Board member Charlie Talbot summarised the end of year financial update and the plans for refinancing in 2022. This was originally intended for publication in the Portsmouth programme (18/12/21) and includes a summary of what was discussed at the recent AGM.
It’s been a busy year on and off the pitch.
Now that the stadium is fully open, the Trust, club and finance committee have been working hard to provide as many options and routes to funding as possible ahead of the refinancing deadline in April 2022.
As previous updates have made clear, in April 2022 there will be £4.5m of external debt to refinance. This was originally provided by a short-term bridging loan in order to allow the stadium construction to be completed on time. It was hoped at the time the loan was secured in early 2020 that by the first quarter of 2022, any refinancing discussions would have been possible against a backdrop of over a year of financial performance of a fully functioning stadium. Of course, Covid and playing games behind closed doors means that this hasn’t materialised.
As we explained in this week’s update at the AGM, there are three routes to funding that will be combined to provide the refinancing needed – a combination of what we could think of as “friendly” debt, commercial debt and equity investment. Ideally, we would like to reduce or remove completely any external debt obligations by April 2022.
In terms of equity investment, as of summer 2021 there remained approximately £2.5m in equity headroom under the existing structure. That means there is up to £2.5m in share capital available to minority investors (and previously approved for sale by Dons Trust members). Even if all of that is sold, it would mean the Dons Trust maintains 75% ownership of AFC Wimbledon plc. We are in negotiations with a few parties and hope to use some or all of this available equity to bring in funding by spring 2022. Further updates will of course follow as and when anything concrete is agreed.
Hopefully that will leave no more than £2 – £2.5m to refinance. We have obtained indicative terms from a lender to provide commercial debt to cover this amount, but this would be at relatively high interest rates (more than 10%). We are continuing to talk to other lenders to provider further options at better rates.
But there is no doubt that we would rather borrow money from our fans and other investors in the Plough Lane Bond than borrow from a bank or other lender. And so, the Plough Lane Bond will not only remain open, but will be relaunched and refreshed as the Plough Lane Bond 2 for 2022. We will be offering a higher rate of interest and also be providing an extra incentive for any existing bondholder.
Bonds will now be available paying up to 7% interest per annum over 5, 10 or 25-year terms. Full information will be available on the updated www.PloughLaneBond.com.
The Bond has already raised more than £5.6m in funding, making it the largest football bond ever issued. Fans and well-wishers invested generously to facilitate the construction of the stadium and ensure Wimbledon moved back to the borough as a fan-owned club. We know that the last two years have been challenging for everyone – personally, emotionally, physically and financially. We are well aware that people’s circumstances have changed. So, we continue to explore all routes for equity and debt investment as well as asking our incredible members and fans once more.
And so, we are not asking people to put in their savings to “save the club”. Thanks to everyone’s efforts we have brought the Dons home and we are playing here on Plough Lane, back in Merton at last. We are working through the Foundation and DLAG to assist thousands of people in our community. What we are hoping for now is one last push to provide the club with the funding required to drive our five-year business plan at an operational stadium – on matchdays and non-matchdays.
If we can drive Plough Lane Bond 2 up towards the £2 million mark on top of what we have already achieved together, then it will improve the financial picture for the club and reduce or remove any external obligations, freeing more money up to be spent on operational costs and playing budgets. And it will support everything we hope to achieve together. Thanks for your support.