A High Court judge has ruled that a number of Owen Oyston’s properties, as well as shares in his company that owns the majority of shares in Blackpool Football Club, should be sold.
Following today’s hearing at the Business and Property Court in London, Justice Marcus Smith made an order, which comes into effect on July 5, that seven unidentified properties should be put up for sale to pay the £25m he still owes Valeri Belokon.
It is likely that will be by auction, rather than private treaty as Oyston’s barrister Matthew Collings QC argued for.
Oyston’s shareholding in Blackpool Football Club (Properties) Limited (formerly Segesta Ltd) - which owns the majority of shares in Blackpool FC - and Closelink Ltd, which owns Whyndyke Farm land, the site of a proposed 1,400 home garden village, must also be sold.
However, the court wants to scrutinise those share sales and will have to give its approval.
Justice Marcus Smith said as regards a Segesta deal that was because Belokon “might have an interest in the Segesta shares and I am concerned about a certain amount of self-dealing to buy the very property being sold”.
During the hearing, Belokon’s barrister Fraser Campbell said he had no instructions either way whether Belokon, or anyone associated with him, intended to show an interest in the Blackpool FC shares.
He added: “As it happens he has been urged for many years by the supporters’ trust.”
Mr Campbell added that the court must be satisfied that the proper sale process had been gone through and the shares had been properly exposed to the market.
Oyston’s barrister had argued that the Segesta shares should not be sold at this time as the company owned the grounds around his home, Quernmore Park Hall, and it would be a breach of his human rights.
The judge rejected that argument.
Oyston also argued that an order to sell Closelink Ltd shares should be adjourned for six weeks because a proposed deal was at a sensitive stage.
In his ruling, the judge said: “Looking at the value of the various properties it’s appropriate to make an order for sale now.
“Those properties which have a calculable sale price are those in the North West. At least one can make some form of estimate of what they might achieve if sold.
“On the basis of those figures, even if all of these properties were sold, they would come nowhere near realising the £24-plus million which remains due from Mr Oyston.
“I am not satisfied that the shortfall will be met by either the sale of Segesta or the sale of other shares, or by the sale of both.”
He said it was difficult to value shares where they were private companies.
“It’s particularly difficult here as Segesta has complex relationships,” Justice Marcus Smith added.
“It’s a diverse portfolio of assets. It also has a diverse range of obligations, not least to the football club, all of which have to be assessed by the eventual buyer of the shares and it’s hopeless to attach any form of value to the shares.
“The same is true of shares in Closelink which owns property which is subject of a major potential development.
“I have been shown figures which suggest that the value of this development could be considerable.
“But to attribute a specific value, even by way of a minimum, to Closelink shares requires one to reach a view on all sorts of matters regarding the development of a major area of property.”
That included, for example, build out costs and of complying with the Section 106 planning agreement.
Oyston’s barrister wanted the Closelink shares sold first – before the seven properties – and only those seven sold if there was a shortfall.
But the judge said that was an uncertain route.
“Mr Oyston has expressed confidence that the sale can be achieved in fairly short order and that I should adjourn the order for six weeks to allow the transaction to take place,” Justice Marcus Smith said.
“I regret to say that it seems to me that this is a wantonly over-optimistic approach.
“I have seen very little by way of evidence to suggest that the sale is capable of being concluded within six weeks.
“So I reject the contention that the sale of Whyndyke property is very advanced. I accept there is something ongoing but I am not prepared to accede to the suggestion that it has sufficient momentum that it can be achieved within six weeks.”
The judge also rejected an argument that the development itself would be prejudiced if Oyston’s 50 per cent holding in Closelink was sold now.
“Property developers are fairly hard-nosed individuals and will look at the value of the transaction rather than the sale of shares in the holding company,” he said.
Oyston’s barrister argued that Belokon’s solicitors had only put on a reserve of half the estimated value of each property due to be auctioned.
He did not want a “fire sale” auction and preferred properties to be sold by private treaty, but suggested any auction reserve should be minus 10 per cent.
During the hearing Mr Campbell, for Belokon, offered a compromise to make the reserve 75 per cent of Oyston’s own expert’s valuation - which the judge accepted.
During the hearing Mr Campbell argued that the court should not grant any indulgence to Oyston who had had months to sell assets by private treaty and had not sold any.
Mr Campbell said: “Mr Oyston’s evidence is that he expects to be in funds in about a week’s time (June 29).
“If he is told he has six weeks he will go back and chip away at the terms and the price because since last November he has been saying he is bringing a deal off and at every single point those deals have fallen through.
“It’s only the pressure of this hearing that in the last two days he is close to completing two deals.
“If that’s true then he should be held to it and if he is held to it then there’s no prejudice to him.”
The judge also awarded costs for today’s hearing and threatened Oyston with a jail sentence should he not pay an interim £60,000 of the total £134,000 within 28 days.
The court heard that Oyston has failed to meet deadlines for paying two previous costs orders: £50,000 in April and £40,000 by the beginning of June.
The judge this time attached a penal notice to his £60,000 pay-up order. If Oyston fails to pay on time he will be in contempt of court and liable to imprisonment, fine or having his assets seized.
The judge said Oyston had brought the high costs on himself by his filing of late evidence, such as the day before this hearing.
“It seems to me Mr Oyston must bear the consequences,” he said.
Oyston unsuccessfully tried to keep The Gazette and fans out of his latest court room wrangle with Latvian Belokon because of sensitive monetary matters.
His legal team wanted today’s hearing to meet the £25 million he owes to the club’s former director held behind closed doors.
That would have excluded press and fans who had attended. But the judge ruled that the hearing should be open to the public.
He said all sides should not refer to specific amounts of money out loud, but refer to documents which contained the figures.
Justice Marcus Smith also ordered that the court file – which is open for inspection – should be redacted to exclude sensitive figures.
However, at one point the judge himself mentioned a figure expected by Oyston to be realised by June 29 which would more than meet the debt owed but later ordered it to be redacted from the transcript.
In the High Court last November, the Oystons were ordered to buy out Belokon for £31.27m after it was found they had illegitimately stripped the club of cash following promotion to the Premier League in 2010.
Justice Marcus Smith found then that the Oystons had unfairly prejudiced the Latvian, who accused them of “improperly” extracting tens of millions of pounds from the club.
The judge found in his favour and the club was put up for sale four days later.