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Working towards completion of ground deal (BCH EGM)
Working towards completion of ground deal (BCH EGM)

Your Trust...Your Club

Another step towards completion of Bootham Crescent deal


On 11 January 2005 a further step was accomplished working towards legal completion of the agreement to bring the ownership of Bootham Crescent under the control of York City and the Trust.  At an Extraordinary General Meeting of Bootham Crescent Holdings Limited (BCH), the shareholders approved the granting of financial assistance by BCH to York City Football Club Limited (York City or the Club) in connection with the proposed purchase by York City of 75% of the shares in BCH.


This Trust Newsletter supplements the information provided previously, in particular that released by the Trust and the Club on 11 June 2004 (available on www.ycst.org.uk).  It is necessarily lengthy, but hopefully of interest and use to those who read it.  If anyone has any further questions about matters contained in this Newsletter, or about any other matters involving the Trust and/or the Club, please contact a Club/Trust Board member and/or email enquiries@ycst.org.uk .


 


It is now hoped/intended that the overall financing arrangements and acquisition of shares in BCH will complete by mid-February 2005.


 


 


Complex legal process


It has been necessary to go through a complex legal process working towards completion of the proposed transaction.  In respect of BCH, it has been necessary to go through two stages:


l                    Stage 1 was for BCH to be re-registered as a private limited company in order for York City to meet the conditions attached to their funding from the FSIF.  Following the vote by shareholders in favour of the resolutions put before the EGM of BCH held on 6 July 2004, Bootham Crescent Holdings plc was re-registered as a private company under the name Bootham Crescent Holdings Limited on 15 July 2004. This represented the conclusion of Stage 1;


l                    Stage 2 is for the parties to enter into a binding legal agreement for the sale of the shares and for BCH to grant a legal charge over the Bootham Crescent football ground in favour of the FSIF to secure their loan to York City.


In order for the parties to complete stage 2, it was necessary for BCH to go through a Companies Act procedure.  At the BCH EGM on 11 January 2005, the shareholders voted in favour of each of three resolutions to approve the proposed purchase by York City of 75% of the shares of BCH and the proposed granting by BCH of a fixed charge over the Bootham Crescent football ground.  This fixed charge (a type of mortgage) will be in favour of the Football Stadia Improvement Fund and will secure the money that the FSIF is lending in connection with the proposed transaction.


On 11 January 2005, Messrs Craig, Swallow and Webb resigned as directors of BCH.  Messrs Jason McGill, Terry Doyle and Michael Shannon were appointed as directors.  Jason and Terry are both Directors of York City Football Club Limited.  Mike Shannon is a Trust Board member.


 


Project Gold


The project by the Trust/Club to gain ownership of Bootham Crescent has been led by Jason McGill.  It became known as Project Gold.  The stage that has now been reached is, in effect, the product of negotiations that first commenced in summer 2003.  During that time, the Trust Board has been kept informed of progress and representatives of the Trust Board have provided support to the Club Directors. 


The legal, tax and business aspects of the process of the Trust and the Club gaining ownership of Bootham Crescent are far from straightforward and it is inevitable that many people may, to some extent, be frustrated by the complexities involved.  It is the complexities involved and the many issues that have had to be overcome that have delayed the process beyond original expectations. 


 


Hands on Bootham Crescent an overall summary


l                    The Trust has always maintained the fundamental principle that York City should not be ousted from its Bootham Crescent home unless and until a better facility is put in place for the Club to play its home games.  The battle to gain ownership of Bootham Crescent has occupied huge amounts of time over the past couple of years, but when completed it will provide the basis for long term security.


l                    York City will be paying around 2.1 million to obtain a 76% controlling interest in BCH, which currently owns Bootham Crescent;


l                    Upon completion of the arrangements, ownership of Bootham Crescent will be under the control of York City and the Trust.  The ownership of Bootham Crescent is being reunited with the Football Club;


l                    York City will receive a 2 million loan from the FSIF (a partner company of the Football Foundation), on which it must pay interest and adhere to certain conditions;


l                    Persimmon Homes agreement with BCH (entered into in 2002) to acquire Bootham Crescent will be cancelled and replaced with a new option agreement;


l                    York City will work towards moving to new stadium in York within the next ten years.  In due course, York City will sell Bootham Crescent and will reinvest the proceeds in the new stadium.


