New Investment Options

[steelboy]

2 minutes ago, texanwellfan said:

Sounds like WS rules may need updated to ensure the members have their say on  major decisions so that the board have to vote per the majority wishes of the WS members, and not on what they think is best? 

Members shouldn't have to vote every time some twat turns up and says can you please give me £2.8m of your members money. 

[Spiderpig]

4 minutes ago, steelboy said:

Five other bids were kicked out without Society members voting.

There is zero justification for bringing this shit show to the members. 

Why not, fan ownership means the fans, aka "the owners" should have a voice. Not some amateur volunteers who seem to have anonymous and ineffective since the WS was formed.

The WS members are committing millions to the club, so there should be proper and accountable governance of how that money is used. Then the WS would be a properly run fan group and not the shambles it seems to have been up till fairly recently.

[Casagolda]

14 minutes ago, Spiderpig said:

While that may be the case re the rules and ok for the every day trivial stuff, on a decision as major issue this the the WS members need to be consulted, and cannot be left to a random collection of volunteers elected to the WS board.

The members are contributing millions in cash so they should have their say.

The board also have a duty to stay within the rules of society which includes the Objects.

They have produced material that says they clearly believe the Barmack bid will breach the rules of the society.

in that case they must either kick the bid into touch as they cannot legally OK it - or- they call a general meeting and attempt to change the rules.

 

[steelboy]

26 minutes ago, Spiderpig said:

Why not, fan ownership means the fans, aka "the owners" should have a voice. Not some amateur volunteers who seem to have anonymous and ineffective since the WS was formed.

The WS members are committing millions to the club, so there should be proper and accountable governance of how that money is used. Then the WS would be a properly run fan group and not the shambles it seems to have been up till fairly recently.

They aren't "amateur volunteers" they are the elected board members of a legally defined Industrial and Provident Society with over 3000 members which owns over £6m in assets. 

You don't seem to understand that they have legal responsibilities and that five other bids have been rejected with no vote on them. It's perfectly legitimate to reject a poor offer which endangers the future of the club and society without a members vote.

 

[Well-Made]

2 hours ago, steelboy said:

Five other bids were kicked out without Society members voting.

There is zero justification for bringing this shit show to the members. 

Rock and hard place, can you imagine if the voting went the same way as the Exec Board or even just the reverse result, so was accepted and then us the paying punters found out.

 

They may have decided to just give us the best of the deals to vote on, hence rejecting the rest. Easier with a Yes or No, than voting for 6 choices and one with only 30% agreeing to it, being passed.

 

[steelboy]

17 minutes ago, Well-Made said:

Rock and hard place, can you imagine if the voting went the same way as the Exec Board or even just the reverse result, so was accepted and then us the paying punters found out.

 

They may have decided to just give us the best of the deals to vote on, hence rejecting the rest. Easier with a Yes or No, than voting for 6 choices and one with only 30% agreeing to it, being passed.

 

They are in a difficult place now but it's as a result of not asserting themselves months ago. Tbh the offer is so shite i don't think there's a chance it would pass if the Well Society board stood up for fan ownership and spoke out about how much the deal rips us off and puts the club at risk. However it's not clear they are going to do that. The situation right now is:

1. The Well Society board believe that the offer under values us by millions of pounds but are presenting the offer anyway.

2. The Well Society board believe that the first two weeks in July is a bad time to hold a vote but have decided to hold a vote then anyway.

3. They appear to be willing to let Barmack change the Head of Terms after they have been presented and are waiting patiently on a club statement that is probably just a delaying tactic before making their own case.

4. We've heard more about Barmack being a great guy than him making a cash grab on the Society amounting to £2.8m by the terms of the deal. They refuse to put forward the real cost.

The Well Society board are 100% in charge of this process legally but appear to be allowing McMahon and Barmack to set the agenda. If that continues we will lose the club.

 

[FirParkCornerExile]

3 hours ago, dennyc said:

I think as the Loan was treated as income, then the improvements must be treated as expenditure. That will feed through future annual results thus affecting profit (or loss) outcomes.

