Share rebels target Sugar

14 April 2012

Tottenham's battle against rebel shareholders ignited yesterday when the rival group tried to stop former chairman Sir Alan Sugar and a key ally of current chairman Daniel Levy from voting on the club's crucial fundraising plans.

Furious with Levy and his company Enic, the rebels have organised a campaign to block Spurs' ambitious £15million share scheme.

The first salvoes were fired yesterday when the club were forced to change voting rights for tomorrow's extraordinary general meeting, following complaints to City regulators.

Executive director Paul Kemsley, Levy's closest board ally, has been banned from voting on the key issue of whether Enic can obtain a waiver to avoid making a formal takeover bid for Spurs if, as seems likely, its shareholding rises above 30 per cent.

Enic, the club's major shareholder with 29.8 per cent, is not allowed to take part in the waiver vote, but Spurs had claimed that Kemsley should be entitled to vote because he is independent of Levy.

However, following the intervention of City watchdog the Takeover and Mergers Panel, it has emerged that Kemsley has been involved in multi-millionpound property deals with Levy and his business partner Joe Lewis - who owns 70 per cent of Enic. These are purported to be worth at least £30m. The potential conflict of interest means property developer Kemsley, who is paid £100,000 a year by Spurs, must sit out the vote.

The rebels, thought to include former director Howard Shore, are trying to win enough shareholder support to torpedo Levy's plans, so voting rights has become a major issue.

Opponents of the board had also hoped to see Sugar - Spurs' largest active individual shareholder and believed to be another friend of Enic - barred from the poll.

His relationship with Enic was also scrutinised by the Takeover Panel which was informed of a surprise omission in the offer document sent out to shareholders last month,

It failed to mention a deal between Levy and Sugar that gives Enic "pre-emption rights" over the Amstrad founder's 13.2 per cent holding in Spurs should he decide to sell. The agreement, which ends next month, means Enic has the right to match any offer for Sugar's shares and was negotiated during its £22m takeover of the club three years ago.

After deliberations, the Takeover Panel told Spurs to release this information in a statement to the Stock Exchange yesterday, but crucially decided not to strip Sugar of his voting rights.

Despite this setback for the rebels, the outcome of tomorrow's meeting remains uncertain with defeat for the Spurs board on any one of seven resolutions set to scupper the scheme. Also known as a convertible redeemable preference share issue, it is a means by which Spurs can raise £15m to spend on new players.

Enic are underwriting it and will put in the most of the money, but in return they want more shares in Spurs at a discounted rate of around 16p per share. Today they opened trading at 231/2p.

Shore and his allies believe the structure of the deal is unfair to smaller shareholders and Enic is accused of trying to acquire a majority stake at a knockdown price.

In response, Spurs say Enic's willingness to underwrite the scheme shows its commitment to the club. They also claim it is the best way to raise funds at a time when football clubs are being shunned by City banks.

The arguments have been raging ever since the scheme was first mooted last summer and there have already been two boardroom casualties.

As well as Shore's acrimonious departure last November, finance director Paul Viner was also axed.

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