BSH: Partial Sale Approved

The sale of 21.64% of Birmingham City plc was approved by shareholders at an Extraordinary General Meeting of Birmingham Sports Holdings yesterday morning in Hong Kong.

Hong Kong Stock Exchange

As expected, the deal was passed by a huge majority, with only 1M of the 9.52Bn shares voting (0.01%) voting against the deal. The total number of shares allowed to vote in this deal was 13.17Bn.

The full results can be viewed at this link.

As disclosed before, I can confirm that I voted against the deal.

This means that Vong Pech has now become the largest shareholder in the club, owning around 41% of shares. Once the club updates its shareholder breakdown page on as per EFL regulation 108.6, I’ll update the relevant pages here.

The deal shouldn’t change much at the club on a day to day basis, although a new strategic committee will be put into place to review “big picture” decisions of the club; one would think that this strategic committee would have been useful in the Academy foofaraw of the last couple of days.

There should be a change on the BCFC board however, with Vong Pech allowed to appoint one member of his own choosing. I’ll be interested to see who that is, who is removed and the impact that new member has on current directors.

It was a busy day in Hong Kong as BSH made another announcement to the stock exchange that it is placing 629.63M shares in an attempt to raise more capital to pay off debt.

The full announcement for this placement can be viewed here.

What this means is that BSH are creating 629.63M shares in the company to sell to new investors, to go alongside the 17.71Bn shares already out there.

To do this, they use a placing agent – in this case Cinda International Capital Ltd. The placing agent undertake “best endeavour” to sell the shares to a minimum six investors independent of BSH. This means that there is no guarantee that the shares will be sold and no guarantee that BSH will be able to raise any cash.

It’s going to be a tricky sell for the placing agents.

From an investment point of view the price of BSH shares is already somewhat inflated and while there is a 16.67% discount to purchase these new shares, it’s inevitable the share price in the company will fall making that discount irrelevant. The placing also hoses small shareholders, making their investment worth even less due to the further dilution of ownership.

None of the money raised will come to BCFC. As I’ve mentioned before, BSH have a huge amount of debt to pay off to third party lenders and they will need as much money as they can to reduce the debt and pay off interest.

It’s for this reason I personally believe BSH are struggling to put money into BCFC – which again reinforces why the holding company needed to sell a stake in the club.

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