Proposed Issue and Notice of EGM

    RNS Number : 7024Z
  Sheffield United PLC
  23 July 2008
   


    For immediate release: 23rd July 2008

    Sheffield United plc
    ("Sheffield United" or the "Company")

    PROPOSED ISSUE OF UP TO £14,285,000 OF CONVERTIBLE LOAN NOTES
    -NOTICE OF EGM-

    Sheffield United (AIM :SUT) the diversified football business, announces today that it proposes to issue up to £14.285 million of
Convertible Loan Notes, conditional upon shareholder approval.  
      
    It is intended that approximately £10.58 million of the Convertible Loan Notes Issue will be funded by the rolling over of the £10.58
million existing loan and unpaid accrued interest owing to SDG Caledonia Holdings Limited (a company indirectly controlled by Kevin McCabe's
immediate family and related trusts) which currently falls due for payment on or by the 31st August 2008.  

    It is intended that the remainder of the funds received from the Convertible Loan Notes Issue will be used to obtain planning permission
for the redevelopment of the Fraser's Property KOP stand at Bramall Lane, to underpin investment in the first team and for working capital
purposes.  
    The issue of the Convertible Loan Notes is conditional on the passing of the resolutions, which are to be proposed at an EGM. It is
proposed to issue approximately £10.58 million of the Convertible Loan Notes to SDG Caledonia Holdings Limited, (a company indirectly
controlled by Kevin McCabe's immediate family and related trusts), £0.5 million of the Convertible Loan Notes to Craftglen Limited, (a
company controlled by John Burnley) and £0.5 million to Michael Dudley. £150,000 of the Convertible Loan Notes are proposed to be issued to
Foundation Plant and Equipment Limited (a company controlled by David Green who is a director of The Sheffield United Football Club Limited)
and £1.05 million of the Convertible Loan Notes are proposed to be issued to other individual investors which include Chris Steer who is
also a director of The Sheffield United Football Club Limited. The balance of the Convertible Loan Notes are available to be issued at the
Company's discretion in the event that it intends to capitalise the interest on the Convertible Loan Notes.  
    SDG Caledonia Holdings Limited, Craftglen Limited, Foundation Plant and Equipment Limited, Michael Dudley and Chris Steer are related
parties for the purposes of the AIM Rules and the proposed issue of Convertible Loan Notes by the Company to SDG Caledonia Holdings Limited,
Craftglen Limited, Foundation Plant and Equipment Limited, Michael Dudley and Chris Steer is therefore a related party transaction under the
AIM Rules.  With the exception of Kevin McCabe, John Burnley and Michael Dudley, the directors of the Company consider, having consulted
with KBC Peel Hunt Ltd, that the terms of the issue of Convertible Loan Notes are fair and reasonable insofar as shareholders of the Company
are concerned.
    A circular pertaining to the above, the details of which are summarised below, is being sent to shareholders together with a notice of
the EGM to approve the relevant resolutions, which is to be held at 11.00 a.m. on Monday 18th August 2008.  
    Copies of the circular will be available to the public free of charge from the registered office of the Company at Bramall Lane,
Sheffield S2 4SU, during normal office hours on any weekday (Saturdays, Sundays and public holidays excepted), for one month after the date
of this announcement and shall also be available on the Company's website at www.sufc.premiumtv.co.uk.
    Commenting on the Convertible Loan Notes Issue, Kevin McCabe, Chairman of Sheffield United said: "this Convertible Loan Notes Issue
allows us to restructure part of the Company's debt whilst investing further in the budget for the first team. It will also allow us to
prepare the proposed development of the KOP stand to a stage where we can commence construction subject to our promotion to the
Premiership."  
     Enquiries: 

 Sheffield United PLC                                 [phone]
 Jason Rockett    
 Simon Capper

 KBC Peel Hunt (Nominated adviser and broker)         [phone]
 David Davies 
 Oliver Stratton

