ANN BUDGE’S OFFER TO AMEND FINANCIAL AGREEMENT
Foundation chair Brian Cormack today emailed Foundation of Hearts members concerning the offer from Ann Budge to amend the financial agreement between the Foundation and Bidco (her holding company). The email is as follows:
Dear Foundation of Hearts Member
As you will be well aware, the club has put in place initial plans for the development of Tynecastle, including the construction of a new main stand. Foundation directors have been kept informed of these plans as they have been developed.
Related to these plans and the funding of the developments, I am contacting you to let you know that Bidco (Ann Budge’s holding company) has made an offer to the Foundation with regard to the financial agreement which was drawn up in 2014.
The Foundation directors recommend acceptance of this offer, but we will only proceed if the membership approves the proposal.
As background information, you will recall that when the financial agreement between the Foundation and Bidco was put in place, it included a plan whereby pledges from Foundation members would initially be used to support the club financially. The second phase of the agreement sees the Foundation contributions being used to buy out the £2.5m loan which Bidco made to the club as part of the transaction to purchase the majority shareholding. At this point, the majority shareholding would be transferred to the Foundation.
The first period of the timetable is coming to an end later this month and thanks to the incredible support of fans, we are on schedule with our payments. These have now reached more than £4m.
The new offer from Ann (Bidco) is to change the schedule in order that our contributions can be switched to support the Tynecastle developments. This change would take effect in June.
What is now proposed is as follows:
The start of Foundation payments to buy out the Bidco loan will be deferred for a period of up to two years. Instead, from 1 June, our monthly contributions will go towards the financing of the stadium development. The amount to be provided by the Foundation towards these developments is £3m. When this figure is reached, the monthly contributions will revert to buying out the Bidco loan.
As and when the Foundation has provided £1.5m of stadium funding, Bidco will transfer a 20 per cent shareholding in the club to the Foundation. When the full £3m has been paid, Bidco will transfer a further 15 per cent shareholding. The remaining 40.1 per cent (bringing the total shareholding to 75.1 per cent) will be transferred when the Bidco loan payments are completed.
What we are all potentially signing up to is this: by accepting the Bidco offer and agreeing to an extension of the funding arrangements, we will play a major role in the development of Tynecastle and continue to support the club financially. The start date of the period when we buy out the Bidco loan could move out from the original timetable by two years, although this would be reduced if we reach the £3m stadium payment figure sooner.
We appreciate that this is a complex and highly significant issue and are therefore planning to hold an open meeting for Foundation members at the Gorgie Suite, Tynecastle, on Monday 16 May at 6.30pm. We are also posting a detailed Q&A on our website which we hope will cover many of the questions which members may have. You can see this here.
The next step will be to invite members to vote on whether or not to accept Ann’s offer and amend the financial agreement with Bidco as detailed above. Details of this vote will be announced shortly. Our participation in the stadium funding will be dependent on a majority vote in favour.
In conclusion, then, the Foundation directors would like to recommend acceptance of the offer from Bidco and will be seeking the approval of the membership to do so.
Thank you for all your support and for taking the time to read this.
Foundation of Hearts