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Watson considers Warriors share offer as ownership wrangle continues

Eric Watson has hinted at offering Warriors’ members shares in their club as a solution to an ownership row between him and Sir Owen Glenn.

The Warriors co-owner said yesterday he was open to the idea of selling shares to the more than 9000 Warriors Club members after confirming he was committed to buying out Sir Owen trust’s half share, which was bought for over $6 million in 2012.

“We have a lot of members and they are the people we owe the first duty to in many ways,” Mr Watson told the Sunday Star Times.

“Would they like to have a financial involvement in the club? Look, if that made sense, well, the Broncos are publicly listed. I’d have no problem with that at all if that made sense. Whatever is best for the Warriors.”

What wasn’t mentioned is the fact that Mr Watson is currently a defendant to civil proceedings filed against him by the Financial Markets Authority in relation to the failure of Hanover Finance and related companies.

In 2012 the FMA launched proceedings against former Hanover directors and Mr Watson as a promoter over alleged misleading or untrue statements made in offer documents.

The proceedings relate to new investments and reinvestments at Hanover Finance and sister companies Hanover Capital and United Finance totalling $35 million, a small slice of the $554 million of investor deposits frozen in July 2008. Mr Watson was never a director of those companies.

In February, it emerged in the Auckland High Court that the Hanover individuals had entered settlement talks with the FMA.

Mr Watson told the Sunday Star Times he was happy to get an independent valuation for the Warriors after Sir Owen accused him of trying to buy the stake back cheaply.

He has reportedly offered Sir Owen $1 million for his stake.

Sir Owen had purchased his shares from Mr Watson and Hanover co-founder Mark Hotchin for just over $6 million.

It is understood Messrs Watson and Hotchin paid very little when they took over the Warriors ownership in 2000 on the promise of injecting substantial funds.

According to former Warriors chief executive Trevor McKewen, the pair bought the club and its assets (excluding debt) for $1 while convincing the NRL to liquidate the players’ contracts so they could renegotiate them at a lower rate.

Mr McKewen, who is Fairfax Media’s head of sport, wrote yesterday that any prospectus issued for shares in the Warriors would make interesting reading.

“Watson likes to talk about how he’s never taken a cent from the Warriors and if a float goes ahead, he can put his money where his mouth is by opening up the books and showing us what happens with all the cash the club generates.”

Mr McKewen calculates that, even run poorly, the club should never lose money in any year.

“Even in a dud year, there is at least $12 million, and possibly as much as $15 million, coming in the door.”

Mr Watson and Sir Owen’s ownership battle came to a head last week over the sacking of coach Matthew Elliott.

Sir Owen called for an independent review of the club while emphasising he wants out because he didn’t have “any confidence or trust in the management of the company.”

He told Radio New Zealand his relationship with Mr Watson had "deteriorated to the point of confrontation" and claimed "Mr Watson wants total control ... dictatorship."

What do you think? Would you buy shares in the Warriors? Click here to vote in our subscriber-only business pulse poll.

Comments and questions
8

It seems that in this case two pieces of pastry don't make a pie. Perhaps Mr Leitch can provide some mince to act as a buffer.

Unfortunately this was always the way it was always going to end up for Sir Owen......I hope he puts up a good fight.

The Owen and Eric story. Each could donate 2.5% ie a 5% shareholding to a Charitable trust run by Sir Peter Leitch for underprivileged kids and let him make the calls accordingly: or open the books completely for the market to assess for itself what the Warriors are worth. Bit of work here before the opportunity would be ready for a SX listing I would have thought.

Nice idea. Wishful thinking.

Can you imagine being in business with someone that has such dubious credentials? No me.

Glenn probably thought he was getting a bargain. I dont think anyone would be surprised he got a big headache instead.

Regrettably for NZ in general these 'asset stripping' entrepreneurs promise so much value-added but when the facts emerge they are seen to be selfish, money and power-grabbing in their behaviour. If Sir Owen bought his stake for $ 6m and Eric W is now offering only 16 cents in the dollar, doesn't this say something about how poorly Eric Watson has navigated the ship? Whether it is soccer or NRL NZ OUGHT to be able to field a credible and strong (performance and financial) franchise so what's the missing link? I would place my trust completely in Mr Leitch to deliver best value for all Warriors stakeholders.

Buy shares in the Warriors? Do some research and see how Strathmore did as a Watson inspired listed company. You would get a better return by taking your money (in $5 or $10 notes) and burning them, at least if you had enough notes you could BBQ a sausage.

Eric and Owen could put some of their horseracing interests in the mix then combine with moa, and we would get the kiwi theme of league, racing and beer. Yeh, a full on slosh machine listed on the nzx. On a more serious note history tells me an nzx listing may have an unpleasant ending.

It would be just like Watson to try and flog over-valued shares to the Mt Smart faithful who can't afford them. No doubt his plan would hinge on buying them back down the track at a heck of a discount.

In the meantime Owen Glenn doesn't cover himself with glory either. As much as I don't like Watson, it seems like Glenn's being economical with the truth to suit his story too. Hardly befitting of a knight.