Laurence Bassini could be days away from taking over Watford (From Watford Observer)

April 9th, 2011 by admin

Laurence Bassini could be days away from taking over Watford

8:00am Friday 1st April 2011

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Laurence Bassini could be just days away from gaining control of Watford after the eagerly-anticipated offer document from Watford FC Limited was released this week.

The offer period does not close until April 15 but the Watford Observer understands there are just a few minor technicalities stopping the acceptance from some of the major shareholders.

Lord Michael Ashcroft, Graham Simpson and his wife Yianna have all given Watford FC Limited “irrevocable undertakings” to sell their stake in the Hornet’’ parent company Watford Leisure Plc at 1p per share.

Once their acceptance is formally received, the offer becomes ‘unconditional’ and WFCL would have a controlling shareholding of 53.95 per cent.

Watford FC Limited has also reached agreements with Lord Ashcroft, Simpson and director David Fransen to acquire all of the 202,840,000 warrants attached to last summer’s Bond Issue for a nominal sum of £1 for each bond holder.

So regardless of whether the Russo brothers or other shareholders agree to the offer, if WFCL activate all of the warrants, at a share price of 4p, then it would give them control of 91.8 per cent of shares.

In his WFCL chairman’s letter in the document, Panos Thomas said: “These undertakings remain binding even if a higher competing offer for Watford Leisure is announced, unless the offer lapses or is withdrawn.

“Accordingly, the acceptance condition to the offer is most likely to be met shortly following the date of posting of this document.

“The Watford Leisure shareholders who have given irrevocable undertakings to WFCL have additionally agreed therein, inter alia, not to sell, transfer, dispose of or grant security over any of their shareholdings, accept any other offer from any third-party in respect of their shareholdings or withdraw their acceptance of the offer.”

WFCL was created on January 12 this year with the sole purpose of making an offer for Watford Leisure and whilst Thomas is the only shareholder, he is holding the shares “in trust” for his close friend Laurence Bassini.

There has been considerable rumours and speculation surrounding Bassini after it came to light that the Stanmore businessman was made bankrupt less than four years ago, which led to him subsequently changing his name from Bazini to Bassini.

The document includes a section where it provides some background information on Thomas, 50, and Bassini, 40, and where they have held directorships in the last five years.

It states Thomas is currently a director of The Orthopaedic Consultancy Limited and used to be a director of The Sports and Exercise Treatment Rooms Limited, which was dissolved in 2008.

It showed Bassini does not have any current directorships and in the last five years has been a director of Hungry Restaurants Limited, Regal Partnership Limited, Dancing Divas Limited and Newbeck Management Limited – all four were dissolved between 2007 and 2008.

The document also stated that between 1993 and 1994 Bassini was a director of PL Multitrade Limited, an importer and wholesale distributor of perfumes. In March 1994 the company was placed into insolvent liquidation and then dissolved in February 1995.

It also mentioned Bassini petitioned for bankruptcy protection in October 2007 and was discharged in October 2008.

For both Thomas and Bassini, it also had a section where it stated that apart from the information above, neither man had, among other things, any convictions for fraudulent or indictable offences or been a director of a company within 12 months of it being placed in to administration or receivership.

Bassini is set to loan WFCL £7m for the offer and the document says the company will be funded by his “existing resources”.

Thomas said: “The cash consideration payable by WFCL under the terms of the offer will be funded from the existing cash resources of Laurence Bassini who has provided the requisite funds to WFCL by way of a loan facility.

“Seymour Pierce confirms that it is satisfied that sufficient financial resources are available to WFCL to satisfy full acceptance of the offer. Full acceptance of the offer would require a maximum cash payment of approximately £0.44 million by WFCL.”

The document later adds: “To finance, inter alia, the cash consideration payable to Watford Leisure shareholders in connection with the offer, and to pay certain fees and expenses associated with the offer, WFCL has entered into loan agreements with Mr Bassini dated February 14 2011 and March 25 2011.

“Under these agreements Mr Bassini has agreed to make available the aggregate sum of £7m by way of interest free loans to WFCL for the purpose of funding (a) the offer and the costs and expenses related thereto, (b) the provision of the working capital facility and (c) Watford Leisure’s obligations to the bond holders on the date the offer becomes wholly unconditional and the first anniversary of the announcement.”

