About CPO

When the freehold of Stamford Bridge was sold to Marler Estates plc, (later Cabra Estates plc) in 1984, the future of football at the ground became uncertain and many Chelsea Football Club fans will remember that we faced continual threat from property developers.

When Cabra Estates plc went into liquidation in 1992, the club was granted a lease for Stamford Bridge and an option to buy the freehold.

In December 1992 Chelsea Village Limited, as it then was, entered into an agreement with a subsidiary of Royal Bank of Scotland (RBS) to take a lease of the whole of the Stamford Bridge (SB) site for a term of 20 years from December 1992.

West Register Properties Ltd (which is now called Chelsea Stadium Limited), the subsidiary of RBS, also granted Chelsea Village Limited (CV) an option to buy the site in various parts during the 20-year term of the lease.

One of the parts was the 'stadium site', albeit at that stage with a much smaller West Stand and much larger South Stand.

Following the completion of this deal in December 1992, the then club chairman Ken Bates decided to set up Chelsea Pitch Owners (CPO). In early 1993 the deal was restructured so that CPO acquired the option that had been granted to CV to acquire the stadium site for £5m.

A conditional agreement for lease was entered into whereby if CPO acquired the freehold of the Stadium Site they would grant a lease of the Stadium Site to CFC on the terms set out in paragraph 7(b) of the 'Additional Information' section of the Prospectus.

Supporters were encouraged to buy a CPO share to meet the £5m acquisition cost. The agreement for the lease was conditional upon CPO raising sufficient monies to enable them to exercise the option, and we have never come close to achieving that.

It is very important to note that the freehold cost is £10.2m - rather than the £5m stated in the prospectus. The reason for this is that when Glenn Hoddle became manager in 1994 he wanted a bigger pitch to play his more expansive version of football.

By that stage the foundations for the hotel had been built and so the only way a larger pitch could be incorporated was to shrink the South Stand (Shed End) and increase the size of the West Stand to maintain the 42,000 plus capacity CFC were looking for.

As a result the footprint on which the stadium was built expanded considerably to encompass the West Stand, and the value attributed to the stadium site was increased.

By 1997 roughly 7,580 shares had been sold in CPO leaving the Company at least £9.5m away from being able to buy the Stadium Site and grant the lease. In short, the conditional lease was never granted because CPO never raised enough money to buy the stadium site.

As of October 2012 the total of shares sold stands at around 17,700, the vast majority at £100 each.

In the latter part of 1997 CV, by this time a PLC and listed on the AIM, had managed to agree a deal with SBC Warburg whereby it would raise £75m by way of a secured Eurobond issue. It was a condition of that issue that CFC had security of tenure for longer than the 15-year unexpired lease that had been granted in 1992.

Warburg agreed that a 199-year lease would be sufficient tenure, and so CV approached CPO to see if it was possible to vary the arrangement that was in place.

Those discussions resulted in the structure that is now in place. CV lent CPO the funds to purchase the freehold of the site on soft terms, and in exchange CPO granted the 199-year lease to CFC at a peppercorn rent.

It is worth pointing out that if this variation had not taken place in 1997, the original option would expire on 1st December 2012, and CPO would be wound up with the funds raised being returned to investors at par.

In reality provided CPO uses 'reasonable endeavours' to repay the loan, the loan can run for 199 years. Selling shares is the most efficient way for CPO to use reasonable endeavours to repay the soft loan.

The concept that any third party could lend CPO £9.5m to repay CFC plc is questionable. CPO has virtually no income and certainly could not service a loan of that scale. The asset (i.e. Stamford Bridge), subject to the CFC lease, is worthless.

That is how we have come to the position we are in today.

In recent years a number of questions have arisen regarding CPO past and future. We have endeavoured to answer some of them below.