It must be accepted practice and was explained in the notes to the Accounts. But is was not specifically pointed out to the fan base when the results were declared. So I agree the headline profit quoted in press releases was misleading, whether that was intentional or not is up to individuals to decide.

Folk can dress it up however they like a loan is not a profit and if it results in a profit on the balance sheet it is not a true reflection of the operating costs of the club. As I said typical accountants smoke and mirrors. So the clubs reported profits over the period of fan ownership would be a loss because we are treating a £3million loan as operating profit in if it were not included we would show a £500,000 loss. The devils always in the detail.

[dennyc]

16 minutes ago, FirParkCornerExile said:

Folk can dress it up however they like a loan is not a profit and if it results in a profit on the balance sheet it is not a true reflection of the operating costs of the club. As I said typical accountants smoke and mirrors. So the clubs reported profits over the period of fan ownership would be a loss because we are treating a £3million loan as operating profit in if it were not included we would show a £500,000 loss. The devils always in the detail.

Not dressing it up. Actually confirming what you suggested. Was only shown as just under £2m though so would not have been a loss had it not been included as income. Still is misleading whatever the figure used though.

 

[Spiderpig]

9 minutes ago, FirParkCornerExile said:

Folk can dress it up however they like a loan is not a profit and if it results in a profit on the balance sheet it is not a true reflection of the operating costs of the club. As I said typical accountants smoke and mirrors. So the clubs reported profits over the period of fan ownership would be a loss because we are treating a £3million loan as operating profit in if it were not included we would show a £500,000 loss. The devils always in the detail.

Sorry but thats pish, If the club gets a loan, then it's an additional income stream onto the total income for that financial year, no different to say selling a player or signing a sponsorship deal etc, so in this case the total income will have increased by £3 million.

As it will no doubt  be repaid in installments, those payments will then show as expenditure on subsequent accounts until the loan is repayed.

So the club was being accurate in counting the loan in the total income figure against the total expenditure and hence calculate a profit or loss accordingly 

[FirParkCornerExile]

23 minutes ago, dennyc said:

Not dressing it up. Actually confirming what you suggested. Was only shown as just under £2m though so would not have been a loss had it not been included as income. Still is misleading whatever the figure used though.

 

I never said you were dressing it it .. it was as a general "folk"

[dennyc]

35 minutes ago, Spiderpig said:

Sorry but thats pish, If the club gets a loan, then it's an additional income stream onto the total income for that financial year, no different to say selling a player or signing a sponsorship deal etc, so in this case the total income will have increased by £3 million.

As it will no doubt  be repaid in installments, those payments will then show as expenditure on subsequent accounts until the loan is repayed.

So the club was being accurate in counting the loan in the total income figure against the total expenditure and hence calculate a profit or loss accordingly 

If you sell a player  or get sponsorship, do you eventually have to return the money? Yes the Loan was income and has to be shown in year end figures. Is it truly a profit though? If you get a Bank Loan, is that part of your earned wages? it is income.

The Club could have pointed out to fans that the £3.5m profit included Loan funds received and was not all profit generated from general business. They did reveal that fact in the Account notes, but not in the headline press release. " We made £3,5m Profit". So fans thought we earned £3.5m that year. From normal footballing activities. I certainly did until I looked at the Accounts today.

Folk cannot have it both ways. If you build in the loan as income resulting in raised profit figure then fair enough.  But you cannot just say ignore improvement costs funded by that loan when you incur a loss in future years. As a few on here are saying. " We did not really make a loss because we spent money on the pitch". 

Anyway, we are allowed to see it differently. No harm in that.

