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Southampton Leisure (SOO)

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Monday 26 June, 2006

Southampton Leisure

EGM Statement

Southampton Leisure Holdings PLC
26 June 2006

                                  EGM STATEMENT

                        SOUTHAMPTON LEISURE HOLDINGS PLC

                                  26 JUNE 2006


Further to the announcements made by the Company on 16 May 2006, 2 June 2006 and
6 June, the Company has posted the following notice to all shareholders. The
notice will be available free of charge for one month at the Company's
Registered Office at St Mary's Stadium, Britannia Road, Southampton SQ14 5FP.
The notice contains two letters to shareholders, the full texts of which are set
out below.

          ------------------------------------------------------------

St. Mary's Stadium,
Britannia Road,
Southampton SO14 5FP

23 June 2006

Dear Shareholder

You will remember that on 5 June 06 I wrote to you enclosing an open letter to
Michael Wilde. That letter set out 10 simple questions about the future of
Southampton Leisure Holdings plc ('SLH') and Southampton Football Club ('the
Club'). The purpose of those questions was to elicit answers that would enable
your Board to make a recommendation to you on Mr Wilde's proposals and give you
the facts to help you determine who should run SLH after the Extraordinary
General Meeting scheduled for 3 July 06.

The key issues within the 10 questions were, and still are:

• Will Mr Wilde be bringing commitments for new funding with him?

• Can Mr Wilde set out why his proposed Board will run your company better than
  the existing Board?

Answers to these critical questions would, and will, allow your Board to make an
informed decision as to whether Mr Wilde's proposals, which amount to assuming
majority board control of your company, are in the best interests of SLH and the
Club or not.

My 10 questions were designed to enable Mr Wilde to provide short, concise and
pertinent answers. By way of response, on 22 June 06, you received a 39 page
document from Mr Wilde. You will be pleased that I do not propose to respond to
this on a line by line basis. Instead, I want to draw out the main threads of
this document and then see if Mr Wilde's proposals meet the key tests that I
have set out above.

• Corporate Governance: Mr Wilde's document devotes more space to setting out 
his proposals for corporate governance than it does on how he will improve the 
Club's performance on the field. It is interesting to know the frequency of 
Management Committee Meetings in the event that Mr Wilde is successful on   3
July 06, but the document does not answer who will be Chairman of the Club   and
therefore to whom George Burley is ultimately answerable. It does not   answer
my original question of whether all proposed directors of both plc and   Club
are named or not. Much of Mr Wilde's corporate governance proposals are  
already in place through our obligations as an AIM listed public company  
quoted on The Stock Exchange.

•  Family Club: Mr Wilde's document makes much of his wish to see the Club  
become 'family orientated' and a 'valued social institution'. He does not say  
how he will build on an organisation which already provides 100,000 child   
places on community courses every year, has an active relationship with 300   
schools and has introduced ticket offers to children and young people that   
have attracted extra gates of up to 2,700 for selected matches.

•  Football First: Can you imagine George Burley joining a Club where football 
did not come first? Not only that, but also having the commitment to bring 
Malcolm Webster, Simon Hunt and Glynn Snodin with him. At the same time Mr Wilde
describes the use of St Mary's for 'activities other than football' as a '
temptation'. There is not a Club in the Football League that does not value the
contribution that conferences, banqueting and concerts make to defray
expenditure and increase profitability.

•  Academy: Mr Wilde is kind enough to acknowledge that our Academy has 'an
excellent reputation' but at the same time wishes to remove the Board that had
the foresight to invest in the best scholars and the best staff to coach them.

•  Scouting: Mr Wilde believes that he should 'expand' our domestic scouting and
'develop' an international presence at both a senior and Academy level. I am not
sure that he fully understands what Simon Hunt,

Terry Cooper and Malcolm Elias do, but I am proud of a scouting team that at a
senior level has found players of the calibre of Michael Svensson and Peter
Crouch, and at a junior level has found Theo Walcott and Gareth Bale.

•  Commercial: Mr Wilde believes that SLH should recruit a '
football-business-savvy' Commercial Director who will 'implement a new supporter
orientated integrated commercial strategy' with 'complimentary plans and
programmes'.
At the same time he proposes to maintain early bird discounts for the full
season ticket sale period and reduce what he sees as 'excessive ticket pricing'.
I do not believe that there is a Chairman in the League who would not like a
sales supremo or a fan who would not like cheaper tickets. In the real world a
combination of increasing overheads and reducing prices needs very
careful thought.

•  Supporters: Mr Wilde makes a number of useful suggestions such as Supporter
Forums and a Supporter Charter. I would respectfully remind Mr Wilde that the
current Board introduced quarterly forums in 1997 and that our Customer Charter
covering broadly the same agenda that he proposes is available on
our website.

I would never suggest that we could not improve supporter communication,
(whether or not they are called customers or supporters) but suggest that the
Club's record speaks for itself.

