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Funding for the new stadium

Erik's latest update on move to Plough Lane

24 March 2019

In his programme notes for the Gillingham game, Chief Executive Erik Samuelson explained that part of the funding for the new stadium will come from a crowdfunding exercise.

This will take the form of a share issue and Erik provided more information about this in his update, which is reproduced in full below.

One of the important elements of financing our new stadium is a proposed crowdfunding. Our thoughts about how to go about this are now crystallising, so I thought I’d explain more about it.

In our case, “crowdfunding” has come to mean an issue of shares in AFCW PLC, which owns the club and also owns The Wider Interests of Football Limited, the company that will own the new stadium. We have issued shares before, back in 2003, when we raised a substantial sum towards the cost of buying our current home. (Some of you may recall that a while back we were considering a Community Share issue, but unfortunately the idea fell by the wayside when HM Revenue & Customs changed the rules a couple of years ago.)

What would be different about a share issue this time? Well, first of all, this time investors would be buying shares in an established company, with a good track record both on and off the pitch. Second, the underlying value of shares in an EFL club with a new stadium in the offing is also, very obviously, much higher than for a non-league club that has been in existence for only a year and is in a league five levels below League Two. In other words, we think the proposition is far more attractive to third parties than it was 16 years ago, at the time of the previous share issue. And that is a key point: in order to raise a substantial sum of money, we need to look outside the fanbase – and we will be actively doing so.

Obviously, there need to be safeguards to ensure that the club remains in the ownership of the fans. We were very aware of this question in 2003 when we first issued shares in the PLC, so we set up the company in such a way that the Dons Trust would retain 75% plus one of the votes in the PLC. This percentage is very important. If any one shareholder, or a group of shareholders, commands 25% or more of the votes, then they can stop important resolutions from being passed. After the first share issue, the Dons Trust owned comfortably over 75% of the votes, and in subsequent years that proportion has crept up to well over 90%. With any new share issue, there will be the same proviso: that the Trust’s shareholding in the PLC must remain above 75%.

Some years ago, the Dons Trust Board anticipated this sort of proposal and created a form of protection which is designed to prevent the club or the stadium from being sold off without due consideration and a very thorough democratic process. This protection is enshrined in the rules relating to what are call restricted actions (RAs). These rules require a much higher than usual level of approval before the implementation of a restricted action, in this case selling shares in the PLC. So last September a special resolution was put to DT members whereby new shares in the PLC could be issued as long as the Trust’s shareholding in the PLC stayed above 75%. This resolution was overwhelmingly passed in November – 60% of the DT members voted, and 98% of the members who voted supported the resolution.

With support from specialist advisors, we are now going through the process of preparing to launch the share issue so that we can do so at short notice, if necessary. Part of that preparation is to act on the advice we’ve been given by all the specialists we’ve spoken to. That advice is that, for a share issue to succeed, it is very important that it gets off to a strong start – and a good way to do that is to have some investors lined up who have already committed to buying shares.

We’ve been taking steps to identify ways of achieving such a flying start to the share issue, and we’ve spoken to a number of people who we think can help. In fact, I will be doing just that this weekend, which is why I am missing the game. But while I will be physically absent for the game, pursuing ideas that could help us build a better stadium, I will be listening to the Radio WDON commentary on iFollow.

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