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Loan Notes Update

175,000 raised from Loan Note Issue 2003

Trust issues Loan Notes to the fans who helped save York City

The following letter has been sent out in the past week to around 500 fans - on behalf of the Board of the Supporters Trust to those people who contributed towards the Trusts Loan Notes 2003 Issue.

As noted below, if you have any queries in relation to the Loan Notes, please contact Trust Secretary Stan Collins (in writing via the Bootham Crescent address; via email on ; or in person).

As well as the Thank You to those contributing financially, thanks also go to those fans who have helped organise the administration of the Loan Note 2003 Issue over the past several weeks, including John Mingay, Ian Savage and Stan Collins.

Dear Fellow Supporter

York City Supporters Trust Loan Notes 2003 Issue
A big Thank You for supporting the Trust to save York City from the brink of extinction. Please find enclosed a copy of your Loan Note certificate (and the associated legal document).

Apologies for the delay in getting the documentation to you. Thats been due to a combination of circumstances, including the overwhelming level of support generated by the Trust to save City. Around 500 City fans have provided monies for the Loan Notes 2003 Issue, each contributing between 100 and 50,000. In total, around 175,000 was raised by the Trust through this mechanism.

If you have any queries in relation to the Loan Notes, please contact Trust Secretary Stan Collins (in writing via the Bootham Crescent address; via email on ; or in person)

Please dont ever forget how close we came to losing our Club
In November 2002, when it became starkly apparent that we could be facing the end of York City FC, the Trust set itself one ultimate objective:

To work to save York City Football Club from extinction so that our Club could continue playing in the Football League.
Everything that has done by the Trust over the past few months has been carried out with this objective in mind. Some people said the Club was beyond salvation and that the fans would never do it, but, against all the odds, the supporters of York City did achieve the objective of saving the club.

Whilst it has been a great achievement by City fans, please be in no doubt that the new York City desperately needs the positive support of the people and businesses of York to help it survive in the future. Please do continue to support your club in whatever way you can next season and beyond.

The Trusts solution

To save York City, the Trust had to work a solution to satisfy approximately 1.5 million of liabilities owing by the old football club company.

In addition to the 181,000 invested by the Trust in March 2003 to complete the rescue package, the Trust had already injected approximately 130,000 previously to enable the Club to survive to that point. In addition, the new company needed money to help fund the day to day business once the takeover was complete. On day one, approximately 120,000 was injected into the new company (i.e. York City Football Club Limited).

All together, thats around 430,000 that has been used to fund the Trusts rescue package.

Where did that money come from?

- About 110,000 from fundraising prior to December 2002;
- About 175,000 into the Trust from the Loan Notes scheme;
- An initial 50,000 direct into the new company from Jason McGill; and
- The balance came from other Trust fundraising and donations in 2003.

A quite remarkable effort by the supporters of York City.

The Loan Notes 2003 Issue and ownership of the new company

The Loan Notes mechanism was the form of fundraising mechanism suggested to the Trust by our legal advisers (Cobbetts). It was neither feasible nor desirable to make a public offer of shares in the new company.

The Trust had made efforts to bring on board substantial backers of 50,000 or more. To that end, the Trust had indicated to any such people that it was prepared to discuss a limited ownership stake in the new company. There were only two individuals who made themselves known to the Trust prepared to inject at least 50,000. One of those has wished to remain anonymous and does not want an ownership stake. The other of those is Jason McGill and the Trust negotiated to provide him a minority ownership stake in the new company.

The package on offer from Jason McGill, both in financial terms and his time and business skills input, is such that we felt it was in the best interests of the Club and the Trust to recognise this by way of a direct shareholding in the new community club.

Each current Trust member owns one share in the Supporters Trust. In turn, the Trust owns 212,500 1 A shares in the new company York City Football Club Limited. This equates to 85% of the total ownership of the Club.

In addition to buying the house (in Grosvenor Terrace, for use by some of the Clubs youth trainees) for around 300,000 (which was an absolutely essential aspect of the rescue package), Jason McGill has provided an initial cash injection of 50,000 to acquire 37,500 1 B shares in the new company. That represents a minority stake of 15%. As advised by Cobbetts, a new class of B shares was created, that in some respects have limited rights compared to the shares owned by the Trust. That includes a restriction on being able to ever sell those shares and a restriction of 20% on the voting rights of the shares. This means that the Trust will retain majority control over the new company no matter how many B shares are in issue.

Key features of the York City Supporters Society Loan Notes 2003 Issue
As described to you previously, some of the key features include:

- Loan Notes are issued in denominations of 100. So the minimum contribution was 100, then in multiples of 100 upwards;
- No interest will be paid and the Loan Notes are non-transferable;
- Noteholders will only be repaid in very 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;

Thanks, once again

Because you made the effort and financial commitment to support your Trust and your Club in February/March 2003, you now have a football club that you can continue to support and be proud of. It is down to you and others that our football club has managed to survive for the benefit of future generations.

Be proud to be York City.

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