1. Mr Gavin Masterton
Director
Dunfermline Athletic Football Club Limited
8th March 2013
Dear Gavin
Further to our recent appointment, the undernoted investment proposal (‘the proposal’)
has been developed by the Dunfermline Athletic FC Working Party (‘the Working Party’) led
by myself. Members of the Working Party who have been involved actively in negotiating
the proposal are myself, Bob Garmory and Stephen Taylor.
The proposal has the full support of the Working Party together with the following parties:
the board of the Pars Supporters Trust (‘PST’) (advised by Supporters Direct (‘SD’)), 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.
We believe that the proposal would help secure the immediate and long term financial
stability of the club.
Our assessment of the club’s current share issue plan, given that its focus is solely on the
immediate working capital needs of the club through to the end of May 2013, is that it
carries an unacceptably high degree of risk for ordinary supporters who might consider
investing, particularly since we now understand that the issue will be classed as a ‘financial
promotion’ and not as a ‘prospectus’, with the more limited investor protection implications
which this distinction implies.
We also see little evidence that the proposed issue will secure sufficient support from
parties who we might have expected to back it, principally prospective new investors and
SD. In addition, we believe that there is now a significant risk that The Purvis Group could
withdraw its support for the planned share issue.
Accordingly, on the evidence available to us at this time, we cannot see the proposed share
issue raising anything like £500,000. As a result, we would be very nervous about standing
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2. up in front of supporters at next Monday’s scheduled meeting and providing any
encouragement to ordinary supporters to invest in the share issue.
Therefore, in accordance with our remit, we now believe that the broad shape of the
undernoted proposal is in the best interests of all stakeholders in the club and as such,
deserves to be given due consideration by yourself. We fear that the consequences of you
not entering into our constructive dialogue could include the liquidation of the club – a
result which no-one wants.
The proposal has been developed by the parties involved in the negotiations in good faith
and is presented on the following basis:
 All parties agree that the future well-being of Dunfermline Athletic FC is far more
important than any one individual or group.
 All parties agree that speed is now of the essence in order to save the club and
therefore agree to collaborate with the intention of implementing this proposal in
full, as soon as possible.
 All parties agree to conduct all further discussions regarding the proposal in good
faith, with openness and transparency and, in a timely manner.
 All parties agree that the prospect of Dunfermline Athletic Football Club Limited
(‘DAFCL’) being liquidated is a highly undesirable outcome.
 All parties agree that supporter unity in the future is essential for the long term well-
being of Dunfermline Athletic FC.
In addition, we can advise that following consultation between the PST and SD, the PST has
confirmed to us that the proposal will receive its full support. This is on the basis that the
proposal is entirely in line with the mission of SD and with the PST’s ethos and desire for
50:50 community ownership of the club.
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
DAFCL representing up to 89.32% of DAFCL. Regardless of the sum finally raised, you
would own at a minimum, 10% of DAFCL and other existing DAFCL shareholders
would own at a minimum, 0.68% of DAFCL.
2. In any event, DAFCL no 2 would 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).
3. Given DAFCL’s pressing financial requirements, we have given consideration to the
need for an element of underwriting by new investors, while the DAFCL no 2
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3. financing is in progress. Based on our discussions, we believe that if you are able to
agree with us that the proposal is now the preferred way forward for all parties,
including yourself, and then indicate your willingness to withdraw the planned share
issue, such underwriting will be forthcoming in short order. (Such underwriting
would not be in addition to the sum subscribed for new ordinary shares in DAFCL
under point 1 above.)
4. A new four person board of DAFCL would be appointed, mirroring the board of
DAFCL no 2. In addition, DAFCL would be able to co-opt additional non-voting
members to the board in order to facilitate the full implementation of the proposal
and to ensure that the DAFCL board retains the correct competence and skill set. In
this regard, The Purvis Group has agreed to offer its continued support to DAFCL by
providing a senior executive as a co-opted member of the DAFCL board, should this
be deemed appropriate.
5. All existing directors of DAFCL would resign, without claim for loss of office.
6. Charlestown Holdings Limited (‘CHL’), other companies in the CHL group, yourself
and members of your family - in each case in respect of all amounts due to
you/them, whether long term or short term - together with all other long term
creditors of DAFCL would write off 60% 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 and
European matches, significant transfer fees). If not repaid by 31 March 2043, the
remaining amounts outstanding on these loans would be written off in full.
7. Short term creditors would agree to a rescheduling of all amounts due to them by
DAFCL, with the intention that the amounts which are agreed as outstanding are
repaid in full within 18 months.
8. We have agreed in our negotiations that you would be invited to meet with Lloyds
Bank (’LB’) as a matter of urgency to seek to negotiate (i) a percentage of the existing
£12.2m loan to East End Park Limited (’EEPL’) which would be written off and (ii) a
restructuring of the residual loan. Should you be able to negotiate a restructuring
which is acceptable to the board of DAFCL no 2, then that board would be willing to
agree that DAFCL would enter into a 30 year lease for the stadium on normal
commercial terms. Should your negotiations not prove acceptable to the board of
DAFCL no 2 within 21 days following your agreement to the proposal, or should you
decide not to enter into negotiations with LB, then you would immediately grant
duly authorised representatives of the board of DAFCL no 2 an unrestricted mandate
to negotiate a restructuring of the loan. The objectives of the board of DAFCL no 2 in
this event would include DAFCL acquiring 100% of the shares in EEPL. In this event, it
is anticipated that the terms of the residual 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
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4. 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.
9. As necessary, we would seek the early approval of all relevant football authorities to
the proposal.
10. The Purvis Group would extend its existing sponsorship of DAFCL for a further two
years following the end of this season.
11. We have been advised that the agreement of the parties with whom we have been
negotiating the terms of this proposal is subject to all necessary due diligence (which
would be carried out with appropriate urgency, recognising that time is of the
essence) and is subject to contract.
Once the proposal is implemented in full, our collective goal is to make the club great once
again, by pursuing a philosophy of ‘Sustainability: Now and in the Future’.
We look forward to discussing this proposal with you as a matter of priority. Should it be
appropriate, we would be prepared to convene an early meeting between you, the Working
Party and the parties with whom we have been negotiating in order to conclude
negotiations.
Yours sincerely,
Jim Leishman
On behalf of the Dunfermline Athletic FC Working Party
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