Takeover bid' is a fog on the Tyne
http://www.telegraph.co.uk/sport/main.jhtm...22/sfnnew22.xml
(Filed: 22/08/2006)
Newcastle United were on full takeover alert last night after Belgravia Group, a secretive investment company based in Jersey, confirmed they were considering a bid for the club.
A week after American billionaire Randy Lerner made a £62.6 million bid for Aston Villa, Belgravia revealed they were interested in Newcastle, which could be worth about £100m.
Although they refused to reveal the identity of those behind the approach, Belgravia quickly played down speculation that the company were a front for Sheikh Ahmed Bin Saeed Al Maktoum, the ruler of Dubai.
Belgravia acted as advisers to Maktoum on a failed bid to buy the Jordan Forumla One team in 2004 but a spokesman described the link with Newcastle as a "red herring", dashing hopes on Tyneside that they would soon have their own oil-rich tycoon to rival Chelsea's Roman Abramovich.
Nevertheless, Belgravia insist they have assets of £1billion and are serious about making a bid for control of St James' Park, to turn the club into one of the most powerful forces in European football.
In a statement released to the Stock Exchange yesterday morning, Belgravia said: "Following recent press speculation, the Belgravia Group confirms that it is examining the potential opportunity of acquiring Newcastle United plc, which may or may not lead to an offer for the company being made by Belgravia."
Although at a very early stage Belgravia, who manage the finances of high-rolling clients like Maktoum, are believed to have held talks with former Newcastle chairman Sir John Hall and his son, Douglas, about acquiring their 40 per cent holding.
Both men are now based abroad and it is believed their stake has been for sale for at least a year. In June, Sir John confirmed he had held talks with an American hedge fund, Polygon, about a possible sale of his shares in the club.
With Belgravia prepared to offer a premium of between 10 and 15 per cent per share, the Halls stand to make a profit of more than £30 million on the estimated £3 million Sir John has spent in building his stake over 16 years.
But even if Belgravia secure the Halls' stake, they face a major battle for control as chairman Freddy Shepherd has repeatedly indicated he will not sell his 28.5 per cent holding. In fact he has been steadily building his stake over the last 18 months.
Without his shares any buyer would not be able to obtain the 75 per cent needed to take the company private.
Shepherd's reluctance to do a deal will only increase the price. Shares in Newcastle climbed 6p to 67p yesterday on news of the interest from Belgravia, valuing the club at just under £89 million.
Another potential stumbling block is the £55 million securitised loan Newcastle took out in 1999 to fund the redevelopment of St James' Park. The 17-year loan, which is due to be repaid in 2016, has a change-of-control clause which would allow the six British and American banks behind the deal to demand early repayment or renegotiate the annual 7.43 per cent interest rate.
One possible solution which could suit Shepherd and the banks could be for the Newcastle chairman to offer Belgravia an option on his shares which would see him stay on for a fixed period of time to smooth the takeover process.
Until Belgravia make their next move, the identity of their backers will remain shrouded in mystery. Little is known about the company's chairman, Duncan Hickman, who set up the investment group with fellow banker Ron Mitchell in 2000 after they sold the successful hedge fund Liberty Ermitage.
Hickman, 38, who lives in Jersey, is not thought to have any connection to football. But the company, who also have interests in aviation, construction and hospitality, have a strategic marketing arm that counts Arsenal and Everton among their clients.
Despite the potential battle for control any bidder would face, Newcastle remain an attractive proposition. One leading City analyst said: "They have a fully refurbished stadium with a capacity of 52,000, modern training ground and a very loyal and passionate fan base."