 Tavistock Communications                             [phone]
 Jeremy Carey    


      Extracts of the letter from the Independent Directors as contained in the circular to shareholders, which is expected to be posted to
shareholders today:

    1.    Introduction
    The Company has today announced proposals to issue up to £14,285,000 of Convertible Loan Notes. The funds received from the issue of the
Convertible Loan Notes will enable the Company to repay the principal together with the accrued unpaid interest owing to SDG Caledonia (a
company indirectly controlled by Kevin McCabe's immediate family and related trusts) under the SDG Loan Agreement and the balance will be
used to develop the business of the Group and for ongoing working capital requirements. 
    The Company intends to issue up to £14,285,000 of Convertible Loan Notes to the Investors who comprise of SDG Caledonia, Craftglen (a
company controlled by John Burnley) and Foundation Plant and Equipment (a company controlled by David Green), together with Cesidio Di
Ciacca, Didier Tandy, Stephen McBride, Chris Steer and Michael Dudley.
    Due to the size of the issue of the Convertible Loan Notes relative to the Company's existing authority to allot securities otherwise
than on a pre-emptive basis, the issue of the Convertible Loan Notes is conditional upon the passing of the Resolutions by the Shareholders
at an Extraordinary General Meeting.
    The purpose of the Circular is to provide you with information about the Convertible Loan Notes Issue and to explain the background to
the Convertible Loan Notes Issue, to set out the reasons why the Directors believe the Convertible Loan Notes Issue is in the best interests
of the Company and its Shareholders as a whole and to seek your approval to the Resolutions to be proposed at the EGM. Notice of the EGM
which is to be held at 11.00 am on 18 August 2008, at the Platinum Suite, Bramall Lane, Sheffield S2 4SU, at which the Resolutions will be
proposed, is set out at the end of the Circular. 
    2.    Reasons for the Convertible Loan Notes Issue 
    The Club was relegated from the Premiership at the end of the 2006/7 season which led to a reduction in the income the Club received
from, amongst other things, television revenues. In September 2007, the Company received a loan of £10 million from SDG Caledonia which was
intended to enable the Club to fund player purchases, maintain players' wages to a similar level as they were when the Club was in the
Premiership, to support certain potential capital projects both at Bramall Lane and at the Group's other locations in Sheffield and also for
ongoing working capital purposes. The terms of the SDG Loan Agreement provide that the principal together with the accrued unpaid interest
is to be repaid in full on or by 31 August 2008. Despite the additional investment, however, the Club failed to achieve promotion at the end
of the 2007/8 season.
    The Club receives payments from the Premier League for two seasons post*relegation, the last season being the 2008/9 season. The
Directors believe that the receipt of these payments from the Premier League during this period offers the Club its best opportunity to be
promoted back to the Premiership. The Board has therefore continued to maintain the level of wages for the playing squad above the level of
an average Championship club.
    The Group has also been constructing a 158-bed hotel which is due to be completed in October 2008 and open for business in November
2008. The total cost of this hotel project is approximately £18 million, which has been funded partially by a standalone £13.5 million
facility obtained from the Bank of Scotland and partially by the Group. The Group's contribution to the funding of this hotel project has
been by way of the Company making a cash subscription for shares in Sheffield United (Hotel) Limited of £2 million plus a further
subscription for shares of £1.5 million which was satisfied by granting Sheffield United (Hotel) Limited a 999 year lease on land at Bramall
Lane which was valued at £1.5 million. The Company will also make available to Sheffield United (Hotel) Limited an inter-company loan of up
to £3 million which is intended to be converted into shares in Sheffield United (Hotel) Limited in due course. The Club has also constructed
