Hedge fund plots Newcastle United swoop
By Mark Kleinman, The Sunday Times, June 18, 2006
AMERICAN hedge fund Polygon is working on secret plans to snap up Sir John Hall’s shareholding in Newcastle United, the quoted Premiership football club.
Polygon, best-known for the aggressive positions it has taken during corporate restructurings at British Energy and Monsoon, the fashion retailer, has been working with UBS, the investment bank, for several months on a buyout proposal.
This could see it take control of the listed Newcastle United plc, parent of the famous northeast club.
It was not clear this weekend whether Polygon has already made an approach to Sir John.
Through a Guernsey-based company called Wynyard he controls 28.5% of Newcastle United.
Douglas, Sir John’s son, is connected to further interests that account for about another 13% of the shares.
Shepherd Offshore, the company connected to the Newcastle United chairman, Freddy Shepherd, owns another 26.7% of the club.
Talks between Sir John and another suitor broke down last November, although it has been clear for some time that the property developer would be open to selling his shareholding.
Sir John took control of Newcastle United for an estimated £3m in 1991 after a bitter battle with the former owner, Gordon McKeag, but stepped down as chairman in 1997.
Polygon’s interest in Newcastle reflects growing interest in the football industry from hedge funds.
Och-Ziff Capital Management, Perry Capital and Citadel were key investors in Malcolm Glazer’s Manchester United takeover last year.
The Glazers are examining plans for an autumn refinancing of their investment that will include taking out the more expensive payment-in-kind debt and replacing it with a cheaper form of borrowing.
Nufcmismanagement view:
Is this the kind of ownership that Sir John dreamed of over a decade ago?
Or, as more likely, is this the result of Sir John allowing his son to take over the family business?
We all know what a mess Douglas has made of a previously successful business, St James' has virtually kept the family business afloat for a few years now.
Where this leaves the club is anybody's guess, time will tell.