Battle for the Blades: Sheffield United’s Shareholder Scrap
Sheffield United’s shareholders Kevin McCabe and Prince Abdullah bin Mossad Bin Abdulaziz al-Saud (a Saudi royal), have recently been in the High Court in relation to a dispute concerning control of the side.
The Case in question has served to highlight the importance of getting legal advice in order to correctly purchase shares from fellow shareholders under an Option.
The Notices to Purchase
Mr McCabe’s family business (Sheffield United Ltd) offered to buy out Price Abdullah for £5m in the belief that Prince Abdullah’s company (UTB) wouldn’t be able to purchase the Club’s properties in a Counter Notice. The Notice was serviced under the original Investment and Share Agreement made in 2013, however it was made incorrectly.
The offer still opened the window though, for Prince Abdullah to buy Mr McCabe’s shares for a further £5m by way of a Counter Notice (as per the original Agreement and Prince Abdullah served this Notice in January 2018).
Transfer of Shares
At the same time as the Notices, Prince Abdullah transferred 80% of his half of the Club to a sister company, UTB 2018. This was to avoid triggering a Property Call Option to buy five properties from the Club because the Property Call Option was triggered at the point he reached 75% ownership of Sheffield United’s shares.
In response Sheffield United Ltd refused to sell its shares, arguing that this move invalidated the original deal. This initiated the Court battle over who was entitled to purchase the shares and become the ultimate sole shareholder of the Club.
The Case had many twists and turns; including accusations of illegitimate funds being used, as well as the use of bribes by Prince Abdullah.
However the Court dismissed these claims and ruled that under the terms of the Investment and Share Agreement, Prince Abdullah had served a legitimate Notice to be entitled to purchase the shares. He couldn’t however avoid the purchase of the properties from the Club by transferring his shareholding to a sister company.
Mr McCabe has therefore been ordered to sell his shares to Prince Abdullah under the terms of the original 2013 Agreement.
Mr McCabe subsequently requested an Appeal from the original Judge, but this was refused. However, Mr McCabe requested that the Court of Appeal Judge give him permission to Appeal the decision on Monday 4 November, and a decision is expected on that in a few months.
This case emphasises how important it is to take legal advice when drafting or acting on such Options.