January
Newsfile

Newsfile Archive

The following message from Clive Sullivan was posted direct to the fans on the mesageboard of this website.
Although I have followed the comments on the message board with interest throughout the past months, and, in particular, the last few weeks, I have been constrained by the fact that I considered the on-going negotiations to be confidential. I had no wish to risk prejudicing the outcome by any untimely comments. Now that a decision, which I personally regret, has been reached, I think it is important that everybody understands the chain of events.

When the first public announcement in respect of the potential investment was made, I made it clear to the media that there was an option and that the decision to proceed would be taken in the light of a number of factors including indications of support not just from fans but also local businesses, individuals, local authorities and facilities operators. This could not be assessed without making the knowledge of the possibility of the investment public. Additionally, any investment is always preceded by a thorough review of the accounts, plans and contractual liabilities.

The investment was never intended to take over ( i.e. buy out ) the existing shares. The intention was to issue extra shares in such numbers as the consortium would have a significant majority of the shares. In this way, all the money would have gone directly to the club. This could only go ahead with the agreement of all the large shareholders as a pre-existing agreement gave certain individuals the right to block the issue of further shares. This agreement was forthcoming and all the various studies, approvals and permissions were set in motion.

The lack of playing results, and consequential effects, meant that the financial assumptions upon which future forecasts were based were no longer valid and that the situation was likely to become considerably worse than that envisaged initially. Nevertheless, and probably even more importantly at that stage, there was a clear need for the investment level to be maintained. It was therefore suggested that the way this could be done was to issue a larger number of shares at a lower price. This meant that the investment could be maintained at the original level envisaged. From the point of view of the consortium, it justified continuing with the investment as such a plan would reflect the lower value of the club in its present situation. This proposal was agreed by every member of the board except one. Those in favour went even further by committing themselves to taking part of the consortium’s proposed extra shares and investing more money themselves. There was no question of buying the club on the cheap as the investment level would have been maintained.

However, Mr Kumar, who had a blocking vote indicated that he was not prepared to accept the rescue plan. He refused offers to meet myself and Steve Borley. He then made the situation public. Despite his protestations to be acting in the interests of the shareholders, very soon afterwards he offered to sell his shares – not at the 25p valuation agreed by the rest of the board, not even at the 50p that he had accepted as part of the initial option but he demanded the price of £1.04. My attitude from the start has been that we did not wish to buy out existing shareholders. Every penny that could have gone into Mr. Kumar’s pocket would have been a penny less into Cardiff City. A total sum of over £1.1 million! I don’t know where the question of £300,000 of shares arose but I assume that this was concerned with the question of reducing Mr. Kumar below 25%. However, there were many more complicated legal considerations. Nevertheless, I am very appreciative of the response of many loyal fans in attempting to raise finance for this. However, just look at the gate last Saturday to realise how fast people drop away.

Steve Borley and I had already devoted considerable time and effort, but we spent even more time looking at and discussing possible solutions and plans to meet the investment criteria and work around the blocking vote. Every proposal fell short, at times just short, of the criteria and/or ability of the parties to deliver. It became clear that it was impossible to resolve the matter as long as Mr Kumar maintained his objection and it was felt that it would be unfair to maintain a false hopes and aspirations. A decision had, therefore, to be taken to announce that the investment would not proceed.

I wish to place quite clearly on the record my appreciation and thanks to all those members of the board who made such strenuous efforts to try to resolve the situation. I cannot praise them enough and I consider that the club is very lucky to have them associated with it.

With regard to the future, I cannot see that the plan can be revived in its present form. Even if Mr. Kumar were to change his mind tomorrow, I cannot guarantee that I could bring the investor back on board for a number of reasons.

However, at the commencement of the matter. I lent the club a six-figure sum on an interest-free basis. It is not my intention to seek an early repayment of this.

To all the fans, I express my regret that the situation has come to this conclusion but I would urge you to be positive in your support for the Directors.

Clive Sullivan clivesull@hotmail.com


OFFICIAL PRESS RELEASE from Clive Sullivan
It was today announced that that the proposed investment in Cardiff City AFC by a consortium arranged by Clive Sullivan would no longer proceed.

Following the announcement, last November, that an agreement had been reached to grant an option to the group, an in-depth assessment was undertaken of the actual and potential level of support. The fans demonstrated their support over the holiday season. Nevertheless the lack of playing results, and consequential effects, meant that the financial situation was likely to become considerably worse than that envisaged initially.

As a result, a revised plan was put to the Board which would still involve an investment of some £2.5 million but that 20% of that would be forthcoming from the existing Board and the balance would purchase a controlling interest. This was to be achieved by issuing more shares at a lower price. The majority
supported this, but one director/shareholder controlling sufficient shares to block any resolution indicated that he would vote against the proposals.

Since then, considerable efforts have been made to try to see whether any other solution could be found. Even though discussions took place, at times in the early hours of the morning, no way around the block could be found. Even the fans attempted to help solve the impasse but no acceptable alternative to the agreed proposal was found.

The investment could not, therefore, proceed.

Mr Sullivan said, “ The loyal fans have been magnificent in their support. I am very upset that one individual has prevented a lot of dreams from becoming reality. The rest of the Board, and, in particular, Steve Borley, have invested a lot of time, effort and money in trying to ensure the survival of the club and I would like to thank them for all their efforts.”

He went on to say that he felt that the chances of being able to revive a similar proposal in the future were likely to be limited.

OFFICIAL PRESS RELEASE FROM CARDIFF CITY FOOTBALL CLUB
The board of Cardiff City Football Club regrets to announce that the proposed investment by Clive Sullivan and the consortium will not proceed.

We have been unable to agree terms acceptable to both parties despite considerable efforts being made by both parties to find a solution.

I personally feel that this is a sad day for the club and is a missed opprtunity for the club to progress.

I have enjoyed working with Clive Sullivan and hope that he maintains his interest in the club to the extent that furture involvemnent is not ruled out.

I would personally like to thank the supporters for their encouragement and messages of goodwill during the past months and I am bitterly disappointed that I have not been able to deliver the deal that we have all been waiting for.

The board will press ahead with its aim to raise new investment and hope to open discussions with persons or groups who have shown interest in investing in the club in recent months.