 


Amounts payable to the shareholders of BCH


Under the proposed transaction, York City will acquire 151,768 (75.89%) of the shares in BCH at a price of 11.10 per share (being approximately 1.7 million in total).


In addition, the following amounts will be paid by York City as part of the overall transaction:


l                    the sum of 161,768 will be paid to Messrs Craig, Swallow and Webb in full and final settlement of all amounts owed to them by BCH in respect of directors loans;


l                    the sum of 202,390 will be paid to Persimmon Homes Limited in consideration of them agreeing to release their conditional contract over the Bootham Crescent site and entering into a new option agreement; and


l                    stamp duty and legal costs.


For the time being, Messrs Craig, Swallow and Webb who are no longer directors of BCH will retain 17,044 (8.52%) of the BCH shares.  These remaining shares will be the subject of a put and call option, which creates a mechanism under which York City may acquire the shares at a set price (of 12.10 per share, rising by inflation after three years) at some future date.  York City would be required to acquire these remaining shares from Messrs Craig, Swallow and Webb upon the expiry of the ten year period or upon the earlier occurrence of certain specified default events (including York City suffering insolvency or a sale of Bootham Crescent).


The selling shareholders have provided York City with tax warranties in respect of the historic tax affairs of BCH.


The other minority shareholders comprise John Quickfall (holding 19,282; 9.6%) and approximately 150 other shareholders who are mostly City supporters (with an aggregate holding between them of c.11,900; 5.9%).  York City does not have sufficient funds to acquire these shares immediately, but has indicated that it intends to do so over time, as it is commercially practicable to do so. 


For the avoidance of doubt, Messrs Craig, Swallow and Webb will have no involvement in the ownership and operations of York City. 


 


Financing of the acquisition


In order to finance the proposed transaction, York City will enter into a loan agreement with the Football Stadia Improvement Fund (the FSIF).  The FSIF is a partner company of the Football Foundation.  After much negotiation, the FSIF has agreed, in principle, to provide a loan of 2 million to York City.


Not surprisingly, in view of the amount of money they are lending to the Club, the FSIF have made it a condition of any loan they make that they are provided with security.  The deal that has been reached in principle is specifically structured to allow this to take place without breaching the provisions of the Companies Act.  The FSIF will be granted a fixed charge (a type of mortgage) over the Bootham Crescent site as security for the money that the FSIF is lending York City in connection with the proposed transaction.


The FSIF loan to York City will be interest bearing (at 0.5% above the variable base rate).  On the basis of current interest rates, it will cost York City approximately 100,000 per annum to service the loan.  The 2 million loan is repayable, in full, after 10 years.  York City needs to have moved to a new stadium within the next 10 years.


 


A future new stadium for York City


In outline, the Club aims to have in place by 2014 a 10,000 all-seater stadium, with superior facilities to Bootham Crescent.  York City will remain at Bootham Crescent until the new stadium is completed.  The Club is already working closely with City of York Council to help identify potential sites for a new stadium. 


In due course, York City will apply for planning permission for Bootham Crescent on the basis that a Section 106 agreement is put in place, whereby development of the Bootham Crescent site is prevented until a new stadium is completed.  As noted above, ownership of Bootham Crescent will be under the control of the Trust and the Club anyway and the Trust continues to hold the principle that there should be no move from Bootham Crescent until a better alternative is in place.


The residual equity from the sale of Bootham Crescent will be used to assist the funding of a new stadium.  When Bootham Crescent is sold in future, the benefit of the sale (over and above the monies owed) will be invested in new facilities for York City.  In addition, it is expected that York City will be eligible to apply for a 2.5 million grant from the FSIF to assist relocation and the development of a new stadium.


For most supporters, moving away from Bootham Crescent will be difficult to bear.  However, the Club now has time in which to review and consider its options.  Through a structured process, York City should be able to move to a new stadium with facilities that will be of long term benefit for the Club, the community and sport in the city.


 


Keep the Faith


With the Club and Bootham Crescent in the hands of the supporters.with unity, hard work and commitment, we can build a better York City.


Since the initial formation of the Trust, we have focussed on working for the benefit of York City and to help ensure that the Club continues to have a decent home.  We're volunteers working on behalf of the supporters, rather than doing it for personal benefit.  The Trust will continue to focus on the future of our Club for our supporters, rather than be distracted by the views of former regimes.


For more information about Bootham Crescent matters and about the work and role of the Supporters Trust, please contact any Trust Board member or visit www.ycst.org.uk


Thank you for your continuing support

 
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