Ipswich Town deal in detail

MARCUS Evans' plans to take control of Ipswich Town Football Club are on course to win the approval of shareholders at a special meeting later this month.

By Duncan Brodie

MARCUS Evans' plans to take control of Ipswich Town Football Club are on course to win the approval of shareholders at a special meeting later this month.

The proposal, full details of which were released today, requires the approval of 51% of the existing shareholders at the extraordinary general meeting to be held at the Corn Exchange in Ipswich on Monday, December 17.

And with the deal being backed by the current board members and investor Michael Spencer, together representing around 49% of the existing shares, the vote is likely to prove a formality.


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The document setting out the deal, which has now been posted to shareholders, reveals details of the refinancing and investment which will see Marcus Evans Investments Ltd - part of Mr Evans' group of companies - acquire most of the club's existing debt and a majority of shares in Ipswich Town FC Ltd.

Of the £12million being pumped into the club by MEI, £3.9m will go into new ordinary shares, giving Mr Evans an 87.5% controlling stake in the club, and £8.1mil will go into new preference shares, which will carry no voting rights but will take precedence over ordinary shares in the payment of dividends.

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MEI is also acquiring the £32m of debt owed by the club to Norwich Union and Barclays - for a sum not disclosed but thought to be in the region of £6m - which, while not extinguishing the club's liability, converts the sum into internal rather than external debt, so that it can be repaid when the club can afford it.

Under the deal, MEI is barred from selling on the debt outside the Marcus Evans Group, other than in conjunction with the sale of the club, and if the club were to be sold the amount MEI would receive for the debt would be limited to its net investment in acquiring the debt.

The only significant external debt the club will be left with is £2.6m, in respect of loan notes issued as part of the refinancing of the club which followed its spell in administration, and £1m owed to Bank of Scotland, which is secured on the club's training ground.

Details of the Marcus Evans deal emerged today as Ipswich Town announced a small profit of £174,000 for last season.

However, the underlying improvement represented only a modest improvement on the £2.7m loss recorded for 2005-06, with last year's figure benefiting from a £2.6m windfall from the sale of former striker Darren Bent by Charlton Athletic to Tottenham Hotspur, with Town's original deal with Charlton having included a sell-on clause.

Turnover fell to £15.3m last season, from £16.4m, reflecting a decline in season ticket sales. Costs remained flat but the bottom line benefited from drop in interest charges, as a result of a restructuring of the Norwich Union debt.

In addition to buying the club's principal debt, MEI is also acquiring - for a “nominal value” - the shares in IT plc currently owned by Norwich Union, so giving it a minority 9.98% stake in the plc as well as control of the club.

IT plc, the holding company set up as part of the refinancing of the club following its spell in administration, will see its 100% holding in the club cut to just 12.5%.

The IT plc board will remain in place for the time being, representing the interests of the existing shareholders following the transaction, with the addition of Martin Pitcher, director of corporate development at MEI, which will be entitled to appoint a director as a result of the shares to be acquired from Norwich Union.

However, control of Ipswich Town will pass to the club board, which will consist in future of just six directors, made up of three from the plc - chairman David Sheepshanks, chief executive Derek Bowden and non-executive director Kevin Beeston - and three from MEI.

The current IT plc board members not included will be invited to attend meetings of the club board while they remain directors of the plc.

These include finance director Anna Hughes, sales and marketing director Andrew Goulbourn, and non-executives John Kerr, Roger Finbow, Philip Hope-Cobbold, Richard Moore, Holly Bellingham and Peter Cohen.

However, the plc is likely to undergo a change of status sooner rather than later, given the change in its effective role.

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