TIDMBMC 
 
RNS Number : 7439Z 
Birmingham City PLC 
28 September 2009 
 

Birmingham City plc ("Birmingham City" or the "Company") 
 
 
Posting of circular advising Birmingham City shareholders to accept Grandtop's 
offer 
 
 
The Directors of Birmingham City have today posted a circular (the "Circular") 
to shareholders recommending that they accept the offer of GBP1.00 per ordinary 
share by Grandtop International Holdings Limited (the "Offer"). The text of a 
letter from the Chairman to shareholders setting out in detail why the Directors 
of Birmingham City recommend that shareholders should accept the Offer is set 
out below. 
 
 
 
 
Enquiries: 
 
 
+------------------------------------+------------------------------------+ 
| Shore Capital and Corporate        | 020 7408 4090                      | 
| Limited                            |                                    | 
| Graham Shore                       |                                    | 
| Stephane Auton                     |                                    | 
+------------------------------------+------------------------------------+ 
 
 
 
 
Unless otherwise defined, terms used in this announcement have the defined 
meaning given to them in the Circular. The Circular is available for inspection 
during normal business hours on any weekday at the offices of HBJ Gateley 
Wareing LLP, 2 Fleet Place Holborn Viaduct, London, EC4M 7RF during the Offer 
Period and is also available for download from the Company's AIM website: 
http://bcfc.aimcompliance.com. 
 
 
RECOMMENDED CASH OFFER FOR BIRMINGHAM CITY BY GRANDTOP 
 
 
1. Introduction 
On 21 August 2009, Grandtop announced the terms of a cash offer by Grandtop to 
acquire the entire issued and to be issued ordinary share capital of 
Birmingham City. 
 
 
The purpose of this letter is to explain the background to, and the terms of, 
the Offer and the reasons why the Birmingham City Directors, who have been so 
advised by Shore Capital (as independent financial adviser for the purposes of 
Rule 3 under the Takeover Code), consider the terms of the Offer to be fair and 
reasonable. In providing advice to the Birmingham City Directors, Shore Capital 
has taken account of the Birmingham City Directors' commercial assessments. The 
Birmingham City Directors unanimously recommend that all Birmingham City 
Shareholders accept the Offer. 
 
 
Full details of the Offer, including its terms and conditions, are contained in 
the Offer Document which was posted to Birmingham City Shareholders by Grandtop 
on 15 September 2009. 
 
 
2. Terms of the Offer 
The Offer is for the entire issued and to be issued ordinary share capital of 
Birmingham City, other than Birmingham City Shares already owned by Grandtop, on 
the following basis: 
 
 
100 pence in cash for each Birmingham City Share 
The Offer values the entire issued ordinary share capital of Birmingham City at 
approximately GBP81.51 million and represents a premium of approximately 55 per 
cent. to the Closing Price of 64.5 pence per Birmingham City Share on 20 August 
2009, being the last Business Day prior to the Offer Announcement, a premium of 
approximately 150 per cent. to the Closing Price of 40 pence per Birmingham City 
Share on 11 August 2009, being the last Business Day prior to the commencement 
of the Offer Period and a premium of approximately 240 per cent. over the 
average Closing Price for the 6 month period prior to the Offer Announcement of 
29.4 pence per Birmingham City Share. 
 
 
Birmingham City Preference Shareholders should note that Grandtop has not made 
an offer for the Birmingham City Preference Shares and is not obliged to do so 
under the Takeover Code. 
 
 
 
 
3. Background to and reasons for recommending the Offer 
On 12 August 2009, Birmingham City announced that it had received an approach 
from Grandtop which might lead to an offer for the entire issued share capital 
of Birmingham City. Following this approach, Grandtop announced the Offer for 
the entire issued and to be issued share capital of Birmingham City on 21 August 
2009. Grandtop's Offer Document was posted to Birmingham City Shareholders on 15 
September 2009. 
 
