British Country Inns expects shareholder sell-off

Chairman Martin Sherwood told the PMA​’s sister tile M&C Report​ that planned restrictions on share trading are to stop a “predator” acquiring shares cheaply.

Sherwood has written to shareholders BCI, which operates 19 pubs across four Enterprise Investment Scheme (EIS) companies, outlining plans to place the shares on Asset Match, which acts as a marketplace for buying and selling shares in UK unlisted companies.

Concerns had been raised by one shareholder about new rules on share trading under new articles of association that accompany the changes. Sherwood refuted claims that they would let directors block a takeover bid - he said this move would require approval from the Takeover Panel.

He said: “There are quite a number of the shareholders who are getting restless and therefore would like to sell their shares and are probably not too concerned about how much they are going to get for them.

“The articles have been amended entirely at the request of Asset Match and in accordance with their exact requirements. What they are saying is that the new proposed articles are in the best interests of the shareholders and the board of the company in being able to prevent a predator acquiring the shares cheaply - basically being able to control the share trading process for the benefit of the shareholders.

“Everything we do is to try and optimise return for the shareholders.”

Discounts​

Asked if he expects the shares to be sold cheaply, Sherwood said: “That is the experience that Asset Match has had to date with the companies on its platform. The share prices at which the shares are traded tend be lower than the net asset value of the businesses.”

He said that “quite a large number of shareholders” would be interested in selling shares, but “the majority” would not want to sell at a “very deep discount”.

Sherwood said the “most likely outcome” for the BCI is that pubs are sold off individually. A number of BCI pubs have been placed on the market in recent months and years.

But he added: “We are not interested in selling at ‘firesale’ prices. We don’t have to. We are running these pubs efficiently and profitably, so we can hang on. Our strategy at the moment is to accept offers for pubs if they are reasonable and decent.”

Sherwood said he did not know how long the disposal process would take.

The articles of association state that there would be a charge of up to £40 for “the registration of any instrument or transfer or other document relating to or affecting the title to any share”. Reacting to criticism of the price, Sherwood stressed that £40 is the maximum figure. “We think it’s quite high so we will probably charge less than that,” he said.