The 39 pages raise some interesting issues, such as ticket price elasticity, and
focus on developments such as direct supporter board representation, that are
topics of hot debate within the game. However, the bulk of the initiatives set
out are already in place and many of the others such as direct supporter board
representation are qualified, (in that instance 'in due course') rather than
firm commitments. Indeed I would be concerned by any document prefaced 'the
forward looking statements in this document are based on current expectations
and subject to risks and uncertainties that could cause actual results that are
materially different to those expressed or implied by those statements.'

The biggest shortcoming in all 39 pages is the omission of ANY FIRM FINANCING
COMMITMENT for new funds.

There are references to potential new investors who are unwilling to invest
whilst the current Board is in place. There are excuses offered such as a lack
of access to George Burley or detailed financial information or even the variety
of financial scenarios in which the Club might find itself. It is my belief that
for an attempt to wrest majority board control to be taken seriously, Mr Wilde
should be capable of showing firm commitments to a minimum respectable
quantified level, even if those commitments are contingent on him winning the
EGM, from wealthy individuals who are prepared to stand up and be counted. Your
Board cannot understand why such commitments cannot be made. In fact, Mr Wilde's
statement of 23 June 06, about funding takes the matter no further. More good
intentions, but no hard commitment. Mr Wilde's proposals therefore FAIL the
first test that I would apply to determine if his approach is in the best
interests of
the company.

I now turn to Mr Wilde and his management team to investigate the second test.
The last item in the 39 pages is a section of the CV's of those involved. I
would like to put some additional facts in front of you:

•  Michael Wilde and the Merlion Group:
Significantly, there is very little in the public domain about Michael Wilde. We
know by his own admission that he is a tax exile resident in Jersey and that he
was resident in Singapore between 1978 and 1985 and founded the Merlion Group
plc ('Merlion') in 1991.

The last published accounts of Merlion are 31 December 04, which show net assets
of only £980,202 but with debts of £8,764,852. In the last published accounts
the profit before tax appears to be £1,270,000.

It may well be that Michael Wilde has substantial personal resources which he
can devote to the refinancing of SLH and the Club. If Merlion, however, is his
principal business, it is very hard to see how he or it has the resources to
effect any dramatic improvement in SLH's fortunes without considerable external
help, which he has alluded to but declined to corroborate, or to provide
details. As a tax exile how much time can he really devote to the affairs of
SLH? Perhaps this is why he has been totally silent as to his prospective role?

•  KEN DULIEU:
Mr Dulieu is a major shareholder of a public company called Capcon Holdings plc
('Capcon'), as well as being the Chairman of it. In the four financial years
from 2001-2004 Capcon made a total profit before tax over the four years of
£440,000. In the year ending 30 September 05, it lost £2,280,000. On 12 May 06,
Capcon made a public statement indicating that in the six months to 31 March 06,
it will record a higher than anticipated trading loss for this period. Capcon
was listed on AIM in 2001 at a value of over £6,000,000 and at the close of
business on 22 June 06, the market capitalisation was a mere £305,000.

At the Saints Trust meeting held on 15 June 06, Dulieu stated that he 'had been
brought in to look after the plc part of the Club'. As a substantial shareholder
of SLH myself, and, based on Dulieu's track record with Capcon, I fear for SLH
if all he can do is replicate what he has achieved at Capcon should he be
elected by you to the Board of SLH.

Mr Dulieu is also a director of Vantis plc, an accountancy and financial
services business.

•  James Hone:
Frankly I cannot tell you whether Jim Hone is good, bad, or indifferent as a
prospective Chief Executive. He was a director of Celtic FC for four years and a
director of Fulham FC for a little under two years. The reasons for Mr Hone's
departure from both Clubs are unclear. From newspaper reports at the time we
understand that his departure from Celtic was due to cutbacks to improve the
Club's financial position and that his position was merged with that of Chief
Executive. At Fulham, certain national newspapers reported that he was
dismissed, allegedly for public criticism of key player Steed Malbranque. It is
my belief that what SLH does not need is a Chief Executive who apparently lacks
discretion in his comments about playing staff. I do not believe that Mr Hone
has held a full time post in football since his dismissal in January 2005.

•  Ken Anderson:
Whilst not a prospective Board member, Ken Anderson an employee of Vantis plc,
has been responsible for developing much of Mr Wilde's approach particularly
soliciting the sale of shares to Mr Wilde and advising Mr Wilde.
Mr Anderson's business card describes him as 'Group Director'. In October 05, Mr
Anderson was banned from holding directorship of a company until 2013.
Mr Anderson has been involved in several liquidations and his record at the
Insolvency Service reveals that he has been found guilty of diverting funds
receivable by a company into personal accounts, VAT discrepancies, and failure
to cooperate with Receivers.

