (May 2014). In market value terms the Club is worth substantially more of course than £32m which proves that we were asset building all this time and not asset stripping as some have alleged.
Your proposal was delivered to me by hand and when I read it I was confused by your third paragraph in which you said “I would be selling the Club to you and you would be buying it….…for just over £16m”.
I was further confused by the main heading in the Evening Gazette after your interview with them which read:
AMBITIOUS & ‘HOSTILE’ £23 MILLION TAKE-OVER BID
The following queries are simply to clarify and establish the facts and should not be taken as an indication of my answer to your proposal which I have been discussing for some time with my professional advisors.
Is it true that you are not putting in one penny of new money into the Club?
Is it true that on behalf of BST your proposal is that I GIVE YOU, not sell to you, all my shares in Segesta Limited which brings with it all Segesta’s assets which includes the majority shareholding in Blackpool Football Club Limited which you would then control, bank balances with millions of pounds in cash, Bloomfield Road Stadium and its land and many other assets together with the substantial guaranteed income streams generated from these assets?
Did you realise that many of these assets were built by new money from me and my family and later from Valeri Belokon in a joint 50/50 investment venture with me. This was at a time when the Club did not have the resource to carry out any developments, was penniless and had a long history of losses. So, in your proposal, are you including these assets also?
You make no reference to the following significant issues which you must have considered when putting together your complex proposals. I am surprised that you have not included any information in your Letter of Intent in relation to the vital issues which would concern me and the fans as set out below. These are queries raised by my professional advisors, without which they cannot possibly advise me. Your responses will enable my professional advisors to understand this proposal and allow me and my Boards (Segesta Limited and Blackpool Football Club Limited) to consider the serious ramifications of this proposal, before I am able to make a decision. If I am to take your proposal seriously as you request please fully respond to the queries below:-
1. Please provide written proof that the Club President, Mr Valeri Belokon, has written off his loan as stated by yourselves in the Evening Gazette or has agreed to the proposals of BST. Also confirm that Mr Valeri Belokon has formally agreed to the sale of Blackpool Football Club Limited.
2. Please provide a copy of the research or investigations regarding the tax consequences of your proposal which could involve VAT, stamp duty, SDLT, income tax, national insurance, inheritance tax and capital gains tax. As you will know these could be very large sums of money and adversely affect all the participants in these transactions, namely, BST, Blackpool Football Club Limited, Segesta Limited and myself. Please provide proof of funds that would enable BST’s ability to discharge potentially large tax obligations? Please provide a draft guarantee to indemnity myself and the companies from any such liabilities now and in the future.
3. Please provide evidence of all professional appointments detailing the costs agreed for both abortive work or a successful takeover. Again, could you please confirm how BST will fund these substantial costs and provide proof of funds.
4. As the Club is virtually debt free and cash rich, despite your bleak assessment, we wish to see a copy of the BST constitution and in particular the elements which prevent the disposal of assets or the borrowing of money, copies of personal undertakings from any of the committee members and undertakings also not to seek to vary the constitution on any basis to allow the disposal of assets or the borrowing against assets. With the low budget you are proposing, the Club could not sustain any heavy debt commitments which would, we believe, put the Club at serious risk of administration or insolvency.
5. Please provide a copy of your 5 year business plan for the Club which will include forecast profit and loss accounts, balance sheets and cash flow statements to show that the new entity will continue to be a going concern in the future. Please provide all forecasts along with the qualifications of those responsible for the preparation of this plan.
6. Please provide a copy of the commercial figures your business plan relies upon together with a report on the commercial income produced by a qualified professional. In particular we are anxious to see evidence of your figures as according to your budget you are likely to run out of money after year 2. Please provide proof of the necessary funding to sustain the running of the Club.
7. Please provide a schedule of your proposed Board, Executive, Football Staff and Administrative Staff structure. You did allude to employing the “best” professionals to assist with the running of the Club. Please provide job specification, terms of employment and remuneration for these best professionals that you anticipate fulfilling the above crucial roles together with copies of the agreements you intend to enter into with them.
8. Please include within the above requests all information regarding redundancies, TUPE and plans including costing and phasing surrounding stadium maintenance. Please provide details of the names and qualifications of those you have tasked with preparing the above.
9. Please provide legal confirmation that the Companies Act actually permits Segesta Limited and Blackpool Football Club Limited to carry out the transactions set out in your proposal.
10. Please confirm that you have had approval in principal from the FA/FL to the proposed takeover and provided and have had approved the requisite future financial information to the FL. Please forward copies of all documentation relating to this point.
May I stress once again that this response is not the beginning of a negotiation with you, at this stage, but simply my attempt to clarify in my own mind and in the mind of my professional advisors what you are really proposing so we can all understand it. The information we are requesting under the heading “Further Queries” above is essential if we are to make an informed response. Obviously I would be concerned if I were to give you all these shares and assets for nothing only to find that the Club fails because of lack of preparation and forward planning and appropriate ongoing investment or reserves to subsidise the annual deficit.
In the interests of the future of our Club and our fans I have to ensure whoever takes responsibility for this institution is qualified to do so and able to finance and run it for another 27 years through both good and bad times.
I hope you will see from our serious approach to your proposal that I am, as requested by you, treating it with every respect. Providing you are able to give a full and frank response to the questions set out above I will make a decision within days of your response after discussing it with the Directors of both Companies and our professional advisors.
As you presented your proposal to the media we are responding accordingly and will send out a press release of this reply also to the media.
We would appreciate a timely response, ideally within the next 14 days together with all of the requested supporting documentation.