[dennyc]

2 minutes ago, FirParkCornerExile said:

I never said you were dressing it it .. it was as a general "folk"

Apologies. My error

[Tamwell]

Real eye opener for me the last couple of weeks. Never been one for the intricacies of the club at an operating level, although I do pay in to the society. I have to say a massive thank you to posters on here and on p&b who have exposed this deal for what it is. Posts from Steelboy and St Andrew on here, plus Vietnam91 on p&b and MJ (daft laddie) on Twitter have been excellent and I truly feel have had an enormous amount of sway on the direction of this, so well done all of you. We should never underestimate the power of our voices as fans, and especially as a fan owned club - that’s what we would be throwing away here. Fan ownership would be dead, finished, let’s not be in two minds about it. My concern is that the wider fan base might not be getting this message so we have to all do everything we can to get the message out there. Not just those with votes, but all fans, because I worry that some might devalue the Well Society if it blocks this move.

 

 

[FirParkCornerExile]

31 minutes ago, Spiderpig said:

Sorry but thats pish, If the club gets a loan, then it's an additional income stream onto the total income for that financial year, no different to say selling a player or signing a sponsorship deal etc, so in this case the total income will have increased by £3 million.

As it will no doubt  be repaid in installments, those payments will then show as expenditure on subsequent accounts until the loan is repayed.

So the club was being accurate in counting the loan in the total income figure against the total expenditure and hence calculate a profit or loss accordingly 

I never said it was inaccurate I stand by my point its misleading. A loan is debt and if you take on debt to create a profit on a balance sheet its accounting worthy of the water companies.

So if we took on a loan every year and create a profit balance every year folk would rightly query why if we went bust why we went bust when we were making profits every year. Its nonsense. 

[Tamwell]

Just to add to my point, I think a lot of people are being taken in by Erik barmack. He’s spent the last few months drip feeding ‘bleeding heart’ content about the club, his kids in well tops etc. I’m experienced in marketing and copywriting and a lot of what he is saying on different platforms is, I want to use a better metaphor here, the words I would use when I’m polishing a turd. There’s a lot of spin and I hope you can all see through it.

also I know Erik lurks on here so Hiya!

[weeyin]

50 minutes ago, FirParkCornerExile said:

I never said it was inaccurate I stand by my point its misleading. A loan is debt and if you take on debt to create a profit on a balance sheet its accounting worthy of the water companies.

So if we took on a loan every year and create a profit balance every year folk would rightly query why if we went bust why we went bust when we were making profits every year. Its nonsense. 

It's only misleading if you're not familiar with accounting - and I make no claims about being an accountant at any level.

In the US we have GAAP (Generally Accepted Accounting Principals), so when you read a balance sheet that's been prepared to that standard you know what's allowed and what's not. That's especially true for people that want to invest money based on that balance sheet.

From what I have seen of our accounts, the income, expenditure, assets and liabilities were all clearly laid out. That's all the matters in these cases. When it comes to negotiating a deal, neither party is going to care what we call something, they only care about each of those buckets.

It's like companies and investors that love to quote their EBITA - useful in some cases as a comparison tool, but can hide a lot of details if you ignore the balance sheet.

If we're using it to mislead someone, that's an entirely different matter (basically fraud), but I don't think any investors are being misled here.

[StAndrew7]

Investment update #2

This might take a while to digest...

[steelboy]

THE CLUB’S SHARE OWNERSHIP

The club currently has just over 300,000 shares in issue.

The Well Society own 71% of these shares with 29% owned by other individual club supporters.

In terms of the 29%, the majority are Well Society members to whom the Well Society sold some of its originally acquired shareholding.

Others are individuals who owned their shares before the Well Society existed and indeed some of these shares have been in their families for generations. Some of them have also joined the Well Society.

The investment proposal revolves around the issuing of new shares.

Consequently, all of the just over 300,000 shares currently in issue remain in issue – they do not cease to exist and none of them are transferred to Erik Barmack.

In return for each of his annual investments Erik Barmack receives new shares issued by the club.

If no other new shares were issued, then Erik Barmack would own all of the new shares and in time far more shares than the current shareholders.

If that situation was allowed to occur, then he would become the majority shareholder and have all the many resulting rights of a majority shareholder.

To avoid any new investor becoming the majority shareholder the only way this can be achieved is for the club to issue new shares (at the exact same price) to be purchased by the Well Society and the current 29% other shareholders if they so wish, who have the legal right to be involved in any new share issue.

