YORK City's Supporters' Trust board insist they have explored all options in their attempts to find a financial and managerial way forward for the football club.
But, having considered the possibility of a loan finance scheme, public share offer and commercial sources of borrowing, as well as approaching the City of York Council, the Trust believe JM Packaging's proposal to invest £1million into the club in return for a 75 per cent (plus one share) stake is the only workable available option.
In a letter sent to the Trusts's 1,250 members, the Trust Board have also given reasons why they deemed an alternative proposal from former Trust board member Mike Grant unworkable.
Grant and a number of other individuals from the Hurst Group construction company, of which he is a director, had signalled their intention to provide the club with a £200,000 loan, boasting an interest rate of 12 per cent.
The interest would then have been payable and the loan waived on the sale of KitKat Crescent.
In return, the Trust would have retained their 85 per cent ownership but the Trust board believed the potential scheme would have been unworkable, reasoning that £200,000 would be an insufficient sum relative to the club's requirements.
The Trust board also expressed concerns over the availability and timing of funds, given the urgency for a cash injection, and added that the proposal insisted upon two non-executive club director appointments but did not provide sufficient comfort about the future management and running of the club's business operations with an implication that City's current board of directors would reconsider their positions in the event it came to fruition.
Answering why the Trust board are now considering a change of ownership in the club, the letter to members states: "We needed someone to both help fund the club and also run it."
About other possible financing alternatives, it adds: "Last autumn, the Trust board's view was a loan finance scheme was the best option. This would have allowed people to provide a loan to the Trust or club, secured against the value of the ground, earning a rate of return and repayable plus interest when Bootham Crescent was sold.
"Unfortunately, it was not possible to launch that scheme. Without planning permission there is currently insufficient value in Bootham Crescent to offer security and, until recently, the scheme did not have clearance from the financial authorities.
"There were also concerns that the scheme would raise insufficient monies to be a solution."
The Trust board statement goes on to explain legal restrictions and time and cost considerations meant a public share offer was never an option and a lack of security again would be the stumbling block for commercial borrowing, whose rates of interest would also be prohibitive.
Equally, it was quickly established that council funding would not be possible and, consequently, the Trust board statement added: "In March, we invited Jason McGill and JM Packaging to extend the partnership with the Trust, whilst at the same time we have continued to explore other options. The JMP proposal is not a hostile 'takeover'."
The statement also re-iterates that the Trust was never established to be majority owners of the football club.
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