a junior community development centre at its premises in Crookes at a cost of just under £0.6 million.
    The Directors also believe that, should the Club return to the Premiership, the extension and partial redevelopment of the Fraser's
Property KOP Stand at Bramall Lane, in order to both increase capacity by approximately 3,500 seats and to remove the pillars which
currently restrict the views of many fans, is important for the Group's future business. The Directors are therefore putting into place the
framework, including obtaining planning permission, to allow construction of this project to commence as soon as the Club's league status
for the following season is known. 
    The Directors therefore believe that further capital is required in order to (i) facilitate the repayment of the whole of the principal
and accrued unpaid interest (which amounts in aggregate to approximately £10.58 million, if settled following the passing of the Resolutions
at the EGM) which is outstanding in relation to the SDG Loan Agreement and repayable on or by 31 August 2008; (ii) to obtain planning
permission for the redevelopment of the Fraser's Property KOP Stand; (iii) to continue investment in strengthening the first team; and (iv)
for the ongoing working capital requirements of the Group.
    The Directors have decided not to offer all Shareholders the opportunity to subscribe for the Convertible Loan Notes, given the
relatively small amounts raised from Shareholders (other than the Directors) through previous open offers and in order to save the
additional cost and delay associated with the production of a prospectus in connection with such an offer which the Directors believe would
not have been in the best interests of the Company and its Shareholders as a whole. The Directors have concluded that subscriptions from
Shareholders (other than the Directors) for an open offer may not have generated funds to cover the additional costs associated with an open
offer and, given the amount of time until the August 2008 transfer window closes, it was believed that any funds received from an open offer
would not have been received in time to be used in the August 2008 transfer window.  
    Further details of the terms of the Convertible Loan Notes are set out in paragraph 6 of this letter.
    3.    Current trading
    On 28 March 2008, the Group reported its unaudited interim results for the six months ended 31 December 2007 which showed an operating
profit before finance costs of £1.3 million (2006: £2.6 million) and an attributable loss of £0.1 million compared to a profit of £1.3
million for the same period in 2006. 
    During the period, the Group repaid £7.3 million of bank debt and entered into a standalone £13.5 million facility obtained from the
Bank of Scotland which has been used to partially fund the construction of the Copthorne Hotel, Sheffield. The construction of the hotel
commenced in May 2007. In addition, whilst Group turnover was down from £25.9 million in the six months ended 31 December 2006 to £17.1
million in the same period in 2007 mainly because the income from the Premier League television rights has reduced on relegation from the
Premiership and because of the reduction in the share of profits from the Company's property joint venture, Blades Realty Limited
(previously known as United Scarborough Estates Group Limited), there was an increase in turnover of 19 per cent. for non*match day and
event activities indicating a significant improvement in the turnover of the leisure division.
    Since the unaudited interim results were announced, the Club has finished the 2007/8 season in 9th place in the Championship. This means
that the Club has not achieved promotion and will be playing in the Championship in the 2008/9 season. Season ticket sales for the 2008/9
season, one of the early indicators of income for the following year are approximately 18,380 which is a similar level to the 2007/8
season.
    The current indications for the year ended 30 June 2008 are that the Group anticipates that it will have continued to trade on a similar
basis as it did for the six months ended 31 December 2007, other than the volume of player sales in the second half of the financial year
ended 30 June 2008 will be substantially lower than in the first half of the financial year ended 30 June 2008.
    The Group recently reported that it has opened a third gymnasium at Crookes, Sheffield, along with a junior development centre with
