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The Peoples' Club

Trust launch Loan Notes

The Trust has revealed details of how the supporters of York City have the opportunity to own their Football Club through the mechanism of the Supporters Trust.

Trust representative Steve Beck appealed to supporters and local businesses:

With your backing and financial support, together with other City fans, through the mechanism of the Trust, you can be the owner of the new York City Football Club.


The scheme is the York City Supporters Society Loan Notes 2003 Issue. In effect, local businesses and City supporters can make a contribution to the Trust in exchange for a Loan Note certificate. In turn, the Trust will then invest the money for the specific purpose of the acquisition of shares in a new company. The new company is the legal entity that will make the acquisition of the business and assets of York City Association Football & Athletic Club Plc, under an agreement reached with the Administrator. Subject to the approval of the creditors and of the football authorities, the new company will then continue the business of York City Football Club.

Whilst there are only limited circumstances in which the Loan Note monies will be repaid and, in many respects, peoples contributions are akin to donations, it is a mechanism that offers some terms to Noteholders.

To make a community-owned club a reality for York City, the Trust now requires significant financial support. The Trust needs to raise 200,000 by 17th March 2003. To that end, the Trust is now seeking to turn existing pledges into cash (either as Loan Notes or donations) and is seeking new funds from people and businesses yet to contribute to the community effort.

KEY FEATURES of the York City Supporters Society Loan Notes 2003 Issue

Key features include:

- A mechanism whereby individual supporters can provide money to the Trust for the specific purpose of acquiring the Club;
- Loan Notes will be issued in denominations of 100. So the minimum contribution is 100, then in multiples of 100 upwards;
- A certificate will be issued to each contributor acknowledging their contribution to save City;
- No interest will be paid and Loan Notes are non-transferable;
- Noteholders will be repaid only in limited circumstances. In many respects, the contribution is akin to a donation;
- In the event of a meeting of Noteholders, on a poll, Noteholders shall have one vote for each 100 Loan Note held;
- The Loan Note scheme has been recommended by Cobbetts, the Trusts legal advisers, and has been used by other Trusts/clubs.

WHAT TO DO NOW...

Supporters are requested to send a cheque or postal order payable to Munby & Scott Save City Account and their address details to York City Supporters Trust, c/o Bootham Crescent, York.

Those supporters who have already made payments to the client account will be contacted by the Trust, to see if they want to turn their donation into a Loan Note (in multiples of 100);

A Loan Note certificate will be returned to each contributor (together with a copy of the Instrument i.e. the legal document) within 28 days of receipt of the contribution.


OUTLINE OF THE DEAL TO SAVE CITY

The agreement with the Administrator, that is subject to contract, sees the Trust paying up to 440,000 for the business and assets of the existing club, that includes a property on Grosvenor Terrace. The consideration includes a deposit of 60,000 already paid by the Trust, that is currently being used to meet the shortfall of income to costs.

If the rescue package target of 200,000 is reached, approximately half will be used as part of the consideration to acquire the business and assets of the old Club and the other half will be used to help fund the ongoing trading of the new company.

The Trust has developed a business plan whereby the new company will be run at or around breakeven. The business plan has been a necessary tool for discussions with the Professional Footballers Association and the Football League, as well as for running the business going forward.
Through the mechanism of the Supporters Trust, the supporters and the people of York can own and operate their own Football Club.

Steve Beck added:

So far, the Trust has received fantastic support from many City fans. Now we would like to see even wider support from people and local businesses for this community effort to save our Football Club for the benefit of future generations.

 
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