2004 SCRIP bid press report

Published on Friday 1st October, 2004 by Celtic Trust

Celtic block new income

Celtic directors were last night accused of blocking a potential new source of revenue for signings. The Herald can reveal that, at the Parkhead club's annual meeting on October 13, the board intends to oppose a resolution put forward by the Celtic Trust, an organisation of shareholders and supporters, to enable shareholders to reinvest dividends in the club in exchange for more shares. A senior Trust board member said the directors were failing to match supporters' ambitions. Before the £1.5m loan signing of Henri Camara from Wolves this summer, Celtic had spent just £350,000 on new players in two years. Owners of a special class of convertible ordinary preferred shares in Celtic are next week due the first dividends from their investment in the 2001 issue, which will cost the club about £2.5m. Dermot Desmond, the club's major shareholder, is expected to collect over £1m and is also due a further £1.6m from a separate preference shareholding. Martin O'Neill, the manager, is due about £233,000 and stated in January that he could be willing to consider the possibility of reinvesting the money in Celtic. Jeanette Ramsay, spokes- person for the Celtic Trust, said the organisation was frustrated by the lack of money spent on the team in recent seasons and that they believe a dividend reinvestment programme could provide a valuable revenue stream. Ramsay also admitted to being baffled as to why the board are unwilling to back the proposal. She said: 'It is unclear to us why Celtic would have problems with this. All we have asked is for the board to investigate different types of schemes, consult with the different representative bodies, including ourselves, and come back and propose what they want to do.' Ramsay believes supporting O'Neill with an increased transfer kitty would reap financial dividends for the club by increasing chances of progression in the Champions League. She said: 'We don't take the view that Celtic is a badly-run club. What we do think is that there is a mismatch between their approach to risk and our ambitions in terms of where the club is going to go. 'We are not asking for the club to spend tens of millions and end up back where we were a decade ago. But where else is the money going to come from? Other revenue streams are starting to mature and there is no imminent sign of moving to another league. 'We need to go further in the Champions League and we are not going to do that unless investment is made in the squad. What we are saying is we are prepared to put the money in and we want it spent on players.' The Trust's preferred option would be a Scrip Dividend Reinvestment Scheme, in which Celtic would issue new shares in the club to those who pay back their dividends. David Glen, a football analyst with PriceWaterhouseCoopers, speculated that the possibility of Celtic's powerbrokers losing some control as more shares were issued could be the reason for the board's opposition. He said: 'This [dividend re-investment] is not something I am aware of being in place within football, but it happens in wider business. It is hard to read, but Celtic's opposition may be down to the fact that, if you have this happening year-in, year-out, your control of the business could be diluted.' Celtic were unavailable for comment last night, although the explanatory notes which accompanied notification of the annual meeting laid out their position. It read: 'As well as individual costs to the shareholder, dividend reinvestment schemes can also result in an administrative cost to the company, particularly at the time of inception. 'The resolution is not specified as to the type of scheme contemplated. The Company will investigate possible schemes to establish which, if any, would be of potential benefit to the Company and its shareholders and worthy of recommendation but, in the meantime, the Directors do not consider that the resolution, as proposed, would be in the best interests of the Company or the shareholders and, therefore, intend to vote their own holdings against it. 'The Directors recommend that shareholders also vote against this resolution.' The club's directors have also signalled their opposition to a second proposal from the Celtic Trust requesting a seat on the board for an elected fans' representative.

Tags: Finance

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