Offer for Shares by Heart of Midlothian 2005 Limited / Vladimir Romanov
 

Update 18 Nov 2005:

Following the agreed purchase, by Vladimir Romanov, of additional shareholdings in Heart of Midlothian FC plc exceeding 50% of the total stock, and the follow-on offer to buy all remaining shares in the club, the committee of the Association invited comments, opinions and observations from the membership about the way forward for small shareholders in general, and our Association in particular.

There were many expressions of concern about recent events at the club, and many members were worried about the future of small independently held shares, and by extension the Shareholders' Association itself. The perception was that small shareholders were being disregarded in the offer proposal, and that a 'Loyalty Club' was not the way forward.

Acting upon instructions from the Association committee, I sought a meeting with Roman Romanov in his capacity as Chairman and interim Chief Executive, in the hope that the position of small shareholders and the Association could be clarified for the future. I am pleased to say that Roman Romanov, along with legal advisor Iain Young from Brodies, met with me last Monday (14th November) and we enjoyed some fruitful discussions, as a result of which the following statement was agreed:

"Ray French (Chairman, Heart of Midlothian Shareholders' Association) met with Roman Romanov (Chairman and interim Chief Executive, Heart of Midlothian FC plc) on Monday 14th November to discuss the Offer for shares by HMFC 2005.  Mr.Romanov reiterated that the declared target of the offer for shares was to exceed 75% of the total stock, primarily to enable the de-listing of Hearts from the London Stock Exchange.  The Offeror was not, however, looking to gain control of 100% of the stock without any regard for the sensitivities of small shareholders, and recognised that their investment in Hearts was as much emotional as financial.  Mr.Romanov was not concerned if small shareholders retained their holdings in Hearts as a limited, albeit no longer public, company. 

It was yet to be decided whether the Offeror would seek to compulsorily purchase shares if the total holding by HMFC 2005 exceeded the required threshold of 93%, although achieving that level was unlikely.  Mr.Romanov indicated that whilst the Offeror would like to confirm that shareholder privileges would be retained by those small shareholders who chose to retain their shares after the Offer closed, and that those privileges would pass on to those whom the shareholders chose to sell, gift or bequeath those shares, unfortunately, for regulatory reasons, it was at this stage unable to do so.  The subject will, however, be revisited once the Offer has closed.

Roman Romanov welcomed the continued involvement of the HMSA in the club, as investor, sponsors, supporters, and valued customers, and looked forward to co-operating fully together in various projects, including the “Hearts G10” meetings together with other supporters’ groups."

Given that there are restrictions relating to what can be publicly stated during a formal offer period, I feel that the agreed statement is as positive as we could have hoped for. There is, of course, some degree of trust involved in these discussions, but I found the input from both Roman Romanov and Iain Young to be very helpful, and I thank them for their time in talking to me.

The position of the Association committee is now clear, and I believe it concurs with the views of our members:

(i) Members who wish to preserve the HMSA and retain an emotional as well as financial stake in the Heart of Midlothian should hold on to their shares. It is clear that Roman Romanov is now aware of the sensitivities of the small shareholders, and would not interpret retention of our shares as a deliberately obstructive or 'anti-Romanov' move. 

(ii) The HMSA will continue to support the interests of Heart of Midlothian Football Club, and the stated ambitions of the Board, ie. to invest further to improve the playing staff and the infrastructure of the club and the stadium, and to seek further success in Scotland and in Europe.

I remain convinced that a small, independent shareholding in Hearts can only be healthy for the club in the new era that is upon us.  We will take stock of the situation as it prevails when the Offer period closes at the beginning of December, and we find out what the balance of shares will be, going forward.  I am very optimistic that the Shareholders' Association will continue to prosper, and remain an active and valuable resource for our members (and therefore for the Heart of Midlothian FC too) in the years to come.
 

Ray French.

Chairman, HMSA.

Update 02 Nov 2005:

Following a meeting of the Hearts G10 Group (four supporters' groups and representatives of the Board) on Tuesday 31st October 2005, the following statement was released to the media:

"Representatives of the four supporters groups met with Roman Romanov, David Southern, and Ian Young (Brodies) and Charlie Mann to seek clarification regarding recent events at Tynecastle.

The departures of George Burley, Phil Anderton and George Foulkes were discussed frankly and as openly as was permissible given confidentiality requirements. The Board felt that George Burley wasn't able to maintain the progress of the team, and re-iterated that Burley was not sacked. The Board maintained that there were valid reasons for the dismissal of Phil Anderton.

The club recognised that recent events made for poor PR and accepted the need to improve communications with supporters and restore the feel good factor. Roman Romanov re-emphasised that Vladimir Romanov was committed to the club for the long term, and would continue major investment in the stadium and the team.

The four supporters' groups recognise the contribution of George Burley and Phil Anderton to the recent progress of the club. In particular we would like to express our thanks and sincere gratitude to George Foulkes for his leadership and committment in securing the club's future.

In conclusion, the four supporters' groups are united in their view that the Board believed their recent actions were in the best interests of Heart of Midlothian FC. The four groups would ask all supporters to unite behind the team."

Following the announcement of an offer by Heart of Midlothian 2005 Limited & Vladimir Romanov to buy all shares in Heart of Midlothian plc not currently owned or controlled by the majority shareholder, the Committee of the Heart of Midlothian Shareholders Association has met to consider the implications of this offer, and the following statement has been agreed by those present at that meeting, and was presented to members at the October 27th dinner:

"We understand that legal constraints may prevent us from offering direct advice regarding the purchase or sale of shares in Heart of Midlothian FC plc. However, the following remains clear:

(i) All shareholders currently still have the right to both sell and buy shares in HMFC plc on the open market.

(ii) Any sale of shares to Mr.Romanov, including a partial sale of any member's shareholding, will progress the company towards the point at which shares could be compulsorily purchased by Mr.Romanov. If that threshold is reached, and if Mr.Romanov then exercises his right to purchase all remaining shares, the Shareholders' Association will not be able to continue, at least with it's present name, and in it's present form. 

(iii) As of today, we have no information from the board regarding details of the proposed 'Loyalty Club' mentioned in the Club's regulatory statement to the London Stock Exchange. 

The Committee would encourage all members of the Association to make their views (regarding the offer to buy shares) known to the committee as soon as possible, either at this meeting, or by phone, e-mail or letter."