 
Birmingham City was previously approached by Grandtop in June 2007. This 
approach led to certain Birmingham City Directors selling to Grandtop, in 
aggregate, 24,375,975 Birmingham City Shares, representing 29.9 per cent. of the 
existing issued share capital of Birmingham City. The Birmingham City Directors 
and Grandtop continued discussions with a view to Grandtop making an offer for 
the remainder of the existing issued share capital of Birmingham City. However, 
such discussions did not culminate in an offer, and on 20 December 2007, 
Birmingham City announced that it had terminated discussions with Grandtop as 
the Birmingham City Directors were no longer confident that Grandtop was able to 
make an offer for Birmingham City at that time. 
 
 
Grandtop has now managed to obtain the necessary financing to proceed with an 
offer and this has been formally confirmed by Grandtop's financial advisers in 
the Offer Document. It should be noted though that the Offer is still 
conditional on approval by Grandtop Shareholders. 
 
 
The Board of Birmingham City believes that the Offer represents a fair price for 
Birmingham City Shares at this time. Further, the Board believes that Grandtop, 
through its connections in the People's Republic of China, is well positioned to 
increase the global fan base of Birmingham City FC as well as enhancing its 
brand awareness. We are also reassured by Grandtop's intention to retain Alex 
McLeish as first team manager. These factors, combined with the intention to 
invest in strengthening the squad and the Club's infrastructure, should place 
the Club in a strong position going forward. 
 
 
4. Current trading and prospects 
Interim results 
In Birmingham City's interim results for the six months ended 28 February 2009 
(the last period for which Birmingham City has published financial information), 
released on 22 May 2009, Birmingham City made the following statement: 
 
 
"Managing Director's Review 
 
 
 
    · Turnover for the 6 months, GBP15.6m (GBP32.6m in 2008 H1) 
    · Operating loss GBP4.0m (GBP7.8m profit in 2008 H1) 
 
The figures being reported on in the six months cover the first half of the 
season (entirely in the Championship) and show turnover considerably lower at 
GBP15.6m (2008 H1: GBP32.6m). The 2008 figures cover the same period in the 
Premier League. Operating loss before interest and taxation of GBP4.0m compared 
to a profit in 2008 of GBP7.8m. Wage costs fell by GBP3.0m and there was a gain 
on the sale of player registrations, GBP0.9m compared to GBP1.65m in the 
previous year. The full year results will include the remainder of the season in 
the Championship and the first month in the Premier League. 
 
 
We estimate that promotion will mean additional revenues of around GBP30m from 
the Premier League, together with a positive effect on attendances and increases 
in most revenue streams. We must use the opportunity that Premier League 
membership provides to maximise our commercial revenues, recognising that we 
will need to spend more on the playing squad. 
 
 
Promotion to the Premier League at the first attempt justifies the Board's 
confidence in the football management team and the challenge is now to manage 
supporter expectations in playing at this higher level while being aware of the 
risks involved in over-stretching the Club financially. During the close season 
major works are being undertaken on the Stadium with the installation of 
under-soil heating, a new pitch complete with pitch perimeter track, erection of 
a new electronic scoreboard and information screen, refurbishment of the Main 
Stand and Superstore and a new tannoy announcement system. Further work on the 
Training Ground at Wast Hills is also taking place with an upgrade of the 
pitches and a new reception area being built. 
 
 
The Academy has had a successful season with three young players signing their 
first professional contracts. In total 12 players from the Academy have 
represented their country. Players coming through from the Academy into the 
first team are the future lifeblood of the Club. 
 
 
We look forward to competing in what is now universally recognised as the 
leading league in world football during season 2009/2010 and beyond." 
 
 
Short term loans 
Birmingham City has made the following statements regarding short term loans 
from certain Birmingham City Directors. 
 
