A planned £13 million pound cash injection is set to save Leicester Tigers from potentially going into administration.
The club revealed this week that directors Tom Scott and Peter Tom have committed to an investment which “could raise up to £13m for the club”, a move which was needed as Tigers admit that recent events have seen their financial “situation worsen significantly”.
Scott is set to invest £10 million, while Tom is set to invest a further £3 million, both by way of a share buyout. Ordinary shareholders will vote on the share subscription on March 3rd.
Despite lifting the Gallagher Premiership trophy last season and receiving a £1 million windfall payment after the RFU bought Steve Borthwick and Kevin Sinfield out of their contracts, the club finds itself perilously close to calling in administrators.
The stark reality of their financial situation was detailed in an address to shareholders by CEO Andrea Pinchen. The demise of Wasps and Worcester is one of the main sources of grief for the midland’s giant’s coffers.
“As a consequence of both of those clubs being expelled from the Premiership, Leicester Tigers lost two important home matches in the current season and the associated match day revenues. This loss of revenue has contributed to a significant deterioration in the Company’s financial position since the publication of its 2022 annual report and a working capital shortfall, together with a breach of overdraft limits in place with the Company’s bankers, is expected in the first quarter of 2023.”
If it were not for the £13 million investment, the club admit that they “would have to find urgent alternative funding. There is no guarantee that such alternative funding will be available or on terms deemed to be acceptable either to the Directors or to the Company’s creditors. Given the Company’s current and anticipated working capital requirements, the Directors believe that should the Resolutions not be passed they may have no choice but to appoint administrators.”
In the case of Scott, the deal would likely see Scott become a majority shareholder in Leicester Tigers with over 71 per cent of ordinary shares. Despite Tigers not being publically listed, a waiver is needed so that Scott is not obliged to make an offer for all of the outstanding shares.
“Although the Ordinary Shares are not publicly traded or listed, as a public limited company the Takeover Code applies to the Company. As a result, without a waiver from the Takeover Panel and the approval of the Independent Shareholders, the Initial Subscription would give rise to a requirement for Tom Scott to make a mandatory offer for all of the outstanding shares in the Company. The Takeover Panel has agreed with the Company to grant the Rule 9 Waiver, subject to the passing of the Waiver Resolution at the General Meeting by the Independent Shareholders on a poll.”
It’s a worrying time for the club and English rugby at large. If the biggest rugby club in the land is hitting the wall, what does that say about the state of the game more broadly?