Deans and McGrail set to pave way for Romanov's control

MIKE AITKEN

VLADIMIR Romanov's bid to increase his stake in Hearts at a cost of around £26 million in order to take the club back into private ownership is set to win the vital support of influential shareholders Leslie Deans and Robert McGrail.

After Romanov confirmed yesterday he's bought the shares which previously belonged to Scottish Media Group for £900,000, and the Bank of Scotland - this took his ownership of the club to 55.5 per cent - The Scotsman has learned the Lithuanian is also poised to acquire the near 19 per cent stake held by Deans and McGrail.

While neither Edinburgh businessman was ready to comment specifically yesterday on the offer, which values shares at 35p and the club itself at £4.42m, it is understood that both Deans and McGrail share broadly the same position. Namely, that they support Romanov's ambition to achieve the level of control at Tynecastle which will enable him to delist from the Stock Exchange and promote Hearts as a force in European football.

Once Romanov acquires the shares which belong to Deans and McGrail he'll be within touching distance of the significant 75 per cent ownership mark which would enable him to implement policies without having to worry about being blocked at an egm by 25.1 per cent of the shareholders.

According to the offer, once Romanov goes through the 75 per cent mark, the club will be re-registered as a private limited company and trading in shares on the Stock Exchange will stop.

Not content with achieving that significant level of control, Romanov wants to own at least 90 per cent of the shares in the club and will look to many of the small shareholders in the club, whose investment is more emotional than financial, to back his vision for the future. Aware that many of these smaller shareholders are more likely to pin their certificates on a wall at home than keep them with other shares in a business portfolio, Romanov has come up with a scheme whereby shareholders who accept the offer will retain many of their former privileges through membership of a loyalty club. Ticket benefits, for example, will continue.

By way of persuading these shareholders to sell, the chairman, George Foulkes, and director Stewart Fraser have announced their intention to sell their personal holdings. Foulkes said: "I believe the offer to be in the best interests of Hearts, its shareholders, staff and supporters and urge shareholders to accept it."

Deans, the former club chairman who has already sold some of his shares to Romanov, commented last night it would only be prudent to study the detail of the offer before making a public comment on whether or not he intended to sell. However, there's no suggestion he opposes the offer.

"What I would say is that my position today is the same as it was before," said the Edinburgh lawyer. "Since I first met Vladimir Romanov I've been convinced he is the right man to take Hearts forward. If there were some who remained to be convinced about how serious he was about his plans for the club, then I think this latest development will give even the doubters pause for thought. There's no doubt Mr Romanov is preparing to tackle an exciting future for the club both on and off the pitch."

As far as the timetable for the offer is concerned, shareholders will receive details within the next 28 days and then have a further 21 days to consider. Hearts expect the entire process to be concluded before the end of the year.

While the majority shareholder, who had already bought Chris Robinson's stake, will spend £4.42m if he purchases every share in the club, the reality of his investment in Hearts is much greater. As of 1 January, Hearts' debt stood at £19.6m. Moreover, SMG was owed £4.5m by Hearts in loan stock options. This sum has been negotiated down to around £1.8m.

Although SMG lost out on its initial investment, the company will doubtless be relieved to recoup something back. One would also hazard a guess the compromise over the loan stock repayment was the trigger which led to all of yesterday's other remarkable developments.

In a statement, SMG confirmed it had "entered into a conditional agreement with UBIG (Ukio Banko Investicine Grupe) for the sale of SMG's entire holding of convertible loan stock in Hearts to UBIG for a consideration of just over £1.8m together with accrued interest thereon. Completion of the sale and purchase of the loan stock is conditional upon, among other things, UBIG sending an offer document to shareholders of Hearts offering to acquire the issued shares of Hearts which are not already owned by UBIG or any party acting in concert with it. As a result of these developments, and in view of the fact that SMG will no longer have any financial interests in Hearts, SMG's representative on the Hearts board of directors, David Archer, has resigned from this position."

The departure of SMG from the Tynecastle boardroom is unlikely to be greeted by much wailing and gnashing of teeth in Gorgie, bearing in mind its support for Robinson's doomsday plan to move lock, stock and barrel to Murrayfield.

One of the lighter moments during the press conference came when Alan Saunby, a reporter from STV [a company owned by SMG], was grilling Romanov on how he would raise investment to improve Hearts.

When the line of questioning became more robust, Foulkes intervened and reminded Saunby how, when SMG were involved, Hearts struggled in the league and faced the prospect of selling off Tynecastle to meet growing debts. Under Romanov, on the other hand, Hearts were top of the SPL and committed to re-developing their home.

It was an interjection which raised a few smiles and is sure to find favour with many Hearts' shareholders when they receive the offer document and decide which course of action to follow in the days ahead.

Taken from the Scotsman