Desmond agrees to underwrite Celtic share issue

FINANCIER Dermot Desmond has agreed to underwrite a fundraising issue at Glasgow Celtic football club.

Mr Desmond, the largest shareholder in the club, will underwrite £10 million (€14.6m) of the £15m (€22m) rights issue.

Celtic will issue one new share for every two held by existing shareholders at 30 pence a share 13p below closing price last week.

If all shareholders do not take up their rights, Mr Desmond would end up owning more than 30% of the club, the level at which he would have to make a full takeover bid. The club is asking other shareholders and the Takeover Panel for a waiver from this obligation.

The money raised will not allow manager Gordon Strachan to go on a spending spree for new players.

Chairman Brian Quinn said: "The board believes the biggest test currently facing Celtic is to control football costs whilst maintaining the competitiveness both in domestic competitions and in Europe. In this context, the board believes it is vital to continue to improve the club's infrastructure, particularly relating to its ability to develop home-grown playing talent as well as retaining and attracting a number of experienced core players."

He added the money will be used to develop a purpose-built youth training academy and reduce the club's debt.

Celtic also plans to move its listing from the main index of the London stock exchange to the Alternative Investment Market, which it said is more appropriate for a company of its size.

In August, Celtic revealed turnover was down for the first time in 10 years, with merchandise sales falling to £62.6m (€92m) from £69.0m (€101m). Pre-tax losses widened to £7.7m (€11.3m) from £7.4m (€10.87m) a year earlier, while net debt rose to £19.5m (€28.65m) from £16.0m (€23.5m).

The company will not be helped in this financial year by the early exit from the Champions' League.