football pitches and other indoor and outdoor facilities also at Crookes, Sheffield. Construction of the Copthorne Hotel at Bramall Lane is
progressing on time and budget and the Directors expect it to be completed in October 2008 and open for business in November 2008.
    The Group has also obtained planning permission to construct a three storey building on part of the Shirecliffe Academy site. It is
intended that the building will be a regional centre for the National Skills Academy and will provide serviced office accommodation for
start up businesses. The construction of this facility is dependent on the finalisation of grant funding and bank finance.
    The Company's property joint venture, Blades Realty Limited has seen a reduction in the share of profit before interest and tax to £0.5
million in the first six months to 31 December 2007 compared to £1.2 million in the previous period. This is attributed to the recent
turmoil in the financial markets which has led to a more challenging environment in the commercial property market. The Directors have
focussed on maximising rental yields from the property portfolio of Blades Realty Limited.
    The Company has recently announced that it intends to acquire the Hungarian football club Ferencvaros and has entered into a cooperative
agreement with a Hungarian company connected with Scarborough. The Company intends to acquire 95 per cent. of the share capital of FTC
Labdarugo Zft, which is the company operating Ferencvaros football club. As part of the terms of the transaction, it is proposed that FTC
Labdarugo Zft will receive financial assistance from a company connected with Scarborough to support the advancement of Ferencvaros football
club in the first two years of ownership. The detailed terms of this transaction are still being negotiated.  
    On 14 July 2008, the Company announced that the Club had sold the Thames Club for a total consideration of £4.55 million on 11 July
2008. This sale generated a profit of £0.7 million after costs of sale, and allows the Club to repay £2 million of debt used to fund the
initial acquisition of the Thames Club.  
    The Club is also engaged in arbitration proceedings against West Ham United Football Club under the Football Association Rule K
Arbitration Procedure. The parties are currently making final submissions in respect of liability, and it is expected that this stage of the
proceedings will end by late July 2008. Should the Arbitration Tribunal decide in favour of the Club in respect of liability then a further
hearing to evaluate the quantum of the damages suffered is likely to take place in autumn 2008.   
    4.        Information on SDG Caledonia and the Investors
    SDG Caledonia is owned as to 100 per cent. by SDG Caledonia Limited. Its directors are John Lewis Burnley, Cesidio Martin Di Ciacca,
Stephen Paul McBride, Kevin Charles McCabe, Scott Richard McCabe, Simon Charles McCabe and Didier Michel Tandy.
    SDG Caledonia Limited is owned as to 100 per cent. by Scarborough UK Limited. Its sole director is Esplanade Director Limited.
    Scarborough UK Limited is owned as to 100 per cent. by Scarborough Group Limited. Its directors are Esplanade Director Limited, Kevin
Charles McCabe, Scott Richard McCabe and Simon Charles McCabe.
    Scarborough Group Limited is owned as to 100 per cent. by Scarborough Group International Limited. Its directors are Kevin Charles
McCabe, Scott Richard McCabe, Simon Charles McCabe and Paul Richardson.
    Scarborough Group International Limited is owned as to 93 B ordinary shares of £1 each by Kevin Charles McCabe, 535,728 ordinary shares
of £1 each and 7 B ordinary shares of £1 each by Simon Charles McCabe, 535,112 ordinary shares of £1 each and 7 B ordinary shares of £1 each
by Scott Richard McCabe, 267,723 ordinary shares of £1 each and 27 B ordinary shares of £1 each by the Scarborough 1992 Trust and 394,071
ordinary shares of £1 each and 39 B ordinary shares of £1 each by the Scarborough IIP Trust both of which John Lewis Burnley, Cesidio Martin
Di Ciacca, E R C Lewis and Sandra McCabe are trustees and the beneficiaries are members of Kevin McCabe's immediate family. The ordinary
shares and B ordinary shares have full voting rights. Its directors are Kevin Charles McCabe, Scott Richard McCabe and Simon Charles McCabe.

