ASHCROFT TO RAISE INTEREST IN WATFORD FC

Watford Leisure, the company that owns the Championship club, has announced that it would launch a GBP 6.2 million rights issue, with Fordwat, a company controlled by deputy chairman of the Conservative Party Michael Ashcroft, expected underwriting a significant part of the issue.

Ashcroft could then end up controlling up to 42 percent of the issues equity up from Fordwat’s current holding of around 8 percent. The purpose of the rights issue is to wipe out the club’s bank overdraft and to increase working capital.

“This is an important step to achieve our goals,”said Mark Ashton, chief executive of Watford Football Club.

“Watford is a good business that is making steady and sure progress,” Lord Ashcroft said in a statement released by the club.

Ashcroft will not be appointed to the club’s board. Because of the size of his stake he will be considered a shadow director by the Football League and be required to submit to its fit-and-proper-persons test. However, Ashcroft already has an associate on the board, non-executive director Andrew Wilson, who is understood to have acted as a financial adviser to him.

The rights issue will take Ashford's holding past the 29.9 percent threshold, which would normally require a takeover bid for the club under Takeover Panel rules, but a successful application has already been made to the Panel requesting that the mandatory bid obligation be waived. Three independent shareholders, who together owned the overwhelming majority of shares in the club, have decided that the injection of new funds - of which they are likely to be the beneficiaries due to the outstanding monies they are owed - would be a benefit to outweigh the dilution of their stakes.