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Notice of Closure

Important information regarding Arsenal Fanshare

I am writing on behalf of the Arsenal Fanshare Society Limited (the “Society”) to inform you that, with much regret, the Arsenal Fanshare Scheme (the “Scheme”) is likely to close in the near future. Effective immediately, therefore, the Scheme will not take in any further contributions, and all requests to redeem Fanshares are currently suspended, pending the potential sale of the Arsenal Holdings PLC Shares (“Shares”) held by the Scheme and a distribution of funds to members (less the costs of winding-up the Scheme and the Society).

I know you will be interested in the background to this situation. The Scheme has faced two major problems: a lack of liquidity in the share market and a shortfall in funding.

As you will be aware, Stan Kroenke, via his company KSE UK Inc (“KSE”) has a majority stake in Arsenal Holdings PLC, the company that owns Arsenal Football Club. According to published figures, this holding is currently 66.85%, 41,596 Shares. Red & White Securities Limited (“Red & White”), a wholly-owned subsidiary of Red & White Holdings Limited, the vehicle of Alisher Usmanov, holds 30.04% or 18,695 Shares. The Fanshare Scheme holds 116 Shares and is now the third largest shareholder.

This means that out of a total of 62,217 available Shares, there are just 1,810 outside of these three hands. As a result, the Society has found obtaining additional Shares increasingly difficult to arrange. Understandably some shareholders do not want to sell, as they have an emotional attachment to Arsenal – most of the 360-plus who own just one share each fit into this category, and many others are also fans of the club. Holders who between them hold over 200 Shares cannot be traced. Accordingly, the lack of movement in the share market and the overall availability of Shares have caused problems. This has directly led to the second issue: a lack of ongoing funding to continue to operate the Scheme

To find out more, read the full document which contains more information regarding the scheme's future.

Fanshare Frequently Asked Questions

  • Why is the Arsenal Fanshare Scheme suspended at the moment?

    The Arsenal Fanshare Society has suspended the Scheme because the directors cannot justify accepting any further subscriptions at this time due to the high likelihood that the Scheme will need to close shortly (see the letter on the home page for full details). At the same time no existing members can withdraw their holdings until the directors are able to meet all withdrawals at the same time. The directors need to take this action so that no one holder is disadvantaged over another and all Fanshare holders are treated on the same basis.

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  • Why is the Fanshare scheme closing?

    The Directors have reluctantly come to the conclusion that Fanshare cannot continue for two main reasons:

    a) The business model for Fanshare was based on the Scheme being able to buy shares in Arsenal Holdings plc, the listed vehicle that owns Arsenal Football Club, and being able to market and grow the Scheme. Shortly after the launch of Fanshare, Arsenal was taken over by Stan Kroenke (via his company KSE UK Inc, which now has a majority stake currently at 66.8% or 41,596 shares). In addition, the other main shareholder, Red & White Securities Limited (“Red & White”, a wholly-owned subsidiary of Red & White Holdings Limited ) started buying up shares in bulk and now holds 30% or 18,695 shares. Consequently liquidity of shares has dried up substantially making purchasing shares very difficult for the Scheme. This means that out of a total of 62,217 Shares, there are only 1,926 Shares outside of these two hands. The Fanshare Scheme holds 116 Shares and is the third largest shareholder. There are now very few share sales.

    b) At the same time, because of the lack of shares available for the scheme to purchase the running costs of the scheme have come under extreme pressure – the charge of 2% of contributions to the scheme simply does not generate enough revenue to pay the administrative costs of running the Scheme. Had we been able to market the Scheme and grow as we intended this small charge would have been enough for the Scheme to become self-funding.

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  • Why have Arsenal ceased to support Fanshare?

    Arsenal agreed to provide financial support for an initial period of 3 years and this was extended for a further year. It was always intended that the Scheme would become self-financing but as a result of the takeover by KSE it became more and more difficult to acquire sufficient numbers of shares to achieve this. Arsenal had no legal obligation to continue to provide financial support and its Board of Directors decided it no longer wanted to support the Scheme. The Fanshare Board has tried on numerous occasions to persuade Arsenal’s Board to continue to support the Scheme but to no avail. More information is set out in the email communication recently sent to all Fanshare members, which can be found above and on the Home Page.

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  • What efforts did the directors make to find an alternative?