    Kevin Charles McCabe and his connected persons are currently interested in Ordinary Shares representing approximately 75.17 per cent. of
the issued share capital of the Company. SDG Caledonia has agreed to subscribe for £10,576,507 of the Convertible Loan Notes, conditional
only on the passing of the Resolutions at the EGM. Following completion of the issue of the Convertible Loan Notes, Kevin Charles McCabe and
his connected persons will therefore be interested in Ordinary Shares and, in respect of Convertible Loan Notes, rights to convert into
Ordinary Shares, which would in aggregate equate to a maximum of approximately 77.75 per cent. of the enlarged issued share capital of the
Company if all the Convertible Loan Notes held by the Investors were converted into Ordinary Shares (at such conversion rate as would create
the highest number of Ordinary Shares) and no other Ordinary Shares were issued.
    Following completion of the issue of the Convertible Loan Notes, the Investors (other than SDG Caledonia and Kevin Charles McCabe and
his connected persons) as a whole will be interested in Ordinary Shares and, in respect of Convertible Loan Notes, rights to convert into
Ordinary Shares which would in aggregate equate to a maximum of approximately 6.6 per cent. of the enlarged issued share capital of the
Company if all the Convertible Loan Notes held by the Investors were converted into Ordinary Shares (at such conversion rate as would create
the highest number of Ordinary Shares) and no other Ordinary Shares were issued.
    5.    Related Party Transaction
    SDG Caledonia, Craftglen, Foundation Plant and Equipment, Michael Dudley and Chris Steer are related parties for the purposes of the AIM
Rules and the proposed issue of Convertible Loan Notes by the Company to SDG Caledonia, Craftglen, Foundation Plant and Equipment, Michael
Dudley and Chris Steer is therefore a related party transaction under the AIM Rules. The Independent Directors consider, having consulted
with KBC Peel Hunt, that the terms of the Convertible Loan Notes Issue are fair and reasonable insofar as Shareholders are concerned.
    6.    Particulars of terms and conditions of the Convertible Loan Notes
    The Convertible Loan Notes will be issued in multiples of £1, will be created by a resolution of the Board and will be constituted as
unsecured obligations of the Company by the Convertible Loan Notes Instrument proposed to be executed by the Company. A copy of the
Convertible Loan Notes Instrument, when executed, will be available for inspection by a holder of Convertible Loan Notes and any person
authorised by them at all reasonable times during office hours at the registered office of the Company.
    The Convertible Loan Notes Instrument will contain provisions, inter alia, to the following effect:


