Bulls finances 'considerably worse than originally thought'

Sent personally by C S Caisley on behalf of shareholders of the Company holding more than 50% of the issued share capital in the Company

Peter

Further to our discussion this morning and our later discussion at 1.10 pm today, I attach copies of the letter and accompanying memorandum that were hand-delivered to the Company's office earlier today on behalf of the shareholders referred to in the memorandum. You have confirmed that the original was received at the Company's office. However, It seems that article 103 was deleted and replaced with a requirement under article 104 (A) to pass an ordinary resolution for the removal of a director before the expiration of his period of office.

Notwithstanding that shareholders of more than 50% of the issued share capital ("the majority shareholders"icon_wink.gif require you and Mr Bennett to be removed from office you have made it clear on behalf of yourself and Mr Bennett that you have no intention of standing down because you believe that the best interests of the Company will be served by you remaining in office on the ground that you are in negotiations with people who have indicated an interest in investing in the Company. You said that these "potential investors" fell into 2 camps, i.e. those who were prepared to buy the Club from an Administrator and those who may be prepared to invest in the Company to help the Company to resolve its financial difficulties and thus prevent an administration. From your recent media comments it is reasonable to assume that you have received no tangible interest from the latter.

I indicated to you that the majority shareholders wished to take immediate steps to prevent the Company entering into administration by presenting a viable business plan, securing investment to enable the Company to pay its debts and preventing the loss of the Club's star players. You said that if an Administrator had to be appointed then it was not something you wanted or are planning for but something which will have been unavoidable. I said that you had earlier told me that if you did not attract new money of a sum which you had in mind by the weekend the Company would be placed into administration by next Tuesday. I asked whether, if you raised £400,000 and not £500,000 (your published requirement) by Saturday of this week the Company would be placed into administration, and you replied that £400,000 would not be sufficient but £600,000 would cause you to reflect which I took to mean that if you were to raise less than £600,000 the Company's Directors would more than likely appoint an Administrator. I pointed out that according to my information, even if you were to raise £1m by the end of April the Company would still suffer substantial month on month losses going forward. You agreed and said there would have to be significant expenditure cuts.

It is clear under all the circumstances that you and Mr Bennett are continuing in office against the wishes of the majority shareholders; further, that the very recent short notice to all of the Company's shareholders, via the media, of the Company's need for £1m of new money has given all concerned very little time to react to the situation. Also, when you agreed to sell the Company's lease of the stadium to the RFL it is very strange that the RFL saw fit to immediately take back the majority of the consideration paid in order to receive repayment of its loan. Presumably this is because they were concerned at that time about the Company's financial standing. I have further noted the apparent discrepancy between your media comments regarding RBS calling in the overdraft and their version of events. Nonetheless the bank has already received repayment of a large slice of the overdraft over the past couple of months.

Peter, there are a good many reasons why the Company should not be placed into administration if at all possible, including the damage it would do to the reputation of the Club and the inevitable questions that would be raised as to the RFL's knowledge of the Company's financial status, and why the majority shareholders should be given the opportunity to provide a solution to the Company's present financial difficulties.

I still believe that you and Mr Bennett should accede to the wishes of the majority shareholders and I would ask you to give further thought to so doing. However, if you will not do so then under all the circumstances and on behalf of the majority shareholders I ask that the Company's Directors do forthwith give notice to all of the Company's shareholders to convene an extraordinary general meeting to pass an ordinary resolution under Article 104 (A) that you and Mr Bennett be immediately removed as Directors of the Company. Please confirm that you will act in accordance with this request.

If notwithstanding what I have said on behalf of the majority shareholders you decide to proceed to give notice of an intention to appoint an Administrator then:

1) I should be pleased if you would ensure that the majority shareholders receive a copy of the notice;
2) please note that it will be the intention of the majority shareholders to challenge the appointment on the basis that it would be a bad faith appointment given the circumstances outlined above;
3) the majority shareholders will hold the Directors personally responsible for any losses thereby caused.

Regards.

Chris Caisley