Stefan Borson: Arsenal to issue new shares after Man City update

Arsenal and Brighton are unlikely to face any significant issues despite their hefty shareholder loans putting them in the spotlight following Manchester City’s associated party transactions (APT) case.

That is the view of former Man City financial adviser Stefan Borson, who exclusively told Football Insider the Premier League duo will likely issue more shares to ensure they don’t face any financial issues.

Man City took legal action against the Premier League regarding the APT rules currently in place at an arbitration hearing in June.

Both sides have claimed a victory in the case after the arbitration panel’s decision was published on 7 October, where two aspects of the rules were deemed to be unlawful.

The commission ruled that shareholder loans shouldn’t be excluded from the Premier League’s profit and sustainability rules (PSR).

Arsenal owe owner Stan Kroenke £259million, while Tony Bloom has loaned Brighton £373million.

Arsenal and Brighton to avoid “big” issue despite Man City news

But Borson doesn’t see it being a “big” issue for either club.

He told Football Insider: “The clubs who tend to have very big shareholder loans are those with near 100 per cent ownership of the club because then they are not worried about subsidising the other shareholders effectively by putting their hands in their pocket, not charging interest and allowing the other shareholders to gain value of their shares on the other side.

“The teams that we should look at as being important are Brighton and Arsenal in particular.

“But both of them have got near 100 per cent ownership of the clubs that they are loaning to, so they are not really subsidising anybody in circumstances where they are perfectly able to switch that debt into equity.

“What they would do is the clubs would just issue more shares.

“It wouldn’t be diluted because they already have 100 per cent of these clubs and those shares, and the proceeds of those shares would repay the loans to the shareholders.

“They would effectively remove the loans and, therefore, remove the issue in terms of the undervalue on the interest rates.

“To be honest, I don’t think it’s a big deal and, furthermore, these clubs have always had to apply a market rate of interest for Uefa purposes.

“In the Uefa rules, they have always needed to fair market value low interest or non-interest-bearing loans.

“Overall, even for Arsenal, who have got a shareholder loan of more than £200million, I don’t see it’s going to be a particular issue for them.”

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