The long awaited takeover of Everton Football Club, (The Everton Football Club Company Limited – company number 00036624) by The Friedkin Group is almost upon us. After years of the most chronic mismanagement by Farhad Moshiri, his selected board members, senior executives, advisors and the pre-Moshiri owners, now deceased or long since retired, a brighter, more stable, more professionally run (at the very least) future is upon us.

Despite the very significant footballing issues, the as yet unresolved dispute with the Premier League over the accounting treatment of interest payments and the enormous competitive gap within the Premier League, new ownership and the moving into Bramley-Moore at the beginning of the 2025/26 season has brought that most rare of commodities, optimism to the fore of many Evertonians’ minds.

Unlike previous would-be purchasers, The Friedkin Group have remained resolutely tight lipped about every aspect of their future ownership, much to the relief of most seasoned Everton watchers and commentators.

However, (and there’s always an however) one group of the Everton community, namely the individual shareholders might have, by now, expected more information about what the potential takeover means for their shareholdings.

The Everton Football Club Company Limited is, of course, a private limited company and as a result minority shareholders either through statute or as governed by the Articles of Association have very limited rights and access to information.

Everton’s shareholding structure

As mentioned above The Everton Football Club Company Limited is a private limited company. It is owned by the holders of the 135,000 ordinary shares issued by the company. In total, there are 2,114 holders of the ordinary shares. The most recent list of shareholders can be viewed here: Everton shareholders . Shareholders with greater than 50 shares are listed below:

In a letter to shareholders, dated  30 November 2024, Chief Executive Officer, Colin Chong stated the following

Dear Shareholder,

I hope this communication finds you well.

As a valued shareholder of Everton Football Club, I am writing to provide you with an update on the recent amendment to Premier League rules regarding Associated Party Transactions, and what this means for the Club and its shareholders moving forward.

It is also important to explain, within the context of the detail I am sharing with you today, what the rule amendment means for the proposed purchase of Blue Heaven Holdings’ (BHH) shares by The Friedkin Group (TFG).

All parties are working to secure the necessary regulatory approvals to complete the transaction, and that is progressing well.

It has not been appropriate to provide information on the takeover whilst the regulatory approval process continues, but I am happy to share with you that TFG has demonstrated a high level of professionalism and a clear, focused approach throughout this process. This has ensured a smooth preparation for the transition of ownership for everyone involved at the Club, and provides a clear indication as to the future trajectory of the Club, which I’m sure, as a shareholder, you will welcome.

In accordance with the Club’s Articles of Association, a letter will be sent to all shareholders via post ahead of the completion of the sale asking you to vote on all company resolutions required to advance the transaction to completion. The majority shareholder will be voting in favour of each of the resolutions presented.

One of the resolutions shareholders will be asked to vote on will ensure the Club will not be adversely affected by the new rules approved by the Premier League shareholders last Friday in respect of Associated Party Transactions (APT). The changes have been put in place following an Arbitration Panel’s ruling earlier this year, which made clear shareholder loans needed to be brought within the scope of APT within the Premier League’s rules.

For clarity, the impact of the rule amendments means that, going forward, all loans any shareholder wishes to provide a club will be subject to a Fair Market Valuation (FMV) assessment, and (regardless of the terms of the loan) market interest rate and costs will be applied to the loan facility for the purposes of a club’s PSR calculation – or any future financial sustainability calculation mechanic.

The rule changes also mean any club with a current shareholder loan balance (as we have), must take steps to ensure such loans are capitalised on or before 11 January 2025, to avoid these loans potentially having a negative impact on a club’s PSR calculation for the accounting period 2024/25.

In addition to the resolutions around change of control you will be asked to approve, this will be the basis of one of the resolutions included in the formal communication you will receive through the post in the coming weeks.

As a result of these changes, shareholder loans will no longer provide a PSR neutral route for the injection of funds into a club, leaving equity investment as the only means through which additional funding can be provided without negatively impacting investment in the playing squad. The APT rule amendment requires a capitalisation of shareholder loans which, in turn, will result in the creation of new shares in the Club.

I can assure you the Club, our current majority shareholder and TFG have put in place a structure for the takeover agreement that ensures these rules do not negatively impact the Club’s PSR position and will enable TFG to continue to invest in the Club and in the team in the years ahead.

I am aware there is a great deal of anticipation about the vision and plans of our prospective new owners. It is important to explain that, out of respect for the ongoing process, it would not be appropriate for TFG representatives to communicate directly with shareholders at this time.

Accordingly, the letter from the Club confirming the resolutions in advance of completion will be your next formal communication on this matter.

I felt it was important to keep you informed, and your understanding is appreciated.

Kind Regards,

Colin Chong

The letter refers to two separate but related issues, the sale of Blue Heaven Holdings shareholding to The Friedkin Group and the treatment thereafter of the current shareholder loans provided by Bluesky Capital in line with the new Premier League Associated Party Transactions (APT) rules.

I thought it worthwhile therefore to clarify and seek answers to the following:

• The sale of Blue Heaven Holdings’ shareholding in The Everton Football Club Company Limited does not require shareholder approval – theoretically (and in accordance with Article 6 of the AoA) the directors can decline to register the transfer of shares but that is not the case here – the sale will come with the approval of the directors.
• The letter therefore suggests that The Friedkin Group will not be acquiring all of the 135,000 shares, just the 127,031 owned by Blue Heaven Holdings
• The issue of new shares (in respect of capitalising the £450 million of shareholder loans currently owed by the club) does require shareholder approval by way of a simple majority – this is guaranteed with either the approval of Moshiri prior to the sale or the approval of The Friedkin Group after their acquisition.
• On the assumption that The Friedkin Group acquire only the Blue Heaven Holdings holding (127,031 shares) the price at which those shares are acquired impacts all other shareholders, particularly given that shares traded as recently as 29th November 2024 when 72 shares traded at £3,400 each
• The issue of new shares, the classification of those shares, and the price at which the shares are issued is also of concern to existing shareholders.

I raise these points for the following reasons:

• Even the most optimistic forecast of what Moshiri (Blue Heaven Holdings) might receive for his shares suggest figures of between £25 and 50 million. That suggests a value per share of £196 – 392 per share. How does one explain the rationale behind individual shares trading recently at £3,400?
• The issue of new shares to cover the capitalisation of the shareholder loans, on the assumption of a similar price to that offered for Blue Heaven Holdings shares, would see the minority holdings be heavily diluted to less than 0.5% perhaps as low as 0.25% (this includes the shares of the late William Kenwright). At what point, particularly in the context of no statutory requirement to hold general meetings, does the notion of individual shareholdings become just a quaint (but no doubt important to many existing shareholders) nod to the past?

In the excitement of a takeover, the new stadium and the prospects of much of the damage of recent years being reversed under new ownership it is perhaps easy to dismiss the above as largely irrelevant, but it is important – important to individual shareholders and important to the continued connection between the club and those long term shareholders with shares having been passed from generation to generation of Blues.

For the Friedkins, the above (the sale of Blue Heaven Holdings’ holding and the issue of new shares) requires sensitive handling. There is the argument that it has not been appropriate so far to discuss these matters. However, now, on the cusp of the takeover, that argument is no longer valid. How the Friedkins communicate this will give greater understanding as to how they propose running our club in the future.