Open Meeting - Update

The club held an open fans’ meeting last night (August 10) where members of the Board and its representatives provided an update on various developments relating to finance, investment and a potential change in ownership model.

This meeting followed on from the first Trust meeting held at Rodney Parade last month.

The agenda was broken down into several key themes which were delivered to a packed room by Shaun Johnson and Colin Everett, a former director acting as an independent link between the Board and potential investors, before the floor was opened to questions and discussion.

Colin confirmed that things were moving quickly and there were two key investors in discussions, one at an advanced stage, but they could eventually work together. There was an urgency to finalise a heads of terms agreement, ideally by the end of August, due to the current financial position and to help build the club’s off-field capacity in areas such as senior management, commercial and marketing. He also stressed that the Trust, who would maintain a shareholding, still had an important role to play going forward, both from a support and financial perspective, and the investor had to be the right fit for both parties to work together for the betterment of the club.

Also, any investment proposal would have to go before a special general meeting of the Trust, hopefully in September, where 75 per cent of shareholders would have to give the green light.

The themes covered:

Review of current position

Full review of the financial position with external support
Detailed budget and cash-flow planning in place for 2023-24
Tight budgetary controls in place
Creditors being managed
One-year stadium lease signed with Dragons Rugby
2023-24 In-year operational budget gap still to be met
There is an urgency to secure the financial future for 2023-24 and the longer-term

Investment and ownership options

Option 1: Trust owned model (as current)
Option 2: Hybrid model of shared Trust and Investor ownership (as is the case in all EFL clubs where trusts have been significant in the recent club’s history - with two exceptions). This would require the Trust to sell a proportion of its equity shareholding to the investor
Option 3: an outright sale of the Trust shareholding

Engagement with potential investors

A small number of potential investors have expressed an interest in coming into the club
Discussions at different stages with one at an advanced stage
We are offering the opportunity to buy-into a League Two club
Ideally we need a combination of investment – immediate and over a prolonged period – and football club management and business expertise
The investor will need to cover the creditor debt and the 2023-24 budget requirement in return for a sizeable equity in the club
We need a long-term partnership with the investor
‘Due diligence’ checks by both parties – investor and club

What change would mean for the club

To commit to the size of the up-front investment needed the investor is likely to require a majority (51%) equity stake in the club
The Trust will need to sell the majority of its shares to make this happen
The investor would become the majority club owner and would set out how the club will be run and directed
We would seek a partnership model with the new owner valuing and working with the Trust as the voice of supporters
In return, the owner is likely to expect the Trust to maintain and increase its annual fund-raising to share the risk
The new owner is likely to want more equity year-on-year as they add to their upfront investment

Process for making a big decision

The Trust is the majority shareholder in the club as things stand (79% plus of the total shareholding)
Once we have a firm and detailed offer ‘on the table’ – with due diligence completed – we would need to convene a Special General Meeting to consider the offer and decide our future
Three quarters of the members present would need to vote in favour for a change of ownership
If the offer was rejected, and no others come forward, the Trust itself will have to raise substantial funds to cover the creditors and balance the annual budget for 2023-24

What next?

Complete the discussions with potential investors with urgency
Keep Trust members updated via communications
As and when there is a firm offer which could secure the future of the club, convene a Special General Meeting of the Trust

What can we do next . . . As Trust Members

Increase our monthly contributions as current owners
Persuade fellow fans to join the Trust to help raise funds and send a positive signal to potential investors

What can we do next . . . As Supporters

Take part-in and promote all commercial streams e.g. the County Lottery
Support all initiatives e.g. the Playing Fund
Stay loyal and spend what you can with the club