On 16th March 2023, Sian Davies (Supporter Director) and Ceri Stone (Associate Director) attended a club board meeting at the Swansea.com stadium. These meetings happen on a quarterly basis and are attended by the Board of Directors for Swansea City, including co-owners Jason Levien and Jake Silverstein, Martin Morgan, Bobby Heinrich, Sam Porter, CEO Julian Winter, CFO Gareth Davies, Romy Chaudhari and ourselves.
At the Board Meeting, several items were discussed, but there was one main agenda item which has been summarised below.
Conversion of loans to equity
Earlier in March, the Trust was provided with formal notice of an intention to convert current loans (valued at 3 million GBP) into equity within the club by Steve Kaplan and Jason Levien (representing Swansea Football LLC), and Jake Silverstein (representing Stormlight Elyrch LLC).
We were also informed of the intention for Stormlight Elyrch LLC’s holdings to be transferred into Swansea Football LLC, the majority ownership investment vehicle, to sit alongside the rest of the majority ownership group’s shareholdings This was reviewed by our legal sub-group, who issued a number of clarification questions to Jake Silverstein regarding the purpose and justification of the transfer, and the benefits to the club of this transfer.
After a round of discussions, we were satisfied that the answers we received would allow us to support this conversion and transfer. The conversion of these loans will reduce the debt within the club and avoid ongoing interest payments to the loan note holders (although it should be noted that no cash interest has been paid by the club on any of these or the previously converted CLN’s). The transfer of Jake Silverstein’s shares to sit inside of Swansea Football LLC is being done for administrative purposes and reaffirms alignment amongst the majority ownership group. These changes will not affect Jake Silverstein’s role as a Board member of the club or the level of his ultimate shareholding in the club.
During the board meeting, the following resolutions were passed:
- Stormlight Elyrch LLC and Swansea Football LLC converted £3,046,579.56 worth of loans into equity. In other words, the Club has repaid the £3,046,579.56 by giving shares, rather than cash.
- Stormlight Elyrch LLC transferred its shareholding into Swansea Football LLC.
We recognise that transparency around who owns the club, and the decisions made around that, are very important to the fanbase. As part of our input into this discussion, we encouraged the majority ownership group to issue a statement that provides a direct update to fans on this transaction, which they have done HERE. We are continuing to discuss the sharing of a broader message about the strategy of the club going forward.
Impact on the Trust
As a result of the conversion, the Trust’s overall stake in the Club has been diluted alongside all other shareholders who did not take up the offer to purchase more shares. However, the Trust’s protected 5% effective shareholding has not been diluted. The Trust has permanent legal and economic protections in place, which are set out in the confidential shareholding agreement between all shareholders of the club.
We have recently responded to a large number of queries and feedback about our comments on our shareholding – we would like to be clear that the Trust is well aware that dilution is not ideal, but the Trust does not have the financial resources to match incoming funds each time a new investment in the Club is made by another party.
In instances like this, our responsibility is to put the security of the football club first, and it is our collective view that the club should operate with only sustainable debt – if that means more equity must be released to support this, then it is a position that we accept.
We have mentioned on several occasions already that we would prefer any investment to be targeted at playing squad improvements or upgrades to the club’s infrastructure, and not to cover shortfalls in the Club’s accounts. We know that this is shared by all concerned with Swansea City, but the club is not financially sustainable enough to do this yet. Our outgoings are still higher than what we bring in through commercial revenue and player sales. This balance is something we are continuously discussing with the owners and senior management team.
It is also worth noting that the Trust is not the only shareholder diluted in instances like this – as none of the other shareholders beyond the majority ownership group have invested additional funds, their respective shareholding in the club has also been diluted.
Fans Forum
Can we also take this opportunity to mention members of the Trust Board continue to field questions and respond to feedback via both social media and to direct emails. An area that we have picked up is the need for additional fans forums before the end of this season, which we have fully endorsed.
The Trust have engaged the club regarding future fans forums and other supporter-based engagement events before the end of the season and are pleased with the warm response we have received to this proposal. The club are looking at all available options and as soon as we have any more information, we will let our members and supporters know.
As always, we encourage members and supporters to send us their feedback and questions to communications@swanstrust.co.uk
Swansea City Supporters’ Trust
21st March 2023