 
9 June 2009: 
 
 
"Birmingham City Football Club (the "Club") has agreed short term, unsecured, 
working capital loans from two of its directors, David Sullivan and David Gold, 
to fund its stadium refurbishment and player purchase programmes. 
 
Under the terms of these loans, Roldvale Ltd Employee Benefit Trust (in which 
David Sullivan is interested) and David Gold, will each lend GBP1m to the Club, 
repayable on or before 1st September 2009. The loans will bear an interest rate 
of 0.5 per cent. per month. There will be no facility fee payable. 
 
As required by Rule 13 of the AIM Rules for Companies, the Company's directors 
(other than the directors interested in the loans) consider, having consulted 
with the Company's nominated adviser Shore Capital and Corporate Limited, that 
the terms of the loans are fair and reasonable in so far as its shareholders are 
concerned." 
 
 
26 June 2009: 
 
 
"Further to the announcement made on 9 June 2009, Birmingham City Football Club 
(the "Club") has agreed additional short term, unsecured, working capital loans 
from three of its directors, David Sullivan, David Gold and Ralph Gold, to fund 
its stadium refurbishment and player purchase programmes. 
 
Under the terms of these loans, Roldvale Ltd Employee Benefit Trust (in which 
David Sullivan is interested) will lend GBP1.5m, and David Gold and Ralph Gold 
will each lend GBP750,000 to the Club, repayable on or before 1st September 
2009. The loans will bear an interest rate of 0.5 per cent. per month. There 
will be no facility fee payable. 
 
As required by Rule 13 of the AIM Rules for Companies, the Company's directors 
(other than the directors interested in the loans) consider, having consulted 
with the Company's nominated adviser Shore Capital and Corporate Limited, that 
the terms of the loans are fair and reasonable in so far as its shareholders are 
concerned." 
 
 
10 August 2009: 
 
 
"The Company is pleased to announce that Birmingham City Football Club has now 
repaid in full the short term, unsecured, working capital loans (the "Short Term 
Loans") from three of its directors, David Sullivan, David Gold and Ralph Gold. 
The Short Term Loans, which were previously announced on 9 June 2009 and 26 June 
2009, amounted to GBP5m in total and were intended to fund the stadium 
refurbishment and player purchase programmes." 
 
 
5. Management and employees 
Grandtop has assured the Board that it intends to continue to run 
Birmingham City as a football business, with operations remaining at the current 
locations. Grandtop has also indicated that it does not have any immediate plans 
to dispose of, or otherwise change the use of, any assets within the 
Birmingham City portfolio, although it would consider any potential 
opportunities if and when they arise. 
 
 
Grandtop has indicated that it will work with the executive management team of 
Birmingham City and expects existing members of senior management to continue to 
be involved in the ongoing business of Birmingham City. Following the Offer 
becoming or being declared wholly unconditional, David Sullivan has agreed to 
resign from the Board of Birmingham City. In addition, the employment of Karren 
Brady, Roger Bannister and Ralph Gold will also terminate upon the Offer 
becoming or being declared wholly unconditional. David Gold has indicated that 
he is willing, subject to agreeing the terms with Grandtop, to remain on the 
Board and continue in the role of Chairman of the Club. Michael Wiseman is also 
expected to remain a director of the Company. 
 
 
Grandtop has given assurance to the Board of Birmingham City that, on the Offer 
becoming or being declared wholly unconditional, the existing employment rights 
of all management and employees of Birmingham City, including pension rights, 
will be fully safeguarded. 
 
 
The Board of Birmingham City, in its discussions with Grandtop, has no reason to 
believe that Grandtop's intentions would prejudice its employees and is 
comforted that Grandtop has no current plans to alter existing arrangements with 
employees. 
 
