BSH: Announcement Analysis

The first official communication that a partial takeover of Birmingham City is underway was made yesterday as Birmingham Sports Holdings made a voluntary announcement to the stock exchange. The announcement confirmed that BSH had been informed by Vong Pech that he was selling his 21.64% stake in Birmingham City plc.

Hong Kong Stock Exchange

If you’ve not seen the announcement already, you can view it at this link.

As can be imagined, this announcement has set Birmingham City social media on fire. It offers as many questions as answers, and I have done my best to put together what this means in this article.

Why have BSH made an announcement and not the club? What does it mean?

Birmingham Sports Holdings have a legal obligation to their shareholders to protect them from false markets in trading of shares. This means that they needed to make this clarification announcement even on a voluntary basis after it was reported in the UK that contracts had been exchanged.

This was the point I made to the HKSE when I complained to them on Monday night about a lack of announcement and I suspect at least part of the reason the announcement got pushed out yesterday afternoon.

The announcement confirms what my thoughts I wrote on this website on Tuesday morning; that 21.64% was being sold rather than 30%, and it was the stake held by Vong Pech through his Oriental Rainbow Investments vehicle being sold rather than anything owned by BSH.

What it doesn’t properly confirm is if the buyer is just buying the stake from ORI or if they are buying ORI outright. This is an important distinction, as ORI have obligations towards BSH in the light of the club making financial losses.

The announcement goes on to confirm that BSH have not entered into nor exchanged any agreement about the remaining 75% of the club. This means that we are being told only a small stake in the club is being sold, not the whole thing. While this can easily change in the future, we have to take this at face value right now.

Who is buying the club? Why would they only buy a small stake?

Although there is no name mentioned in buying the club, I have obtained details from more than two reliable sources that the buyer is a company owned by Laurence Bassini.

There have been multiple rumours about where the money has come from, and as of yet I have not enough information to say one way or another who that might be with 100% confidence.

However, this deal is subject to regulatory approval which means that not only will any incoming directors have to take the owners and directors test, but that the evidence of where the money has come from also has to be shown to the EFL.

My understanding is that even though only 21.64% of the club is being sold, there is an agreement for the remainder to be bought at some point within the next three years, and as part of that agreement, control would be handed to the buyer as well as the responsibility to underwrite every single part of the club, stadium and women’s team expenditure.

What that means is that despite his protestations that he won’t be a director or chairman, as someone who has financial control over the club, Bassini will also have to take the OADT.

It is not a foregone conclusion Bassini will pass or fail the OADT. Neither of his bankruptcies nor his three year ban will be considered as they are seen as spent. However, it’s my understanding that the EFL will be very careful with any application Bassini makes.

It’s also worth noting that Bassini has got into positions in the past where he has been close to buying a club – notably Bolton Wanderers – without completing a purchase.

Does this purchase mean Wang Yaohui and Vong Pech are out of the picture?

This is the confusing bit, and something that I think that needs explaining carefully.

There are two large stakes in the club currently – one of 75% owned by Birmingham Sports Holdings and one of 21.64% which is currently owned by Oriental Rainbow Investments (which in turn is owned by Vong Pech). Only the smaller chunk is being sold, which means Birmingham Sports Holdings remains very much involved.

Both Vong Pech (via Ever Depot / Graticity Real Estate Development) and Wang Yaohui (via Dragon Villa) still own stakes in BSH, and therefore by extension own a stake in the club.

On paper, the only change being made is that Vong Pech will no longer have the largest provable financial interest in the club – that honour will go to Bassini, who will have 21.64%; and that one more name is being added to the ownership tangle.

The agreements I’ve seen will mean that Bassini will have complete control over the club but at a heavy cost as he will have to underwrite all losses to prevent any deterioration of the BSH bottom line, allowing them to keep their listing.

I’d go as far as to say that the agreement is very, very seller friendly and to my uneducated eyes I cannot see why any serious businessman would agree to the terms.

Why is only a small stake being sold?

There’s three reasons for this.

Firstly, by only selling this stake BSH can kick down the road the problem of needing to replace BCFC with something else to retain the listing, with all the regulatory issues that may come with that.

Secondly, this sale represents a huge cash injection for Vong Pech who absolutely needs it to pay off some of his more pressing debts, without any of the hassle he would have if he sold his stake in BSH.

Thirdly, while not mentioned it’s my understanding that the purchase of ORI’s stake also includes the stadium and a separate agreement has also been completed with Achiever Global Group to ensure that the new buyer owns 100% of the stadium.

As BSH has no financial interest in the stadium we have to wait for Birmingham City Stadium Ltd to update Companies House to confirm that has happened.

Once this goes through, what is the shareholding structure?

The main changes to the shareholding structure are at the UK level. Once this deal is completed, the structure will look like this:

Birmingham City FC is 100% owned by Birmingham City PLC.

Birmingham City PLC Ownership Structure

Birmingham Sports Holdings Ltd 75%
Laurence Bassini’s company 21.64%
Trillion Trophy Asia Ltd 0.21%
Public Shareholders 3.15%

The shareholding structure of Birmingham Sports Holdings will not change, so the overall financial interest will look like this:

Laurence Bassini’s company – 21.64%
Paul Suen – 21.20%
Vong Pech – 17.65%
Lei Sutong / Wang Yaohui – 12.81%

As can be seen, it still is very much a mess for now – and while Bassini will have financial control any investigations into Wang Yaohui which may be ongoing will still affect things.

Will there now be investment in the club / stadium?

I would expect that IF the deal gets past the regulatory authorities, that investment has to be forthcoming.

One of the things that the EFL ask to see is proof not only of the money to buy the stake but also funding for the next season – a figure of circa £65m in total

Without a crystal ball, it’s impossible to know what will happen with regards to investment but I suspect one of the first actions would be to move on Lee Bowyer and to get the stadium repairs underway.

Of course, there is the concern what happens if this deal collapses.

There seems to be a misconception not only from some fans but also from Bassini and Richardson that there are only two horses in this race. While there are no other bids out there, I know that there are multiple interested parties.

None of those have got involved yet because the deal is so insanely seller-friendly, and I suspect most were waiting for BSH to get more desperate so a better deal for a buyer could be negotiated.

I’m not sure if they would go to Richardson to see if he will still bid.

The fact that Richardson did not have response to their bid speaks volumes to me – it’s as if BSH / Vong Pech etc are ignoring him.


Despite my feeling that this wouldn’t happen, I have to consider with this announcement that there is good chance this deal will go through.

I’m not convinced the EFL will fail Bassini, which I think is part of the problem with the OADT. I will once again admit my personal bias, but In do not believe Bassini should be allowed to buy any club.

I will also once again admit that I do not want this deal to go through as I fear nothing but issues from it. I do not believe that anything is better than the current status quo, and I do not believe that a staged deal will benefit anyone other than Wang Yaohui.

Only time will convince me otherwise; it’s up to the reader to decide what they think about this.