A Rights Issue is Top Priority for the Board

This week could be a monumental week in the history of the ownership of Arsenal Football Club.

At a board meeting this week, the directors will discuss, amongst other matter the option of raising additional capital.

Alisher Usmanov has sent a letter to the club formally offering to under-write a £100 million rights issue.  Such a move cannot be ignored by the directors as it will be a dereliction of their duties. What Alisher is saying is that any shareholder who does not wish to take up his or her rights, he will buy those shares.

The purpose of the rights issue is to free-up £100 million of cash that the club has, but is needed to payoff the loan of the Highbury Square development.  Through a rights issue the club will receive the £100 million.

The club currently has 62,217 shares.  The shareholding is as follows:

Stan Kroenke                                                  17,613             28.3%

Alisher Usmanov                                            15,554             25.0%

Danny Fizsman                                               10,020             16.1%

Lady Nina Bracewell-Smith                             9,893             15.9%

Others                                                               9,137

The Arsenal shares would be valued at £8,500 each, so to raise £100 million, Arsenal launch a 6:1 rights issue, meaning that for every 6 shares you currently hold, you will be entitled to one new share which will cost you £8,500.  This is the crux of the matter.  For Danny Fiszman, who recently sold shares to Stan Kroenke, he would need to invest in excess of £14 million as would Lady Nina Bracewell-Smith, I doubt if either would wish to invest further sums into the club.  All small shareholders would have to find £8,500 for every 6 shares they own.  This would leave only Stan Kroenke and Alisher Usmanov with the financial muscle to take up their rights and the rights of the shareholders who have not take up their own rights.  

The board’s fear is that this will allow Usmanov to acquire at least 28% of the club, if Kroenke only took up his own rights, then Usmanov will have 31% of the club and will be entitled to a seat on the board.  This would be too much to stomach for certain members of the board.

A rights issue is the only way the club will reduce its debts in the short term and release much needed capital for Arsene to invest in the playing staff.  It is time the board stopped fiddling whilst the club sunk further back from the competition, they are mere custodians of the club and should in the best interests of the club, not their self centred interests.

Posted on July 1, 2009, in Arsenal Ownership and tagged , , . Bookmark the permalink. 4 Comments.

  1. I hope they do approve it, but i doubt it! They are self serving idiots firmly pushing the self destruct button.

  2. the board is fighting to keep the traditions off the club, we are a club which everyclub looks upto, interms of how its run,
    its taken all our history to get to what we are as a club right now,
    thats one off the reasons im proud to be a gooner, i wont enjoy arsenal paying over the odds for players and silly wages ie £150,000 a wk for tevez when arshavin is just as good if not better for £90,000 a wk, which still turns my stomach,
    football is and has been ripped apart because of all the money, its a zillion miles away from sunday league football, which to me doesnt feel right,

  3. Agreed, if these owners profess to have the best interest of the club at heart, then they can cough it up and show it, and stop talking about it. I happen to think they just love the thrill of owning and as long as we’re in the top four on a tight budget they’re satisfied.

    Compared to DD and Usmanov, i don’t know what compels supporters to support the current regime, other than its staunch support for wenger who frankly has headed off the reservation. As long as new ownership actually puts money in the club as opposed to financing with additional debt and with restrictions thereon, i think this offering is fine, time to put up or step down for this board. Really, the only other board member that brings anything worthwhile to the board is kroenke, he can stay in partnership with DD and Usmanov.

  4. Oh and by the way, if we are in financial straights, don’t forget who put us there.

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