 
6. Irrevocable undertakings 
Certain Birmingham City Directors, being David Sullivan, David Gold and Ralph 
Gold, and persons connected with them have given Grandtop irrevocable 
undertakings to accept, or to procure the acceptance of, the Offer in respect of 
their entire beneficial holdings of, in aggregate, 40,757,026 Birmingham City 
Shares, representing approximately 50.0 per cent. of the existing issued share 
capital of Birmingham City. These undertakings will cease to be binding only if 
the Offer lapses or is withdrawn and will remain binding in the event that a 
higher competing offer is made for Birmingham City. 
 
 
On 23 September 2009, Grandtop announced that as at 1.00pm on 22 September 2009 
Grandtop had received valid acceptances in respect of 42,211,337 Birmingham City 
Shares representing approximately 51.8 per cent. of the current issued ordinary 
share capital of Birmingham City and approximately 73.9 per cent. of the 
Birmingham City Shares to which the Offer relates. Grandtop is, and was before 
the start of the Offer Period, already the registered and beneficial owner of 
24,375,975 Birmingham City Shares, representing approximately 29.9 per cent. of 
Birmingham City's issued ordinary share capital. Accordingly, as at 1.00pm on 22 
September 2009 Grandtop owned or had received valid acceptances of the Offer in 
respect of a total of 66,587,312 Birmingham City Shares representing in 
aggregate approximately 81.7 per cent. of the current issued ordinary share 
capital of Birmingham City. As a result, the Offer is now unconditional as to 
acceptances. However, the Offer is still subject to the Offer conditions set out 
in the Offer Document and is still conditional on approval by Grandtop 
Shareholders. 
 
 
7. Escrow Agreement 
Birmingham City announced on 20 August 2009 that it had entered into an escrow 
agreement with Grandtop. Under this agreement, Grandtop put down a deposit of 
GBP3 million (the "Deposit") with a view to making an offer for the entire 
issued ordinary share capital of Birmingham City (other than the shares in 
Birmingham City already held by Grandtop. The Deposit was a surety for 
Grandtop's ability and intention to make an Offer, without which Birmingham City 
was unable to commit resources to considering an Offer. 
 
 
If the Offer is declared unconditional in all respects, then the Deposit will be 
transferred to a receiving agent to be used as part of the payment to accepting 
shareholders under the Offer. However, if the Offer is not declared 
unconditional in all respects by 30 October 2009, then the Deposit will be 
released to Birmingham City unless certain conditions are not met. Certain of 
those conditions were related to the giving of the Irrevocables and are 
therefore no longer relevant now that the Irrevocables have been given. However, 
if any of the following occur, then the Deposit will not be released to 
Birmingham City: 
 
 
1. any of the Irrevocable Givers breaches the terms of any of the Irrevocables 
once executed or has indicated  his intention to be so in breach; or 
2. any of the Birmingham City Directors or any adviser to Birmingham City 
indicates publicly that the Board will not or may not unanimously recommend 
acceptance by   Birmingham City Shareholders of the Offer. 
 
 
8. Recommendation 
The Birmingham City Directors, who have been so advised by Shore Capital, 
consider that the terms of the Offer are fair and reasonable. In providing 
advice to the Birmingham City Directors, Shore Capital has taken into account 
the Birmingham City Directors' commercial assessments. 
 
 
Accordingly, the Birmingham City Directors unanimously recommend that 
Birmingham City Shareholders accept the Offer as they have done in respect of 
their entire respective beneficial holdings of Birmingham City Shares, amounting 
in aggregate to 40,777,026 Birmingham City Shares, representing approximately 
50.0 per cent. of the existing issued share capital of Birmingham City. 
 
