AST Meeting – April 2011

Morning All…

It’s been a whirlwind last couple of days, and personally, for me, having arrived back to the UK late last night, there has been quite a lot to take in in the last 24 hours or so. (Yes, that sentence needed two in’s!)… First of all, massive thanks to @j1mm7t for Friday’s blog on X and to @kieran_delaney for yesterday’s post. Both very good reads if you haven’t already done so.

Last night, I had the privilege of attending the Arsenal Supporter’s Trust meeting – for those of you who don’t know what the AST is – it’s a trust of supporters and shareholders whom have the interests of the club at heart. The AST has been the prime instigator of the new Fanshare system that has allowed many fans to own a part of the club.

Before I review the meeting from yesterday, here are a few key points about the offer:

  • For each Arsenal Share, Arsenal Shareholders will receive £11,750 in cash.
  • The Offer values the entire issued share capital of Arsenal at approximately £731 million.
  • KSE is a Delaware corporation wholly-owned by Mr E. Stanley Kroenke.
  • KSE has entered into a call and put option agreement with DF Nominees (the company holding Mr Daniel David Fiszman’s interests in Arsenal Shares) in respect of 10,025 Arsenal Shares, representing approximately 16.11 per cent. of the issued share capital of Arsenal.
  • In addition, KSE has received irrevocable undertakings to accept the Offer from Lady Nina Bracewell-Smith and the Arsenal Directors who hold Arsenal Shares (other than Mr Fiszman and Mr Kroenke) in respect of all the Arsenal Shares which they hold, representing in aggregate 10,448 Arsenal Shares (approximately 16.79 per cent. of the issued share capital of Arsenal).
  • Taking into account KSE’s existing holding of 18,656 Arsenal Shares (representing approximately 29.99 per cent. of the issued share capital of Arsenal), the call and put option agreement referred to above, and the irrevocable undertakings it has received, KSE now has an interest in or commitments over a total of 39,129 Arsenal Shares, representing approximately 62.89 per cent. of the issued share capital of Arsenal.
  • The Offer will be made in accordance with Rule 9 of the Takeover Code and will be conditional only upon KSE receiving acceptances which will result in KSE and its concert parties holding more than 50 per cent. of the Arsenal Shares.
  • The Offer will include a Loan Note Alternative.

Arsene commented on Stan Kroenke’s new level of involvement and said this:

“I have worked with Stan Kroenke at board meetings over the past couple of years and I believe he has the best interests of Arsenal at heart. He understands the Club’s heritage and traditions and our ambition to run the Club in a way which protects our long term future.”

My personal opinion is that this takeover is very much different to that of the other clubs in the Premiership. United, Liverpool, Chelsea and Man City have 4 different types of ownerships – some have a lot of debt, and some have sugar daddies. What we have at the moment, in terms of stability and our economic plan, will not change with the takeover. Yes, Kroenke has much more of the club – but in reality, he will not be in a position to then take over the club financially. In fact, much of the current takeover if deferred payments and loan notes – advantageous for the people buying (money is deferred) and good for people selling (tax earnings can be split across multiple years).

The key points to take into consideration regarding the takeover:

  • KSE will not leverage the club to pay for the investment – in fact, as they own less than 75%, they cannot use the club as leverage
  • With Usmanov having 27% (ish) and additional 9% being owned by smaller groups and individuals, it will be hard to get to the required amount – Usmanov unlikely to sell
  • Fanshare and AST can continue, as there is no legal obligation to sell their share

Other interesting points of note:

  • 70% of all profits that the club makes going into a “team fund” – this is use solely for the team and playing staff and cannot be used for anything else – this protects the money and stops any ulterior motives
  • 2013/2014 will see new sponsorship deals – which the club will agree in 2012/2013. Injection of money will come from this too.
  • There is currently £35m in the bank team fund, a lot of which comes from the sales of Toure and Adebayor – this fund is used for player contract and sign on fees, so does not represent the possibility of a £35m player.

If you’ve picked up a paper today, you’ll see much more on Arsenal, I think there is a lot more to be said!

Outside of Arsenal, tonight it is Man United (1) vs (0) Chelsea, let’s see what that game has in store for all of us, should be an entertaining game….

  • JayJayGooner

    Great article Dev – amazing amount of time and effort put in here – must have been amazing to actually be at the meeting to discuss these issues!

    The problem I have is that Kroenke has not really spoken a great deal about his motives – his mission – or the effect that the takeover will have at the club (unless I’ve not heard) = that’s the concerning part.

    THe fact that he hasn’t got 75% is good but how long will that last?

  • paresh

    Just read the AST will not be selling their shares.
    Not sur if this changes anything. I think they fell that if stan takes over then its too much power for 1 person

  • Arsefan101

    The AST / fanshare and smaller owners of shares currently represent 9% of the shares.

    Kroenke is 62% and Usmanov is 27%.

    Unless Usmanov sells, then Kroenke will not reach 75% and therefore no force sales are required

  • fo

    Is it true that Usmanov tried to buy the shares from under Kroenke’s nose on Sunday?

  • Gooner Get Ya

    @ fo:
    Yes he placed 2 offers for bracewells shares but got turned down as she already made her deal with Kronke.