 1.  Status
     The Convertible Loan Notes shall rankpari passuamongst themselves and as
     an unsecured obligation of the Company and shall be subject to the terms
     of the inter-creditor deed referred to in paragraph 9 below (the
     "Inter-creditor Deed").
     No application will be made for the admission of the Convertible Loan
     Notes to, or to trading on, any market wherever situated or for the
     admission of the Convertible Loan Notes to listing on any official or
     otherwise prescribed list maintained by a competent or otherwise
     prescribed listing authority.
 2.  Interest
     Subject to the terms of the Inter-creditor Deed, the Company shall pay
     interest on the principal amount of the Convertible Loan Notes at 4 per
     cent. per annum above the rate quoted to the Company by the Bank of
     Scotland as the three months sterling LIBOR rate on the relevant interest
     payment date less any tax required to be deducted by law and shall be
     calculated on the basis of the actual number of days elapsed and a 365
     day year and shall, subject to the paragraph below, be payable quarterly
     in arrears on the last business day in each quarter on that date provided
     that the first payment of interest on the Convertible Loan Notes, which
     will be made on  28 November 2008, will be in respect of the period from
     the date of issue of the Convertible Loan Notes to  28 November 2008
     (both dates inclusive). Interest will be payable until the Convertible
     Loan Notes are redeemed and/or converted pursuant to the provisions of
     the Convertible Loan Notes Instrument.  
     The Company shall be entitled, in its absol