This is to preserve fan ownership.

All of the club board believe in fan ownership.

The longer serving board members were all heavily involved in the inception of the Well Society and all sums they have invested in the club since the society’s inception have been made to the Well Society and not directly to the club.

They do not receive remuneration from the club, they gain no financial benefit from this proposal and have the same one vote on the proposal as every other Well Society member.

The investment proposal requires the Well Society to invest further sums to the club and as equity rather than an increase in its loan.

This is also why the investment is being done in instalments over 6 years.

If Erik Barmack invested all of his near £2m investment at the very beginning, then to avoid him becoming the majority shareholder the Well Society would need to almost match his investment at the same time.

The Well Society does not have the cash reserves to do this hence the agreement to stage the investment over six years.

*********This part is complete lies and should be enough to pull the plug on the deal. It's possible to issue exactly enough shares to Barmack without anyone else having to buy so he ends up at 8% in the first year and increases each year up to 49%. ***********

 

[steelboy]

They pretty much admit they are lying through their teeth when they say that they won't be holding any public meetings where they can be questioned. Utter shite bags hiding behind statements.

There is still zero explanation as to why the Well Society should pay a small fortune to lose it's majority shareholding.

[Villageman]

15 hours ago, FirParkCornerExile said:

I never said it was inaccurate I stand by my point its misleading. A loan is debt and if you take on debt to create a profit on a balance sheet its accounting worthy of the water companies.

So if we took on a loan every year and create a profit balance every year folk would rightly query why if we went bust why we went bust when we were making profits every year. Its nonsense. 

My experience of Treasurer for a registered charitable organisation with HMRC for the best part of 20 years would confirm that it is unlawful NOT to include loans and grants as income in any given year and repayments too. As the person responsible I would have highlighted the fact it is a loan to auditors and members. Some people quoting that as profit is unavoidable. Not having seen the balance sheets in question I cannot make further comment. 

[steelboy]

1 minute ago, Villageman said:

My experience of Treasurer for a registered charitable organisation with HMRC for the best part of 20 years would confirm that it is unlawful NOT to include loans and grants as income in any given year and repayments too. 

It's well explained in the new club statement. 

[StAndrew7]

tl;dr:

"We know what's best, you're too stupid to understand it all and that's it."

Read it in Jim McMahon's voice. Then it makes perfect sense.

[Villageman]

52 minutes ago, StAndrew7 said:

Investment update #2

This might take a while to digest...

Agreed.  However points immediately sticks out for me, very possibly my misunderstanding.

300,000 shares issued, WS have 71% equals 213000. 87000 shares held privately. Did not realise share issue was so huge.

Second point is that public meeting is not being considered. I have never seen the MFC constitution but there must be a clause in there that allows members ie shareholders , usually a minimum of 3, to request an extraordinary meeting which cannot be refused.

Can any shareholder confirm this and be prepared to consider this action.

I have not read the rules of the WS lately but surely the same arrangement applies there too.

[steelboy]

Just now, Villageman said:

 

Second point is that public meeting is not being considered. I have never seen the MFC constitution but there must be a clause in there that allows members ie shareholders , usually a minimum of 3, to request an extraordinary meeting which cannot be refused.

 

They obviously don't want information about the deal to circulate. 

If one person asks a question by email one person hears the answer. If one person asks at a meeting the answer is available to everyone present and anyone who reads a report. 

It's also worth remembering that the club can't indulge in their usual bullshit like 'oh we just forgot to announce the contract' as they are under legal obligations as part of the takeover process. 

[weeyin]

"Under the investment proposal in year 6, Erik Barmack would own 49% of the club’s shares."

"This, however, very importantly would not make him the majority shareholder in the club."

As far as I can see, while technically true, it is for all intents and purposes true that 49% would let him win every single shareholder vote. All it takes is for 1.1% of the remaining shareholders to not vote - which is pretty much guaranteed in any shareholders voting situation.