Interesting article in the Sunday Times Business Section yesterday on SJH and his crumbling business empire, titled "Newcastle's football saviour faces defeat in extra time!"

They report that Cameron Hall Developments have now missed two deadlines for filing it’s accounts, and that 12 days ago it asked for yet more time to comply. Companies House have said they are in breach of the Companies Act and will be prosecuted if they don’t comply. The last accounts filed with Companies House in November 1999 show debts of around £40m.

The article reiterates speculation that at least part of CHD’s shareholding in NUFC has been pledged to Banks as collateral for loans, but that the current market value of their shareholding is less than CHD’s total debts.

They go on:

“The Hall family, through a variety of ownerships has owned about 48% of NUFC plc, but in the past few weeks the family has been reducing CHD’s stake, and buying it back in a personal capacity. On 21 March they sold 12.12m shares – equivalent to 8% of the Club – at 33p. These were acquired by SJH.

Four days later CHD sold a further 3% stake to Copia, of which SJH’s son Douglas is a Director. CHD now owns only 4.2% of the Club in its own right.

SJH is still widely respected in the NE, as he has done more to promote the region in the past 20 years than anyone else. But the 69 yr-old must be saddened by the way his business career is drawing to a close. Local businessmen say SJH has temporarily moved back to the NE from Marbella to sort out his family company.

It would be wrong to say the Hall family is running out of money, but it is clear that a large dent has been made in it’s fortune. Also, one of its main sources of income – dividends from its NUFC shares – has been cut. Last year, even though the Club was under financial pressure, the Group raised its dividend by 18%. This raised eyebrows, and at the half-year stage this year they reduced the payout to 0.8p per share.

Local businessmen say the rot set in 5 years ago when Halls’s son, Douglas, and fellow NUFC Director, Freddie Shepherd, brought disgrace on the Club after being caught by a Sunday newspaper in a Spanish brothel. The Clubs’ credibility was damaged and it’s share price tumbled.

For a man with such good intentions, SJH, would surely have wanted a cleaner exit. But the uncertainty surrounding the ownership of shares in NUFC will ensure that the speculation continues.

-- Anonymous, May 06, 2002

Answers

Why would a company be late, or want to be late, filing it's accounts? I could imagine a small one-man business perhaps being overwhelmed by the task and the proprietor throwing up his arms in horror and not bothering. I don't think CHD is an operation on that scale - although perhaps it is headed that way!

What are CHD's problems? What happened to the "D" in CHD? Have they no ongoing developments at this time? There was supposed to be a leisure complex or something in Portugal I believe. Has there been a failed project which has dragged the company down? I believe the NUFC shares were owned by the CHD pension fund so presumably the fall in their value would not contribute to a weakening of the CHD Balance Sheet (if they had bothered to prepare one!)

Thanks for the article Clarky. It seems frustratingly short on detail as to what is actually happening and raises more questions than it answers. Presumably, a prosecution for late filing of accounts might bring matters to a head.

-- Anonymous, May 06, 2002

I haven't got the article to hand, but it finished with a very pointed reference to Dougie being a dick, something like you can't always pick who will take over when what you are running is in essence a family business, and that Doug wasn't over endowed with the grey matter. But then we all know that.

-- Anonymous, May 06, 2002

Jonno - CHD's failure to submit their accounts will have nothing to do with the physical taks of preparing them: it will everything to do with the state of their finances. The failure of a company to submit it's accounts invariably indicates the finances are in a mess. Given that CHD has failed to submit any annual accounts for two years, you can draw your own conclusion - especially as they reported £40m in debts in the last accounts actually submitted.

It seems probable that CHD is essentially insolvent, but trying everything possible to refinance/restructure their Balance Sheet to avoid needing to formally indicate a position of insolvency.

The Times article is suggesting they are selling assets - eg. NUFC shares - to avoid their creditors assuming them, post-submission of the accounts. The fact they have sold the Toon shares at a premium to the market price will presumably avoid any ultimate allegations of asset-stripping by the current CHD owners.

Regarding CHD's shareholding, it was spilt into several chunks, all under what is classed as the "beneficial ownership" of CHD - which means that technically CHD was in a position to direct, or control, the voting rights. The CHD Pension Fund did indeed hold a large block.

I believe I read somewhere that it was the proposed development in Portgual (theme park, hotel, etc?) that effectively brought CHD to its knees financially. They may now be trying to extricate themselves from this project, and realise some tangible assets from it, before submitting their accounts.

-- Anonymous, May 06, 2002

Out of interest, the following is the present breakdown of major shareholders of NUFC plc. Those held under "dup A" (dup=duplicate) and "dup B" are deemed to be under the same 'beneficial ownership':

Shepherd Offshore 18.02%(dup A)
W F Shepherd 18.02%(dup A)

Wynyard (Guernsey) Ltd 16.88%(dup B)
CHD 7.23%(dup B)
D S Hall 39.46%(dup B)

NTL (Premier TV Ltd) 9.84%
Sir John Hall 8.34%
CHD Pension Scheme 7.01%
Legal & General 4.02%
L Hatton 3.55%
Other Dirs 0.05%

-- Anonymous, May 06, 2002

Perhaps I'm being really ignorant here but someone please tell me who L. Hatton is? (Cheers for the article Clarky)

-- Anonymous, May 06, 2002

An interesting point Clarky that non publication is avoiding the public declaration of their plight. However, I should have thought that late filing of accounts would raise even more eyebrows with everyone assuming the worst, so quite honestly, I really can't see why any company would so strenuously avoid it's legal responsilibities this way.

I had more or less assumed that it wasn't a reluctance to tip all the old receipts out of the shoe box and get the calculator out, that was delaying the issue!

-- Anonymous, May 06, 2002

Jonno - please understand, this is not normal or accepted behaviour we're talking about here. These are the actions of desperate men; people who's business conduct is already very well known. I better not say any more - just in case these hallowed halls have ears.

-- Anonymous, May 06, 2002

hallowed halls???

Not by you Mr C ;-)

-- Anonymous, May 07, 2002

I always thought that Christmas Carol was an incitement to violence

"Deck the Halls...."

-- Anonymous, May 07, 2002

Well I for one would love to see Johnny Boy and his idiot son reduced to signing on at Byker dole. After years of milking NUFCplc in order to keep his own company afloat with undeserved share dividends and overpriced contracts it looks like the magic cow has dried up. Since making a fortune by floating our club on the stock exchange the Halls have clung on like leeches, DH given enough shares to make sure that the juicy contracts go to CHD and that the dividends get paid out regardless of performance.

If we can finally get shot of these parasitic worms then the club might at long last be able to move on financially.

-- Anonymous, May 07, 2002