    They have discussed the position at length with Arsenal, and with Red & White, both of whom have ultimately declined to offer any further assistance. The directors have spoken to many alternative fund administration groups about the possibility of them running the scheme in place of Equiniti, but regrettably no viable candidate has been found due to the unusual nature of the Scheme.

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  • What are the costs of running Fanshare?

    Each year the running costs of the fund have been in the region of £75,000. This is made up of administration costs, charged by the fund administrator Equiniti, and legal and audit fees. All of your directors have been working entirely on a voluntary basis.

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  • What is the process for winding up the Scheme?

    The first action was to suspend all future contributions and redemptions (withdrawals). Having done that, if no other resolution can be found the directors are seeking interested parties, including the two big shareholders, in order to negotiate a sale of the shares the scheme holds. The directors will do everything in their power to get the best price they can for the benefit of Fanshare holders. Once negotiations has been concluded and the costs of winding up the Fanshare have been established, the directors will collect the proceeds of the sale of shares, pay the costs and distribute the remaining proceeds to the holders.

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  • Why do I have to contribute toward the costs of winding up the Fanshare scheme?

    In any distribution, as per the Scheme Rules, the directors have to ensure that sufficient funds are retained by the Society to pay the winding-up costs, and the Rules provide on leaving the Scheme that a £50 exit fee will be levied on every member. However, it is the Board’s current intention to charge a reduced exit fee if possible.

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  • Can I sell my Fanshares?

    Presently, no existing shareholders can withdraw until the directors are able to meet all withdrawals at the same time. The directors need to take this action so that no one holder is disadvantaged over another and all fanshare holders are treated on the same basis. If the Scheme needs to close the directors will do everything in their power to get the best price they can for the benefit of Fanshare holders. Once negotiations has been concluded and the costs of winding up Fanshare have been established, the directors will collect the proceeds of the sale of shares, pay the costs and distribute the remaining proceeds to the holders.

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  • Can I transfer my shares to another individual?

    As per the scheme rules, while the Arsenal Fanshare Society is suspended no transactions of any kind, including sales, transfers and the withdrawal of unvested cash will be permitted.

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  • Can I withdraw my unvested cash?

    As per the scheme rules, while the Arsenal Fanshare Society is suspended no transactions of any kind, including sales, transfers and the withdrawal of unvested cash will be permitted. Once any sale of the Arsenal shares has been concluded and the costs of winding up the Scheme have been established, the directors will collect the proceeds of the sale of shares, pay the costs and distribute the remaining proceeds to the holders.

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  • When will the last direct debit collection be made?

    The last collection was made on 26 June 2014. No further contributions will currently be accepted, and any money collected after that date will be held aside and will not be included in calculations. If the Scheme closes, direct debits will be cancelled as part of the winding down process.

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  • What happens if the directors cannot find a buyer for the shares?

    It is possible that in the event of a closedown the directors will not be able to find a buyer for all the Arsenal shares at what is considered a reasonable or fair price. If that is the case, the directors will consult with Fanshare holders before taking further action.

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  • How much will the fanshare get for each Arsenal share?

    It is not known what price the directors will be able to obtain, but it is hoped that whoever buys the shares will give the Fanshare members a fair and equitable price.

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  • When will I get my money?

    For the time being, the directors cannot say when exactly the monies will be paid out. However the directors are working very hard to complete this work as soon as possible because of the ongoing cost of running the scheme. The directors are conscious of this and will resolve the situation as soon as is practical.

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  • Are there any alternative redemption choices?

    a) Fanshare members who hold Fanshares in excess of the equivalent of 1 full Arsenal share may wish to be issued with a share in their own name. The Directors will approach those holders individually. b) Fanshare members who are close to the equivalent of 1 full Arsenal share may wish to top up their holding in order to be issued with a full share in their own name. c) The directors are exploring an option to ‘freeze’ holdings at the current level. However, this is likely to present many difficulties and may not prove practical or cost-efficient. d) If there are holders that would like to donate their holding for the benefit of the Arsenal Supporters Trust, they should advise the Fanshare directors accordingly.

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  • How can I check my Fanshare balance?

    Please call 0845 600 1612 (+44 121 415 0097 from overseas) to confirm your Fanshare balance. Alternatively, please register for an Equiniti Shareview portfolio by visiting the website at www.shareview.co.uk/myportfolio

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