 3.  Redemption of the Convertible Loan Notes
     Subject to the terms of the Inter-creditor Deed, the Company shall be
     entitled, in its absolute discretion and upon giving not less than seven
     days' prior notice, to redeem at any time (including for the avoidance of
     doubt at any time on or after 31 August 2009 but on or before 14
     September 2009), at par the whole or any part of the Convertible Loan
     Notes plus any accrued interest outstanding thereon (less any tax
     required by law to be deducted therefrom) and the terms of such
     redemption shall be the same for all of the holders of Convertible Loan
     Notes and, where only part of the Convertible Loan Notes are to be
     redeemed, each of the holders of Convertible Loan Notes shall have their
     Convertible Loan Notes redeemed in the same proportions.
 4.                                   Conversion of the Convertible Loan Notes
        To the extent that by 31 August 2009 any of the Convertible Loan Notes
     have not been redeemed each of the holders of Convertible Loan Notes will
      automatically and irrevocably be deemed to have given notice at 11.00 am
     (London time) on 31 August 2009 requiring the Company to convert all (and
       not some only) of their holding of Convertible Loan Notes into Ordinary
      Shares on the basis of one Ordinary Share for each 10 pence of principal
                      amount of Convertible Loan Notes held on 31 August 2009.
        Completion of the conversion of the Convertible Loan Notes referred to
        above will take place on 14 September 2009 (or, if later, two business
         days after final agreement or determination of the number of Ordinary
                                  Shares to be allotted upon that conversion).
         Interest on the Convertible Loan Notes to be converted shall cease to
        accrue as from 14 September 2009. Such Ordinary Shares as are allotted
        pursuant to any conversion referred to above shall be treated as being
                                                            fully paid up and
 5.  Accelerated conversion and related events 
     Subject to the terms of the Inter-creditor Deed, the Convertible Loan
     Notes, which are at the relevant time outstanding, may at the election of
     the holders of Convertible Loan Notes holding not less than 85 per cent.
     in nominal amount of such notes either (a) become repayable by the
     Company or (b) shall be converted into Ordinary Shares at the appropriate
     rate of conversion as set out in the Convertible Loan Notes Instrument
     following the occurrence of any of the following events in relation to
     the Company:
     (a)    the making of a compulsory winding up order; or
     (b)    the appointment of a liquidator on a compulsory liquidation,
     administrator, receiver, receiver and manager or administrative receiver
     or similar officer in relation to the whole or any part of its assets,
     rights or revenues; or
     (c)    it proposing or entering into any composition or arrangement with
     its creditors including a voluntary arrangement under the Insolvency Act
     1986.
 6.  Transfer and registration
     The Convertible Loan Notes are not transferable except in the case of a
     holder of Convertible Loan Notes which is a company to any company which
     is a subsidiary, or a holding company or any other subsidiary of such a
     holding company of any holder of Convertible Loan Notes on the terms set
     out in the Convertible Loan Notes Instrument, or in the case of a holder
     of Convertible Loan Notes who is an individual to a relation (being a
     spouse or child) or to a trust set up for the benefit of such relatives
     of the holder of the Convertible Loan Notes.
     A register of the holders of the Convertible Loan Notes must be kept by
     the Company.
 7.  Payments
     Any monies payable on or in respect of the Convertible Loan Notes shall
     be paid either by cheque made payable to the order of the registered
     holder of the Convertible Loan Notes and sent to the registered holder's
     registered office or by electronic funds transfer through a UK clearing
     bank to such account as the holder of the Convertible Loan Notes may have
     notified to the Company five business days beforehand.
 8.  Variation
     The provisions of the Convertible Loan Notes Instrument and the rights of
     the registered holders of the Convertible Loan Notes may only be altered,
     abrogated or added to with the prior written consent of the Company and
     the registered holders of the Convertible Loan Notes who hold not less
     than 85 per cent. in nominal amount of the Convertible Loan Notes except
     for the provisions relating to the redemption or conversion of the
     Convertible Loan Notes and the provisions governing the Payment in Kind
     Notes which require the consent in writing of the Company and all of the
     holders of Convertible Loan Notes.
 9.  Inter-creditor Deed
     Payments of principal of and interest on the Convertible Loan Notes may
     be made freely in accordance with the terms of the Convertible Loan Notes
     Instrument unless the Company is prohibited from making any such payments
     under the terms of the Inter-creditor Deed proposed to be entered into
     between (1) the Bank of Scotland (2) the Company (3) the Company and
     certain other companies in the Group and (4) the Investors in which case
     the Convertible Loan Notes shall be subordinated and subject in right of
     payment (to the extent set out in the Inter-creditor Deed) to all monies
     and liabilities from time to time due, owing or incurred to the Bank of
     Scotland by the Company and certain companies in the Group and payment of
     any liabilities under the Convertible Loan Notes may be deferred to the
     extent set out in the Inter-creditor Deed.
     The Inter-creditor Deed will contain provisions, inter alia, to the
     effect that payments of principal of and interest made in cash in respect
     of the Convertible L

