1. Mr David Ovens
Representative of Mr Gavin Masterton
Dunfermline Athletic Football Club Limited
14th March 2013
Dear David
Further to this morning’s meeting at East End Park, I have been asked on behalf of The Pars
Community to write to you with a final and non-negotiable proposal which we believe would help
secure the immediate and long term financial stability of the club. We require an acceptance or
rejection of this proposal by 10am on 15th March 2013.
The proposal has the support of the board of the Pars Supporters Trust (‘PST’) (advised by
Supporters Direct), Mr Kip McBay, Mr Iain Jones, Mr Craig McWhirter, Mr Keith Love, Mr Steve
Curtis, Professor Bill McIntosh, Mr Ross McArthur and Mr Donald Adamson.
The proposal is as follows:
1. As soon as agreement on the terms of the proposal is reached with you, a Community
Interest Company (‘DAFCL no 2’), which has already been formed, would commence a fund-
raising, targeting to raise a minimum of £500,000 as soon as possible. The sum raised would
be used to subscribe for new ordinary shares in Dunfermline Athletic Football Club Limited
(‘DAFCL’) representing 100% of DAFCL. The shares held by existing DAFCL shareholders
would be converted into deferred shares. To the extent, that our fund-raising does not raise
£500,000, existing ordinary shares would not convert into deferred shares, on a pro-rata
basis.
2. Immediately on acceptance of this proposal, the voting rights over Charlestown Holdings
Limited (‘CHL’) existing ordinary shares in DAFCL would be transferred to DAFCL no 2 until
such time as the proposal is implemented in full or DAFCL no 2 withdraws from further
involvement.
3. In any event, DAFCL no 2 would continue to be owned 50% by ordinary supporters via the
PST and 50% by named parties as supporters (each restricted to a maximum of 10% of
DAFCL no 2).
4. A new four person board of DAFCL would be appointed, mirroring the board of DAFCL no 2.
All existing directors of DAFCL would resign, without claim for loss of office.
5. CHL, other companies in the CHL group, Mr Gavin Masterton and members of his family - in
each case in respect of all amounts due to them, whether long term or short term - together
with all other long term creditors of DAFCL would write off 75% of all amounts due to them.
The remaining, unsecured, balances due would be repaid from a percentage, of between
10% and 20%, of ‘exceptional receipts’ generated by DAFCL (eg revenues from Cup Finals
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2. and European matches, significant transfer fees) (‘the repayment pool’). If not repaid by 31
March 2043, the remaining amounts outstanding on these loans would be written off in full.
6. DAFCL would act as directed by DAFCL no 2 and give DAFCL no 2 all necessary assistance and
approvals to seek agreement to a restructuring of all amounts due to DAFCL by short term
creditors as at today’s date.
7. A condition of this proposal is that by close of business on 22nd March 2013, agreement to
the undernoted short term creditor restructuring will have been reached with 80% (by
value) of all short term creditors as at today’s date. The required restructuring is that such
creditors will agree to an immediate 50% debt write off. A further 25% of amounts presently
due to such creditors will be added to the repayment pool described in paragraph 5 above.
The balance of amounts due (25%) will be repaid by DAFCL on a normalised repayment plan.
8. The proposed restructuring of the Lloyds Bank (’LB’) loan to East End Park Limited (‘EEPL’)
which you presented to Mr Ross McArthur on 12th March 2013 is unacceptable. Accordingly,
the board of EEPL will immediately grant duly authorised representatives of the board of
DAFCL no 2 an unrestricted mandate to negotiate a restructuring of the loan with LB. In this
event DAFCL would acquire 100% of the shares in EEPL for £1. It is anticipated that the terms
of the restructured loan would be the same as the present loan, except that DAFCL would be
allowed to sell either EEPL or the stadium to an independent charity without penalty. Should
the representatives of DAFCL no 2 not be able to come to a satisfactory agreement with LB,
you would arrange for EEPL to enter into a 30 year lease with DAFCL for the stadium, on
normal commercial terms for a stadium such as East End Park.
9. The Purvis Group would extend its existing sponsorship of DAFCL for a further two seasons
following the end of this season.
10. DAFCL and EEPL undertake to run their businesses as normal during the period until the
proposal is implemented in full and not to undertake any exceptional or unusual
transactions or expenditure during this period.
11. As necessary, and with the full support of DAFCL, DAFCL no 2 would seek the early approval
of all relevant football authorities to the proposal.
12. The terms of the proposal are subject to all necessary due diligence (which DAFCL would
facilitate with immediate effect and which would require to be completed to DAFCL no 2’s
satisfaction by 22nd March 2013) and is subject to contract.
Should you reject this proposal, and only on such basis, we reserve the right to put forward an asset
purchase proposal, albeit such proposal may not be acceptable to the relevant football authorities.
No reliance should be placed on the deliverability of such an asset purchase proposal.
Yours sincerely,
Graham F Watson
On behalf of The Pars Community
Cc Mr Bob Garmory, DAFC Steering Group
Mr Ross McArthur (for delivery to Messrs McBay, Jones, McWhirter, Love, Curtis and McIntosh)
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