 
 
 
 
 
FORWARD-LOOKING STATEMENTS 
This document, including information included or incorporated by reference in 
this document, may include certain "forward-looking statements". These 
statements are based on the current expectations of the Birmingham City 
Directors and are naturally subject to uncertainty and changes in circumstances. 
The forward-looking statements contained herein may include statements about the 
expected effects on the Company of the Offer, the expected timing and scope of 
the Offer, strategic options and all other statements in this document, other 
than historical facts. Without limitation, any statements preceded or followed 
by or that include the words "targets", "plans" "believes", "expects", "aims", 
"intends", "will", "may", "should", "could", "would", "can", "continue", 
"opportunity", "anticipates", "estimates", "projects" or words or terms of 
similar substance or the negative thereof, are forward-looking statements. 
Forward-looking statements involve risk and uncertainties that could cause 
actual results to differ materially from those expressed in the forward-looking 
statements. Many of these risks and uncertainties relate to factors that are 
beyond the Company's abilities to control or estimate precisely, such as: (i) 
future capital expenditures, expenses, revenues, earnings, synergies, economic 
performance, indebtedness, financial condition, dividend policy, losses and 
future prospects; (ii) business and management strategies and the expansion and 
growth of the Company's operations and potential synergies resulting from the 
Offer; and (iii) the effects of government regulation on the Company's business. 
There are a number of factors that could cause actual results and developments 
to differ materially from those expressed or implied by such forward-looking 
statements. These factors include, but are not limited to, the satisfaction of 
the conditions to the Offer, changes in economic conditions, changes in the 
level of capital investment, success of business and operating initiatives and 
restructuring objectives, changes in consumer habits and preferences, 
competitive product and pricing pressures, customers' strategies and stability, 
changes in the regulatory environment, fluctuations in interest and exchange 
rates, the outcome of litigation, government actions and natural phenomena such 
as floods, earthquakes and hurricanes. Other unknown or unpredictable factors 
could cause actual results to differ materially from those in the 
forward-looking statements. The Company does not assume any obligation nor does 
it intend to update publicly or revise forward-looking statements, whether as a 
result of new information, future events or otherwise, except to the extent 
legally required. 
DEALING DISCLOSURE REQUIREMENTS 
Under the provisions of Rule 8.3 of the Takeover Code, if any person is, or 
becomes 'interested' (directly or indirectly) in 1% or more of any class of 
'relevant securities' of the Company, all 'dealings' in any 'relevant 
securities' of that company (including by means of an option in respect of, or a 
derivative referenced to, any such 'relevant securities') must be publicly 
disclosed by no later than 3.30pm (London time) on the London business day 
following the date of the relevant transaction. This requirement will continue 
until the date on which the offer becomes, or is declared, unconditional as to 
acceptances, lapses or is otherwise withdrawn or on which the 'offer period' 
otherwise ends. If two or more persons act together pursuant to an agreement or 
understanding, whether formal or informal, to acquire an 'interest' in 'relevant 
securities' of the Company, they will be deemed to be a single person for the 
purpose of Rule 8.3. 
Under the provisions of Rule 8.1 of the Takover Code, all 'dealings' in 
'relevant securities' of the Company by Grandtop or the Company, or by any of 
their respective 'associates', must be disclosed by no later than 12.00 noon 
(London time) on the London business day following the date of the relevant 
transaction. 
A disclosure table, giving details of the companies in whose 'relevant 
securities' 'dealings' should be disclosed, and the number of such securities in 
issue, can be found on the Takeover Panel's (the "Panel") website at 
http://www.thetakeoverpanel.org.uk/. 
'Interests in securities' arise, in summary, when a person has long economic 
exposure, whether conditional or absolute, to changes in the price of 
securities. In particular, a person will be treated as having an 'interest' by 
virtue of the ownership or control of securities, or by virtue of any option in 
respect of, or derivative referenced to, securities. 
Terms in quotation marks are defined in the Takeover Code, which can also be 
found on the Panel's website. If you are in any doubt as to whether or not you 
are required to disclose a 'dealing' under Rule 8, you should consult the Panel. 
If you are in any doubt as to the application of Rule 8 to you, please contact 
an independent financial adviser authorised under the Financial Services and 
Markets Act 2000, consult the Panel's website at www.thetakeoverpanel.org.uk or 
contact the Panel on telephone number +44 20 7638 0129; fax +44 20 7236 7013. 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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