One Last Chance
But before that next round of legal shenanigans kicked off, there was one final opportunity for Sisu to repurchase that 50% shareholding in ACL and thereby secure Coventry City’s future at the Ricoh.
Wasps had already completed the purchase of the Council’s half-shareholding in the Ricoh for £2.77m and made an equivalent offer to the Higgs Charity for the remaining shares.
However, under the agreement by which the Charity had bought the shares from the football club in 2003, Coventry City Football Club Limited had a right of first refusal to buy them back. The Higgs’ Trustees therefore invited a bid from the liquidator of CCFC Limited.
“The Trustees are honouring the existing commitment to the football club through the terms of the Option Agreement made in 2003 with CCFC Ltd (now in liquidation).
“We have contacted the liquidators to provide them with an opportunity to make an offer to purchase our shares. This matter is now with the joint liquidator of CCFC Ltd in liquidation, Mr Appleton.” AEHC, October 2014
The football club initially claimed that they were not provided with sufficient detail to evaluate an offer:
“We’ve yet to receive the necessary information to enable us to even begin to decide whether we’re able to purchase the Higgs’ shares in ACL, but fans will be the first to know if the position changes.” Tim Fisher, October 2014
However, a bid was submitted shortly before a 30 day deadline expired:
“We have made a conditional offer – we are still awaiting vital information.
“Through the liquidator the club has been given an opportunity to purchase the Higgs’ shares in ACL and we have made a very generous offer.
“This might be a unique opportunity and we owe it to the fans to try to purchase a stake in the Ricoh Arena thereby securing our short-term future, and to bolster revenues in regards to financial fairplay and improve the product on the pitch, which will be the first time since we left Highfield Road.
“This does not detract from us building our own stadium; it is important we keep a focus in that because we need access to 100 per cent of stadium revenues.
“The offer is not just a financial offer, we have also proposed a far-reaching partnership with the charity to use the power of football to create a community programme.
“It’s about using football for community cohesion and the ultimate betterment of the whole Coventry community.
“This is a very serious offer. We have to look beyond any past issues with the relationship between the charity and football club. The club comes first.” Tim Fisher, November 2014
This statement appears contradictory. On the one hand, Tim claimed that vital information was still required, therefore the offer was conditional. On the other hand, he stated that it was “a very generous offer” which implies that they had enough information to make that appraisal.
That second phrase has particular significance, as I will explain later.
It also emerged that Wasps, now the owner of 50% of ACL, would have a right of veto on any sale of the Higgs’ shares. The Rugby Club had previously submitted their offer to the Charity but whether they would exercise the veto or not, we shall never know and it never became necessary as the offer from the club was declined anyway.
“The Trustees having considered the conditional offer from the Joint Liquidators of CCFC Ltd have decided to reject that offer.” AEHC, November 2014
At which point, the path was clear for Wasps to complete the outright acquisition of ACL and secure control of the Ricoh for the next 250 years.
The response from Coventry City was illuminating and repeated the claim by Tim Fisher that the offer was generous, also revealing the headline price which just topped the Wasps’ monetary value:
“This morning the liquidator’s offer for a stake in the Ricoh Arena company, was turned down by the Alan Edward Higgs Charity.
“Naturally, the club are extremely disappointed. Our proposal was for a far-reaching partnership with the Higgs Charity to work together on community projects.
“Our offer was a unique opportunity to meet the twin objectives of the Club and the charity, using the power of football and sport in creating community cohesion and for the benefit of the whole Coventry community.
“Despite the fact that access to critical documentation was denied, the liquidator’s offer for the charity’s 50 per cent stake in the Ricoh Arena was generous – around £2.8 million – and guaranteed above market value price.
“Alongside the proposed CCFC-Higgs Charity partnership, we felt this was the right deal for everyone concerned that demonstrated our ambition for the future of the club in the city. We have pursued every possible avenue.
“Our deal at the Ricoh with Wasps remains in place. We will be playing our home matches there for the next four seasons and look forward to working with Wasps to ensure our mutual success on and off the field.
“Our ultimate goal is to return CCFC to the Premier League but we can only do this if we own our own stadium, allowing us to access 100 per cent of our revenues. In the near future, we will be able to give our fans more details of our plans and tell you where the new stadium will be.
“The liquidator has declined our request, in the interests of transparency, to publish the full details of the offer. We have released in full the detail of our proposed community partnership with the Higgs Charity. We have continually stated since our return to the city, that community will be at the heart of our development and that still remains very much the case.” CCFC, November 2014
Once again, the same old story about the new stadium is also regurgitated, as it was by the Chairman in his previous comment.
