With more details of the CVA for Hereford United expected to be released early next week, it is timely to look back to January 1998 and these reports from HUISA.
At a Board Meeting on 18th November 1997, the Board of Directors
determined that the financial position of the Club was so bad that they
had to seek the professional help of a firm of Insolvency Practitioners.
This Board meeting took place TWO DAYS, prior to the meeting HUISA
called at the Green Dragon Hotel. It is not surprising (and this is the
real reason) therefore that the Board refused to attend our meeting.
The Insolvency company, Smith & Williamson of Birmingham have put
together a proposal, known as a Company Voluntary Arrangement (CVA), to
ward off potential winding up orders from creditors. Details of the
proposal were sent to creditors and shareholders just before Xmas (I
wonder why??), and a meeting was called at the Club, to agree the
proposal, on 7th January 1998.
The CVA documentation shows the Club to be effectively £1m, in debt,
with little prospect of that position improving (i.e. it is getting
worse). The largest creditors (after the BS Group of course) are the
Inland Revenue and Customs & Excise who are owed some £143K and
£120K respectively. Football Clubs are owed some £59K, and the club owes
money to many varied "trade" creditors totalling some £74K. In fact it
would almost be easier to make a list of those to whom they don't owe
money.
In return for agreeing not to wind the Club up, the CVA proposed, that
the Club pay certain preferential creditors (including the Football
Clubs) in full and the balance of the creditors an initial payment of
40p in the £. The creditors are also promised that they will all get the
remaining monies due to them, in full, when the Club secures the
freehold on Edgar Street and sells it for re-development. The estimated
value of the site in these circumstances, is quoted within the CVA at
£8-10m. The CVA is explicit that the arrangements include NO provision
for a new ground, stating simply that this matter will be addressed,
separately.
The money to make the initial payment to creditors, is being borrowed,
from a further property development company called "Chelverton
Properties". In return for this further loan, and in addition to the
interest payable, Chelverton Properties, gain an undisclosed % of the
funds to be generated from the sale of Edgar Street. It seems unlikely
that this will be less than the 25%, the BS Group have already secured.
At the meeting on the 7th January 1998, the creditors refused to agree
the CVA and both meetings were adjourned for two weeks. The reasons for
the creditors refusal were as follows:
That the Club could not prove that the loan from Chelverton Properties was in place!!!!
The Customs & Excise disagreed with the Club's figures, as to how much they were owed.
The Inland Revenue and Customs & Excise, were not happy that the
Football Clubs received preferential treatment and were paid in full.
Only our Board of Directors could make such a cock-up of things, when
they were asking others to let them off the hook!!
Despite the fact that the shareholders meeting was technically
adjourned, it was nonetheless extremely interesting. If PH (Peter Hill -
chairman) was in any doubt as to how isolated he was beforehand, he can
have been in no doubt afterwards. He was asked why shareholders (and
therefore the fans) had not been consulted on the BS deal, and blamed
weakly, a lack of time; he was also asked about his plans to pay the
loan back in 1999, if the ground has not been sold by then. He has no
such plans, preferring to believe, rather naively as one shareholder
pointed out, that the BS Group will simply give the Club more time!
After an attack by George Hyde, who asked how the CVA could be based on
the sale of the ground when the Club did not own it, Graham Rivers spoke
for all of the shareholders (and fans) when saying that the Club faced a
very real threat of closure with or without the CVA, because of the BS
Group deal. He went onto say that for the Club to have any chance of
surviving there would have to be a complete change in the Boardroom,
followed by the bringing and working together of all parties genuinely
interested in saving the Club (the supporters, the Council, the
commercial sector in Hereford, etc.). He didn't say it directly but it
was clear that the latter wasn't possible without the former. He then
proposed an extraordinary meeting of shareholders for this purpose and
received the full support of everybody in the room except those on the
top table. After trying to arrange the meeting for the same day as the
Stevenage game (the Chairman clearly didn't have the date in his diary),
the EGM was agreed for Sunday 18th January 1998.