Watford have a £3.5m shortfall until the summer after not selling any players in the January transfer window and Bassini has agreed to cover the shortfall.

It will be an interest-free loan which will be due for repayment in 12 months, unless one of the several ‘events of default’ occurs and the current secured bonds need to be repaid. The document also suggested the £3.5m from WFCL could be used to exercise the warrants.

The £10.142m created by last summer’s bond issue was due for repayment this summer but that will change when the offer is made unconditional.

Through Barrea Solicitors, WFCL will pay Lord Ashcroft’s Fordwat and Graham Simpson £1m as part repayment for their bonds.

The figures owed would then become £9.262m and will be paid off over five years.

It was initially meant to be three years but Watford Leisure director and Hornets fan David Fransen agreed to defer his payments until March 2015 and 2016.

Money will be paid back to the bond holders on March 10 every year until 2016.

Barrea Solicitors will also keep hold of £1.5m of WFCL’s money which will be used to make the first anniversary payment in 2012.

If any of the payments are missed then the bondholders can demand immediate repayment of their money.

Lord Ashcroft has structured a deal which is aimed at protecting Watford.

There is also a list of ‘events of default’ and ‘covenants’ that will attempt to ensure the club is run in a responsible way and if they are broken, then the bond holders can again demand repayment.

These include, among other things, to ensure the company does not “incur or allow to remain outstanding any financial indebtedness”, except for ‘permitted financial indebtedness’.

There were also several covenants relating to signing new players. It stated the company shall not make any player purchases unless it is financed by a qualifying loan or a new shareholder injection.

And arguably most interesting, that the ratio between the amount owed for player purchases and the amount set to be received for player sales does not exceed 60:40.

Under the previous bond holder agreement, if any of the directors were removed from the Watford Leisure board then it was be an event of default. Because Julian Winter and David Fransen have already agreed to step down from the parent company’s board (but not the club’s board), then it is now only the termination of Graham Taylor and Stuart Timperley which would be classed as an event of default.

The document stated: “The security granted to the bond holders will remain unchanged, but there will be certain changes to the covenants contained in the terms and conditions of the secured bonds including restrictions on the funding of player purchases, certain asset disposals, loans from and to shareholders and the club’s ability to declare dividends and make distributions.”

Bassini and Thomas have previously expressed their desire to develop the Vicarage Road Stadium but the document did not shed any more light on how WFCL plan to do that, or if they will do it at all.

The document read: “Messrs Bassini and Thomas have stated that it is their and WFCL’s current intention to support such development projects, but the timing of their implementation and the preferred method of funding the improvements to the Vicarage Road Stadium have yet to be confirmed or finalised.

“As such, there is no guarantee as to the timing of these improvements or that they will be made at all, and limited visibility as to WFCL’s development plans for the Watford Leisure Group as a whole.”

As was the case with the March 10 cash offer announcement, the independent directors have again stated they do not recommend acceptance of the offer due to the drastic drop in share price.

But their recommendation did list a number of reasons why shareholders may opt to accept.

In the Watford Leisure chairman’s statement, Taylor said: “In light of the value of the offer representing a substantial discount of 75 per cent. and 85.7 per cent. to the company’s prevailing closing price on March 9 2011 and December 2 2010 respectively, the independent directors do not recommend acceptance of the offer.

“However, the independent directors believe that Watford Leisure shareholders may choose to consider accepting the offer, after taking into account the important factors.”

Later in the document, it also read: “Your attention is drawn to WFCL’s intentions regarding the compulsory acquisition of Watford Leisure Shares, cancellation of the admission of the Watford Leisure Shares to trading on AIM and the re-registration of Watford Leisure as a private limited company, following the offer becoming or being declared unconditional in all respects and sufficient acceptances being achieved and/or sufficient shares being acquired.”

The first closing date for accepting the offer will be 1pm on April 15 but there is scope for WFCL to change that if necessary.

<a href="http://www.watfordobserver.co.uk/sport/8947375.Bassini_could_be_days_away_from_takeover/tag:news.google.com,2005:cluster=http://www.watfordobserver.co.uk/sport/8947375.Bassini_could_be_days_away_from_takeover/Fri, 01 Apr 2011 07:09:39 GMT 00:00″>Laurence Bassini could be days away from taking over Watford (From Watford Observer)