The club placed great store in the Community aspects of their offer, what they called “Seven Pillars of Partnership”, all very worthy aspirations including a “Communiversity”. Wasps had also built community development into their offer to the Charity, including re-naming the North Stand as the “Higgs Stand” and donating 50p per ticket to the Charity.
The reasons for the choice of Wasps over CCFC were revealed in this statement from the Trustees:
“The Trustees of the Higgs Charity had clear objectives when in 2003 they bought Football Investors Ltd which owned 50% of Arena Coventry Ltd.
“Primarily they sought to ensure that the planned development of the Ricoh Arena would go ahead. In partnership with the City Council the development would act as a major stimulus to the regeneration of north east Coventry. This has been achieved.
“They also hoped to protect their investment. In this they have not succeeded. This loss of value is reflected in the offers received by the Trustees for their shares. ACL, following a period of restructuring both of its debt and its business, is now fully profitable but at the point where new investment is required to finance the next expansion onto Car Park C and on the adjacent leisure land.
“The sale of their shares by the Trustees will enable this continuation of the regeneration of north east Coventry.
“In rejecting the offer from Otium, the Sisu company which owns the Coventry City Football Club name and the licence to play in the Football League, the Trustees are fully aware of the possibility that they may be subjected to criticism, as they were by Sisu Capital Limited in the court proceedings between the Charity and Sisu Capital Limited earlier this year.
“Notwithstanding the history of Sisu’s behaviour, the Trustees considered carefully the offer to purchase made by Otium through the Joint Liquidators of CCFC Ltd. In addition to the financial aspects of the offers, the Trustees considered all other factors.
“Amongst other factors considered, the Wasps offer was unconditional; the Otium offer was conditional. The Wasps offer requires in effect nothing of the Trustees other than the transfer of the shares.
“The offer from Otium through the Joint Liquidators is expressly stated to be non-binding and subject to a number of conditions. It contains conditions, none of which can be fulfilled wholly by the Trustees owing to duties of confidentiality to third parties.
“Further the question of ownership of the Option agreement has been made ambiguous by the Joint Liquidators.
"They claim both that it is the right of the liquidators of CCFC Ltd exclusively to exercise their option to buy and also that the Option was sold to Otium in 2013 out of the Administration of CCFC Ltd.
"Further, the Option has been reported in the annual accounts of the Sisu company that owns Otium, Sky Blue Sports and Leisure, in 2008, 2009 and 2010 as an asset (valued at £1m).
"To be absolutely clear the Option was expressly stated to be non-assignable without the express consent of the Trustees, which consent has not been asked for or given. The Trustees were reluctant to enter this morass of conflicting spurious claims.
"Alongside the offer through the Joint Liquidators is an offer from Otium to allow the Charity to join it in an extensive football club based community programme. The proposal does not fit the Trustees’ plans for their future activities and commitments already made.
"The Trustees hope that Otium will now engage with the community as they suggested in 2012 and now again in this recent letter from Mr Fisher. It is not for a charity to support the activities of a commercial enterprise; however it is socially responsible for commercial enterprises to support the local community.
"The Ricoh Arena is a major asset to the City and continues to be the home of ‘Coventry City Football Club’. Responsibility for the future of both the football club and Wasps lies with their owners." AEHC, November 2014
There are several points to take out of this statement:
- The offers received from both Wasps and Otium were at a considerable discount to the £6.5 million paid by the Trustees in 2003. The Buy-Back Option granted to CCFC had been linked to a formula and this comment suggests that the Otium offer did not get over that hurdle.
- The Otium offer contained conditions and was non-binding, the Wasps offer was unconditional. The attachment of conditions will generally have the effect of depreciating any financial value, so in the mind of the Trustees the Otium bid had a lower benefit in real terms than Wasps’ offer.
- There was an inference that the Liquidator and/or Otium and/or SBS&L were in breach of the terms of the Option, by assigning the rights granted to CCFC Limited without consent of the Trustees. In such circumstances, the Trustees may have been entitled to consider the Option to be impaired or void.
- The Community aspects of Otium’s offer were dismissed although Higgs called upon Otium to fulfill earlier proposals made in 2012 with regard to Community engagement. Perhaps they were suggesting that the “Seven Pillars of Partnership” were unlikely to be delivered, given Tim Fisher’s track record on accomplishing his commitments at CCFC?
Further clarity was given by the Clerk to The AEHC Trustees in an interview with Trish Adudu on BBC Coventry & Warwickshire recently, making it clear that the Otium offer was of considerably less benefit when all factors were considered:
“The trustees were given a very simple choice. On the one hand was a cash offer for real money and on the other hand there was an offer from Otium, well through the Liquidators, for some money not necessarily all the money, and only subject to all sorts of conditions.
“So it was ‘what if’ money and real money. And so I'm afraid there was no choice for the Trustees.” Peter Knatchbull-Hugessen, November 2018