Marian Mihail answers questions about the changes at ESI

Following the announcement on the Charlton website that ‘the club has received notice of a change in ownership at East Street Investments’, we decided to concentrate this week on questions about the nature and progress of the ‘change in ownership of ESI’ to which the statement refers. Marian Mihail was not in a position to impart any information about the identity of the third party.

In addition we publish his answer to a question about the Range Rovers which was missed last week.

Q.       Can you tell us any more about the identity of the third party?

I'm afraid I'm not in a position to do that. I wouldn't be allowed to say anything anyway but I'm in the same position as you, in that I don't know the identity of the third party.

Q.      What was/is the process for the sale of ESI which is being undertaken?

Panorama Magic (which holds 65% of the shares in ESI) has received an offer from a third party to purchase the entirety of its shareholding, and has required Mr Southall (the holder of the remaining 35% of ESI shares) to accept the same offer in respect of his shares.

This comes from Article 15 in the ESI agreement which also requires Panorama Magic to give notice of its intention to sell to Mr. Southall. This notice has been given. The sale cannot now complete, in accordance with that article, until at least ten business days have passed since notice was given. The notice was given on Friday, May 22nd 2020, meaning that the earliest date on which the sale could complete is Monday, June 8th 2020, though it could also be later than this.

Q.      Does this mean that Matthew Southall has agreed to the sale, or is selling his shares?

Mr Southall’s consent to the process I have outlined above is not required. As long as the price being paid by the third party purchaser to Mr Southall for his shares is not less than the price being paid to Panorama Magic for its shares, Mr Southall is obliged to sell his shareholding in ESI. In that sense, he is selling his shares, although the process is not taking place at his instigation.

Q:      Does the sale involve the transfer of liabilities to Roland Duchâtelet in respect of the obligation to purchase the freeholds of The Valley and Sparrows Lane?

I do not have detailed information about the specifics of the sale, as the directors are not involved in it.

The liabilities of ESI will, however, remain the same following the transfer, as what is being transferred is the ownership over ESI, not over Charlton Athletic, subject to any agreement or renegotiation with Roland Duchâtelet. This means that the option agreed in the sale agreement between ESI and Roland Duchâtelet for the purchase of the freeholds in or around 2024 will remain in force after the sale of ESI has completed.

Q:     Are there any other liabilities to Roland Duchâtelet which are yet to be discharged?

Yes, but these are contingent on future events happening. Unfortunately, these are confidential and part of the original SPA between ESI and Roland Duchâtelet’s companies.

Q:     Are all five Range Rovers back in possession of the club? If not why not?

Three out of the five Range Rovers are now under the club’s control. 

The remaining two Range Rovers which have not been recovered are those used at some point by Mr. Southall and which he has not returned voluntarily despite repeated requests. 

There are legal proceedings taking place, so I can't comment anymore on this at this stage.