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Business Times - 21 Sep 2011
MAN U LISTING
Man U supporters hit out at IPO terms
They are against listing terms that appear unfair to minority owners
By KELLY TAY
THE official supporters' trust of Manchester United has hit out again at the club's proposed initial public offering, criticising the Singapore Exchange for reportedly allowing the listing on terms that seem unfair to minority investors.
In British sports, a supporters' trust is a formal, democratic and not-for- profit organisation of fans who attempt to strengthen the influence of supporters over the running of the club.
Earlier last week, the Financial Times reported that the club was planning to raise up to two-thirds of a planned US$1 billion IPO in Singapore through non-voting preference shares. According to the report, the move would keep as much as 88 per cent of voting rights in the hands of the Glazer family, Man U's American owners.
Manchester United Supporters' Trust (MUST) chief executive officer Duncan Drasdo told BT: 'Clearly, if investors buying in through the SGX listing are subject to such unfavourable terms, then this doesn't reflect well on the stock exchange that allows this. Would they be able to do this on the London or Hong Kong exchanges?
'Investors inevitably depend on the exchange rules to give them some degree of protection. This is especially important when it is a partial listing with a single private owner holding the vast majority of the shares, and indeed, an owner who has a track record of aggressive business practice.'
MUST's comments join a chorus of other criticism against the controversial IPO. Just yesterday, corporate governance advocate and accounting professor Mak Yuen Teen highlighted that so far, it remains unclear what preferential rights the preference shares will actually have.
In an article in BT, he said: 'Those who are considering subscribing for the share offering would be well advised to consider carefully the likelihood of dividends and the preferential rights of the preference shares.'
Mr Drasdo pointed out: '(The IPO) is likely to appeal to many Man U supporters and in all likelihood, the majority will not be experienced investors and therefore vulnerable to exploitation.
'We are extremely supportive of an IPO but not under these rumoured terms . . . We would hope the SGX would be stronger in terms of ensuring that the interests of public investors - and in this case supporters - were properly protected.'
Meanwhile, it has also transpired that Man U may not be able to use as much of its IPO proceeds to repay its debts as earlier expected. This is according to a report in UK newspaper Sunday Express three days ago.
Last January, Man U refinanced its debts with a £pounds;500 million (S$988 million) bond issue. According to the report, the borrowing terms state that the club can only use the proceeds of an IPO to repay up to 35 per cent of the club's debt, or £pounds;175 million.
Details about the bond issue's caveats and covenants are not in the public domain, and the club did not comment on the UK report.
Calling Man U's debt 'wasted money', Mr Drasdo said that the interest, fees, and debt repayment could have been put to better use in stadium expansion, squad investment, and youth development.
As at June 30, Man U's gross debt stood at £pounds;458.9 million, and its net debt at £pounds;308.3 million. However, with the club's cash and cash equivalents of £pounds;150.6 million, a source familiar with the IPO noted that 'even if the (UK report) is correct, net-net, the club still has positive cashflow'.
While the source confirmed that Man U has obtained the Eligibility to List from the SGX, it was pointed out that people may have to 'moderate (their) understanding' of when a launch will happen.
'Man U will wait for markets to improve before launching anything. Given current market conditions, the launch might spill over into November, or even next year,' said the source, who declined to be named.
Business Times - 21 Sep 2011
MAN U LISTING
Man U supporters hit out at IPO terms
They are against listing terms that appear unfair to minority owners
By KELLY TAY
THE official supporters' trust of Manchester United has hit out again at the club's proposed initial public offering, criticising the Singapore Exchange for reportedly allowing the listing on terms that seem unfair to minority investors.
In British sports, a supporters' trust is a formal, democratic and not-for- profit organisation of fans who attempt to strengthen the influence of supporters over the running of the club.
Earlier last week, the Financial Times reported that the club was planning to raise up to two-thirds of a planned US$1 billion IPO in Singapore through non-voting preference shares. According to the report, the move would keep as much as 88 per cent of voting rights in the hands of the Glazer family, Man U's American owners.
Manchester United Supporters' Trust (MUST) chief executive officer Duncan Drasdo told BT: 'Clearly, if investors buying in through the SGX listing are subject to such unfavourable terms, then this doesn't reflect well on the stock exchange that allows this. Would they be able to do this on the London or Hong Kong exchanges?
'Investors inevitably depend on the exchange rules to give them some degree of protection. This is especially important when it is a partial listing with a single private owner holding the vast majority of the shares, and indeed, an owner who has a track record of aggressive business practice.'
MUST's comments join a chorus of other criticism against the controversial IPO. Just yesterday, corporate governance advocate and accounting professor Mak Yuen Teen highlighted that so far, it remains unclear what preferential rights the preference shares will actually have.
In an article in BT, he said: 'Those who are considering subscribing for the share offering would be well advised to consider carefully the likelihood of dividends and the preferential rights of the preference shares.'
Mr Drasdo pointed out: '(The IPO) is likely to appeal to many Man U supporters and in all likelihood, the majority will not be experienced investors and therefore vulnerable to exploitation.
'We are extremely supportive of an IPO but not under these rumoured terms . . . We would hope the SGX would be stronger in terms of ensuring that the interests of public investors - and in this case supporters - were properly protected.'
Meanwhile, it has also transpired that Man U may not be able to use as much of its IPO proceeds to repay its debts as earlier expected. This is according to a report in UK newspaper Sunday Express three days ago.
Last January, Man U refinanced its debts with a £pounds;500 million (S$988 million) bond issue. According to the report, the borrowing terms state that the club can only use the proceeds of an IPO to repay up to 35 per cent of the club's debt, or £pounds;175 million.
Details about the bond issue's caveats and covenants are not in the public domain, and the club did not comment on the UK report.
Calling Man U's debt 'wasted money', Mr Drasdo said that the interest, fees, and debt repayment could have been put to better use in stadium expansion, squad investment, and youth development.
As at June 30, Man U's gross debt stood at £pounds;458.9 million, and its net debt at £pounds;308.3 million. However, with the club's cash and cash equivalents of £pounds;150.6 million, a source familiar with the IPO noted that 'even if the (UK report) is correct, net-net, the club still has positive cashflow'.
While the source confirmed that Man U has obtained the Eligibility to List from the SGX, it was pointed out that people may have to 'moderate (their) understanding' of when a launch will happen.
'Man U will wait for markets to improve before launching anything. Given current market conditions, the launch might spill over into November, or even next year,' said the source, who declined to be named.
