FRAN --------------Rangers run the risk of falling into administration again after rejecting Robert Sarvers £18million bid to takeover club Club running risk of financial ruin if no suitable solution is found Dave King bought 14.5 per cent share in club earlier this month By JOHN GREECHAN FOR THE SCOTTISH DAILY MAIL PUBLISHED: 7 January 2015 Those of us who always read newspapers from the back, often skipping the finance section, reserve the right to remain baffled by the mathematics, economics and high-stakes gambling involved. A £33million takeover bid for Rangers dismissed as not nearly enough? Sorry, but we must be missing something awfully clever in the small print of Tuesday’s announcement to the Stock Exchange. Assuming we’re not getting the Ibrox club confused with some *other* Rangers, perhaps the famous New York ice hockey franchise worth somewhere north of a billion US Dollars, the logic employed by the board – not for the first time – seems grounded in truly Orwellian doublethink. Rangers are facing financial ruin... but the board rejected Sarvers £18million bid to takeover club This is a club never more than one final reminder away from complete and utter financial meltdown. A company reliant on emergency loans that grant certain lenders rights beyond those of mere shareholders. A corporate basket case held together by hope, bits of string and bad contracts – some of which remain to be settled. And all of this is worth *more* than the £33m Robert Sarver was willing to spend? Even if it could be argued that they’ve only officially rejected his £18m bid for a controlling stake, the £15m that would follow in pursuit of the rest of the shares surely represents a fair deal. According to the calculations of the London Stock Exchange, Rangers have a market capitalisation – shorthand for the overall value of all the shares available – of £21.18m. With another £8m required just to stay afloat and promotion to the top flight far from guaranteed, they can hardly be described as a blue-chip investment opportunity. Yet it seems that the promise of glories to come, not the bleakness of the current situation, is what counts in matters like this. Football is a game of dreams – and that applies equally to potential club owners as to the kid who pesters his parents to be taken to the game. According to football insolvency expert — and former Leeds United chairman — Gerald Krasner, there is an obvious return to be had for whoever puts Rangers back on a firm footing. Krasner fears, though, that a power struggle and the absolute reluctance of those in charge – including Newcastle owner Mike Ashley, whatever the size of his actual stake – may prevent the club from fulfilling its ambitions. And he warns that, should the worst happen and Rangers slide into insolvency, the men who have so casually rejected Sarver’s offer will have some very difficult questions to answer. Krasner, whose time at Elland Road saw him temporarily stave off administration and cut debts of over £100m before Ken Bates bought his consortium out, is an insolvency expert and partner in Begbies Traynor. He told Sportsmail that the current Rangers board must be very confident of finding a serious alternative to the Sarver pitch, which may yet be revived as part of a broader takeover bid in tandem with the so-called ‘Three Bears’ and Dave King. ‘The story of Rangers is something I’ve followed going back to when they first got into trouble, so I’m quite au fait with it,’ said Krasner. ‘The problem at Rangers, it seems to me, is that we’re not sure who is pulling all the strings. Is it Mike Ashley, is it the local directors? Unless you’ve been sitting in on the meetings, you’ll never know what goes on there. ‘As for how they can turn down an offer that is 50 per cent more than their current valuation, well it could be a negotiating tactic with an eye on this and other offers. ‘Or it could be that the powers-that-be, whoever that may be, are prepared to put more money in rather than lose control of the club. Sarver also owns NBA outfit Phoneix Suns ‘If you get Rangers right, they will definitely be worth more than £21m. I don’t think £50m or even £100m would be an unreasonable valuation for a Rangers on a firm financial footing and doing well – even in Scotland. ‘If the current owners aren’t going to let Rangers go for £33m, that suggests they have done a sounding among shareholders – and that they’ve got an alternative plan. The board must be confident if they can turn something like that down, given the current financial troubles. ‘Looking at the Mike Ashley situation, if you’re asking me if I’d rather have Rangers than Newcastle? Well, Rangers have more potential. ‘And Mike Ashley is a shrewd nut. You may not like him but he’s a clever guy. He’s put £130m into Newcastle. Imagine if he’d put that into Rangers – he’d have a lot more in return.’ Krasner’s description of Newcastle owner Ashley as a ‘shrewd nut’ is borne out by events since he first began to take an interest in events at Ibrox. For about £2m worth of shares plus loans - not gifts but loans - totalling £3m, he has been granted a remarkable degree of influence. Even if we accept the official explanation behind the appointment of Derek Llambias as chief executive, the long-time Ashley associate apparently rising above a pack of candidates on merit alone, the fact remains that the Sports Direct tycoon’s temporary bail-out bought him the right to appoint two directors. Having already put Barry Leach on board, he still has another ace in the hole. Another close associate who can go in there and wield influence, even if he remains barred from increasing his overall stake in the club by SFA rules. As for how Ashley and the directors beholden to his largesse use their influence, well, there are some pretty extensive guidelines available to anyone interested in corporate law. Reducing the concept of fiduciary duty to something we can all understand, it boils down to this: ‘Directors must use their powers for the good of the company.’ Conflicts of interest are a definite no-no, while mention is also made of acting ‘in good faith’. In short, don’t make decisions based on what you *want* to happen, rather than what *needs* to be done. Mike Ashley appeared to increase his control as Sports Directs Barry Leach was appointed finance director. Mike Ashley appeared to increase his control as Sports Directs Barry Leach was appointed finance director No one is suggesting that the Rangers board have come close to breaching any rules. All Krasner points out is the need to be very certain that rejecting the Sarver bid was in the best interests of everyone. ‘There is a risk for the Rangers directors because, if they fail and go back into administration, then there is a potential for them to be accused of having caused it,’ he told Sportsmail. ‘They’ve had an offer that would have paid everybody off and put money into the club. If the company goes bust now, and I’m not saying it would, you would be saying to the directors that they had a duty to shareholders to at least put the offer to them. So it’s a bit of a gamble. ‘Directors can be liable personally if they’ve been found to have misled shareholders or if they’ve taken decisions against common sense. They must have something else in place. ‘The best result is for everyone to work together, obviously. The trouble is, when you have different blocks working against each other, football takes second place to the power struggle.’ Said struggle appears destined to continue for some time at Ibrox, as Sarver, the Three Bears, King, the Easdale brothers and Ashley are joined by a cast of smaller players now prompted to declare an interest under takeover rules. Watch this space. Do try to keep up with the, ahem, logic behind every major decision. And don’t worry if, on occasion, the sums appear to make no sense at all.
Posted on: Wed, 07 Jan 2015 09:42:18 +0000
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