    7.    Extraordinary General Meeting
    The proposed Convertible Loan Notes Issue is conditional on the passing of the Resolutions at the EGM of the Company to be held at the
Platinum Suite, Bramall Lane, Sheffield, S2 4SU, at 11.00 am on 18 August 2008, at which the Resolutions will be proposed.
    Resolution 1 to be considered at the EGM, proposes the following:
    (a)    to grant the Directors authority to allot the Convertible Loan Notes pursuant to section 80 of the 1985 Act; and
    (b)    to disapply statutory pre-emption rights in respect of the Convertible Loan Notes. Section 89 of the 1985 Act requires that any
equity securities (including any rights to convert securities into shares) allotted wholly for cash must be offered to existing shareholders
in proportion to their existing holdings. This requirement was disapplied to a limited extent by a resolution passed at the annual general
meeting of the Company held on 23 November 2007. However the extent of the disapplication is insufficient to enable the proposed issue of up
to £14,285,000 of Convertible Loan Notes. Accordingly, the disapplication of statutory pre-emption rights proposed in paragraph (b) of
Resolution 1 is necessary in order to effect the proposed issue of up to £14,285,000 of Convertible Loan Notes.
    Resolution 2 to be considered at the EGM proposes to delete the existing article 90 of the Articles of Association and replace it with a
new article 90 whereby the level at which the Company is able to borrow money is increased from twice the aggregate value of its capital and
reserves to four times the aggregate value of its capital and reserves. The Directors believe that in order to continue to develop the
business of the Group and in view of the Group's current and projected borrowing requirements and the need to give adequate flexibility in
the medium term it is necessary to increase its borrowing limits, as currently permitted by its Articles of Association, to a level which
will allow the Group to secure suitable finance for future transactions. The Directors also believe that the Articles of Association as
originally drafted did not envisage the issue of convertible quasi-equity instruments such as the proposed Convertible Loan Notes. The
Directors further believe that the nature of the Company's business has changed, with the Group holding investments in several subsidiary businesses which operate and are financially independent of
each other. The Directors therefore believe that the Group can sustain a higher level of borrowings than as currently permitted by the
Articles of Association.  
    Resolution 3 to be considered at the EGM proposes to increase the Company's authorised share capital, inter alia, to give the Company
sufficient authorised share capital to enable the issue of Ordinary Shares in the event that conversion of up to £14,285,000 of Convertible
Loan Notes takes place.
    8.    Recommendation
    The Directors consider the proposed issue of up to £14,285,000 of Convertible Loan Notes and the approval of the Resolutions, on which
the proposed issue is conditional, to be in the best interests of the Company and its Shareholders as a whole and the Directors recommend
that you vote in favour of the Resolutions to be proposed at the EGM as they and Shareholders connected with them intend to do in respect of
their beneficial holdings of Ordinary Shares amounting to, in aggregate, 214,056,141 Ordinary Shares, representing approximately 76.86 per
cent. of the current issued share capital of the Company.
      DEFINITIONS
    The following definitions apply throughout this announcement, unless the context otherwise requires:
 "1985 Act"                      the Companies Act 1985, as amended
 "AIM Rules"                     the current version of the AIM Rules for Companies
                                 published by the London Stock Exchange
 "Arbitration Tribunal"          the Football Association arbitration tribunal
 "Articles of Association"       the current set of articles of association of the
                                 Company as at the date hereof
 "Bank of Scotland"              Bank of Scotland plc 
 "Board"                         the board of directors of the Company
 "Circular"                      the circular expected to be posted to Shareholders
                                 today
 "Championship"                  the Coca-Cola football league championship
 "Company"                       Sheffield United plc
 "Club"                          The Sheffield United Football Club Limited
 "Craftglen"                     Craftglen Limited, a company wholly owned by John
                                 Burnley
 "Convertible Loan Notes"        the Floating Rate Unsecured Subordinated Convertible
                                 Redeemable Loan Notes 2009 proposed to be issued at
                                 the Issue Price
 "Convertible Loan Notes Issue"  the proposed issue of up to £14,285,000 of Convertible
                                 Loan Notes to the Investors
 "Convertible Loan Notes         the deed constituting the Convertible Loan Notes,
 Instrument"                     proposed to be executed by the Company
 "Directors"                     the directors of the Company, whose names are set out
                                 on page 5 of the Circular 
 "Disclosure Rules"              the Disclosure Rules and Transparency Rules of the
                                 Financial Services Authority
 "Extraordinary General          the extraordinary general meeting of the Company,
 Meeting" or "EGM"               notice of which is set out at the end of the Circular 
 "Football Association Rule K    the arbitration procedure rules of the Football
 Arbitration Procedure"          Association
 "Foundation Plant and           Foundation Plant and Equipment Limited, a company
 Equipment"                      controlled by David Green
 "Fraser's Property KOP Stand"   the KOP football stand for the home fans at Bramall
                                 Lane football stadium
 "Group"                         the Company and its subsidiary undertakings
 "Independent Directors"         the Directors other than Kevin McCabe, John Burnley
                                 and Michael Dudley
 "Investors"                     SDG Caledonia, Craftglen, Foundation Plant and
                                 Equipment, Cesidio Di Ciacca, Didier Tandy, Stephen
                                 McBride, Chris Steer and Michael Dudley
 "Issue Price"                   £1 payable for each £1 nominal of Convertible Loan
                                 Notes to be issued
 "KBC Peel Hunt"                 KBC Peel Hunt Ltd 
 "SDG Loan Agreement"            the loan agreement between the Company as borrower and
                                 SDG Caledonia as lender entered into on 11 September
                                 2007 
 "LIBOR"                         the London Interbank Offered Rate as quoted by the
                                 Bank of Scotland
 "London Stock Exchange"         London Stock Exchange plc
 "Ordinary Shares"               ordinary shares in the capital of the Company which
                                 have a nominal value of 10 pence each
 "Payment in Kind Notes"         the Convertible Loan Notes which the Company is
                                 entitled to issue to the Investors in order to satisfy
                                 the accrued but unpaid interest on the issued
                                 Convertible Loan Notes pursuant to the terms of the
                                 Convertible Loan Notes Instrument
 "Premiership"                   the league of The Football Association Premier League
                                 Limited
 "Premier League"                The Football Association Premier League Limited
 "Resolutions"                   the resolutions set out in the notice of the
                                 Extraordinary General Meeting
 "Scarborough"                   Scarborough Group International Limited, a company
                                 indirectly controlled by Kevin McCabe's immediate
                                 family and related trusts
 "SDG Caledonia"                 SDG Caledonia Holdings Limited, a company indirectly
                                 controlled by Kevin McCabe's immediate family and
                                 related trusts
 "Shareholders"                  the holders of Ordinary Shares 
 "Thames Club"                   the Thames health and fitness club business operated
                                 by Thames Club Limited together with the freehold
                                 property from which the business operates




This information is provided by RNS
The company news service from the London Stock Exchange
 
  END 
 
MSCFKNKNKBKDBOB