What Michael Wilde has proposed to you is a package. However, in any package of
the sort proposed by him there are pivotal relationships:-

1. The major shareholder.
2. The prospective Chairman.
3. The prospective Chief Executive.

If any of these three do not pass muster, then the package as a whole must fail.
You must seriously ask yourself whether Mr Wilde has really assembled the Board
of 'exceptional business people' that he claims, and whether those people are
better for SLH and the Club than your current Board which has performed well for
you over the years. If you cannot give a positive answer then Mr Wilde's
proposal must fail the second test set out at the beginning of this letter.

In contrast I would like to remind you of the achievements of your current Board
which:

•  Has delivered sound financial management over the last ten years. Based on
the independent Deloittes Annual Review of June this year, your company achieved
over a five year period ending on 31 May 05 (being the last published accounts):

•  84% increase in total turnover over that period.

•  In terms of total turnover was ranked 10th in the country over that period.

•  In terms of operating profit was ranked 7th in the country over that period.

•  In terms of net transfer spend was ranked 13th in the country over the same
   period.

•  Spent a total of £119 million over that period on total wages.

•  Reached the FA Cup Final in 2003.

•  Recovered from relegation to the Championship and a poor start to the season
   to produce prospective automatic promotion form over the last 8 games of the
   2005-06 season.

•  Has assembled a first class management team of George Burley, Glynn Snodin,
   Malcolm Webster and Simon Hunt.

•  Unlike Wembley, has delivered St Mary's Stadium on time and on budget and
   fully funded on a prudent long term basis.

•  Has spent £1.85 million in 2005-06 with a further £250,000 committed on
   producing a world class training facility at Marchwood staffed by Sir Clive
   Woodward and a first class sports science team.

•  Has encouraged senior executives to invest in the company and who have done
   so.

•  Despite relegation, has maintained Southampton Football Club in good
   financial shape.

Everyone in the company was bitterly disappointed at our relegation in May 05
and I and Andrew Cowen offered to resign. This was unanimously rejected by the
Board of SLH but obviously this is not an excuse and does not make me feel any
better about it. We are committed to working with the players and training staff
to get promoted this season and believe we have laid the foundations for a
credible promotion challenge in the second year of the parachute payment. To
give this the best chance of success we need Board stability.

Consider all our achievements of the last ten years. Consider also the views of
George Burley, Clive Woodward and Claus Lundekvam which are set out in an open
letter in this Circular to you.

You may well ask why I and other shareholders proposed additional resolutions to
enable you, the shareholders, to vote on the removal or otherwise of Messrs
Thompson, Wiseman and Hunt. It was simply this. These directors chose to sell
shares to Michael Wilde and to support the Michael Wilde package. If it is your
decision to support the Michael Wilde package, then you must vote for them to
remain but if you choose to support your existing Board and management with our
10 year record, then I and others believe it was appropriate for you to have the
choice in these circumstances of removing these directors.
Each shareholder has a choice to make on 3 July 06. Your Board has offered to
stand down if Mr Wilde's proposals can be shown to be in the best interests of
SLH and the Club. To determine this we set two tests. Mr Wilde's proposal has
satisfied neither:


            Your Board recommends that you vote AGAINST resolutions
                            1,2,4,5,7,9,11,12 and 13

If you agree then please fill in your proxy card in the way shown on the reverse
of the enclosed letter from George Burley, Clive Woodward and Claus Lundekvam.
Mr Wilde says his new team 'will put football first.'
I am glad he proposes to do exactly what we have done over many years.

Yours sincerely



RJG Lowe
Chairman
Southampton Leisure Holdings plc
Southampton Football Club Ltd

Note: This circular was approved by the Board of Southampton Leisure Holdings
plc. Messrs Thompson, Wiseman and Hunt did not participate in the approval of
this document.

          ------------------------------------------------------------

Marchwood Training Ground
Long Lane
Marchwood
Hants

23 June 2006


Dear Shareholder,

It is the fervent hope of any Manager, Coach or Player at a football club that
they never become caught up in takeovers, bids, EGMs or other corporate actions
a long way from the training ground. However, as 'plc football' has developed,
it sometimes becomes impossible to stay on the touchline.

Since our management team was formed on George's arrival on 23 December 2005 we
have achieved an enormous amount. The squad has been remodelled, a modern
support team has been installed, and some world class training facilities have
been commissioned. We appreciate that in doing this we have trodden on some
toes, and at certain times, the wisdom of our long term plan has not been
obvious. However, the end product of this period of change has been automatic
promotion form over the final 8 games of last season.

This has not happened by accident. It has happened through a lot of hard work by
a number of people. It has also happened because the Chairman and most of his
Board have believed in us, supported us and backed us. Without this support,
particularly from the Chairman, we could never have made the changes that have
taken place in such a short period of time.

To continue this, what we need is stability. That stability will enable us to
show you the end product of the foundations we have laid.

In football one should 'never say never' and we would all hope to remain at
Southampton for the balance of our contracts and perhaps beyond. However, we ask
you, the owners of the company, to respect our need for stability and to vote
for change only if you can see a clear, defined and tangible benefit, such as
management advantage or a committed refinancing.



Yours sincerely,


George Burley    Clive Woodward            Claus Lundekvam



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