Meanwhile on January 12th HUISA put out a report on a Hereford Council Meeting
HEREFORD CITY COUNCIL MEETING - MONDAY 12th JANUARY 1998
One of the other aspects that had been in dispute, at the
creditors/shareholders meeting, was whether the leases on Edgar Street
had indeed been assigned to the BS Group. Their view was that they had,
the Council took a different view. The subject was then discussed at a
meeting of the Council's Policy and Finance Committee on 12th January
1998, a meeting called by George Hyde. HUISA made representations to
this meeting by way of a detailed letter, requesting that the Council
refuse to assign the lease and pointing out what was likely to happen if
they did (i.e. the Club would fold). We also asked to be able to attend
the meeting.
After some confusion over whether this was possible, the Council finally
agreed to let the supporters in and address the meeting. My thanks go
to all those who turned out on the night and put our case so
passionately and well. Similar thanks go to all those who wrote in to
the Council on the Club's behalf and those who collected (and signed)
the 307 signature petition we handed in to the meeting. That the
council, in closed session, decided to assign the lease, is to be
regretted; one of the Club's best hopes was that they would stand up and
fight for the preservation of football in Hereford. But it is too easy
to blame the Council. The fact is, that they have been out manoeuvred,
by a group of clever businessmen (no not our lot, the other lot). HUISA
members must not forget that it was the Chairman and the Board,
including Mr Fry, who did the deal with the BS Group and nobody else!
Finally for now
THE SHAREHOLDERS MEETING - SUNDAY 18th JANUARY 1998
Prior to this meeting the HUISA Committee invited a number of prominent
shareholders in the Club to a pre-meeting in the Green Dragon Hotel on
Saturday 17th January 1998, before the Kettering game. The aims of the
meeting were simply to identify the options available, that might save
the Club and how best to approach the EGM, on the following day. The
meeting was attended by the HUISA Committee and representatives of the
Businessmen, David Williams, Roger Townley and Mike Davies and Maggie
Dean who recently acquired the Duggan shares. Graham Rivers whilst
offering support to what we were trying to achieve, felt "unable" to
attend and Archie Phillips did not respond to his invitation.
If I am entirely honest, I have to say that the meeting did not achieve a
great deal, simply because the picture was, and to a great extent still
is, so gloomy. The businessmen explained that the key issue was one of
control at the Club, which given his share holding, was exercised by PH,
whether he was Chairman or not. They went onto explain that despite
months of negotiating they were no nearer persuading PH to sell his
shares and give up control of the Club. They expressed a strong doubt
that he had ever been serious in his intentions of doing so (hence the
"ink dry" warning, given above). Beyond agreeing on a series of
questions designed to make PH admit this at the EGM, and a commitment by
all parties to keep each other informed of developments, the meeting
did not reach any other positive conclusion.
The EGM itself, on Sunday turned out to be something of a farce. Whilst
some had expected PH not to turn up, he did so, but got his "independent
Chairman", to announce that it was not a formal meeting and that no
resolutions (decisions) could be passed. Moreover the meeting was time
limited, and after an opening address by Graham Rivers who repeated his
call for a new Board and the standard "its not my fault" defence from
PH, only a completely inadequate one hour was allowed for questioning.
I won't go into detail but it is fair to say that not one shareholder
who stood to ask a question, voiced any support for the Board. Indeed
many were vociferous in their view that, they were directly responsible
for the state of the Club and had to go. The main facts that did emerge
and which should be of concern to all HUISA members, were that:
The leases having been assigned to the BS Group, were not returnable
even if the loan is paid off. They have effectively therefore been given
away.
The Club has no alternative strategy to the Bullinghope site. All its eggs are in that one basket.
Beyond the sale of Edgar Street, the Club has no business plan, which
provides for the repayment of the BS Group loan (plus interest), or the
new loan (plus interest) to be taken from the Chelverton Group. The
Board had no answer to the question of what happens if the former
doesn't happen before the latter is due (31/5/99).
Despite this they have no guarantees that the BS Group will not seek to
wind the Club up when the loan is due to be repaid. They state simply
that it would not be in the BS Group's interest to do so.
If the Club is wound up, the BS Group's interest in the development of
Edgar Street, increases from its current 25% to 100%. But of course this
won't encourage them to do so, at all.
The Club had financial problems in the summer, of that there can be no
doubt. They cannot have been so bad however, as to justify the deal
negotiated by Robin Fry and sanctioned by Peter Hill, with the BS Group.
It contains nothing that is to the benefit of the Football Club.
