In this piece, I point out that I am mildly sceptical of D&P’s plans to choose a bidder by lunchtime today and conclude a deal by the end of the season. And also can you guess which football team the UK end of D&P reminds me of?
The saga continues. Yesterday D&P gave us more detail about the new bidders for Rangers. I have taken their two statements, and have commented, as usual, in bold.
The pieces below are from Rangers.co.uk, so the parts of the articles which are not quotes can still be taken as official Rangers comment. Both of the main articles were posted on the website on Wednesday 9th May.
The remarkable Rangers takeover story took a stunning new twist yesterday when firstly Bill Miller withdrew his offer to shock supporters and then it was revealed there were new players at the table.
The administrators are now in major discussions with all three and insist they want business to be concluded before the end of campaign on Sunday.
As I said yesterday, I have no doubt that D&P want a sale now. However, how credible is it that any sale can be achieved?
And I see that D&P want the deal concluded by the end of the season (this Sunday). How?
If it is a newco deal, as per Mr Miller, then there needs to approval of an SPL share transfer and also the players need to agree to change over to a new employer. There are reasons why a deal prior to the end of the season would be advantageous to Rangers. I thought it was impossible to achieve with a week to go. It is even more impossible (if something can be “more impossible”) with two days to go.
Sarah Bell from Duff and Phelps told rangers.co.uk: “We have three previously undeclared bidders, one of which is seeking a stand-alone CVA and the other two following the same plan as Bill Miller, ie an asset sale to a newco with the old company exiting through CVA.
“Of course if it is a stand-alone CVA then that will take several weeks to do and one of the aspects of that will be funding over that longer period but if a party was willing to fund that period then we could extend the deadline.
For the first time ever, I think, a named person from Duff & Phelps is neither Mr Whitehouse nor Mr Clark. Ms Bell however is an equal heavyweight in Insolvency terms, being Managing Director of D&P’s Manchester office. Maybe Messrs Whitehouse and Clark have taken a temporary break, shell shocked. (Just joking)
However, and with all due respect to the lady, she seems to be as flexible in her pronouncements as her colleagues have been! Please note, I am NOT accusing her or her colleagues of lying, nor should that be taken as implied.
As I mentioned last night, the preferred bidder status being conferred on Mr Miller caused D&P to look for someone to gazump him. The plan seems to have succeeded, as three NEW bidders are in place now. Two want to follow the Miller plan (incubator, side route etc) whilst one wants to use a “stand-alone” CVA. Ms Bell comments that this will take several weeks to do.
“In recent weeks there has been much debate about Rangers exiting from administration through a stand-alone CVA. However, the barriers to a proposed stand-alone CVA are now too high.
“These barriers include, in particular, the absence of any bidder proposing unconditionally sufficient funds to enable a stand-alone CVA to take place.
“Crucially a stand-alone CVA would take so long now to effect, the Club could not survive in administration.”
The bidder looking to do the CVA however has not put its money where its mouth is. As Ms Bell says, ”…If a party was willing to fund that period then we could extend the deadline.”
That suggests that the stand-alone CVA bidder is not putting up that money. Therefore, in the words of Dragons’ Den, “He’s out.”
“The three main deciding factors for selection of the best bid are deliverability of the deal, quantum of a CVA and timing.
Can the deal be done, how much for, and when. These are the main factors in almost any business deal.
“In terms of expediency then going down an asset sale or newco route would be quicker.
This is recognition of the obvious, although there is no distinction between an “asset sale” and a newco. The newco does not need to be a new company. Instead it is simply a different one from that which holds the assets to be sold.
“We are, of course, very conscious that the season ends this weekend and we hope to be running with one of the parties in the next few days.
The next few days? This is Wednesday. The season ends on Sunday…
“The three bidders have been doing very sophisticated research into the situation so they are well aware of what is involved. That was encouraging for us.
According to D&P these bidders only came on the scene on Thursday, after Miller was declared preferred bidder. They have had enough time to do “very sophisticated research into the situation”. Have they found a time machine? Presumably none of them have initiated due diligence? It took Craig Whyte 6 months to carry out his due diligence. Mr Miller felt that the info he was getting prior to due diligence was optimistic, and on seeing the books he withdrew.
Have any of the three bidders seen the details that so frightened Bill Miller?
“Some fans may wonder why three bidders have suddenly emerged when Bill Miller was in preferred bidder status and then withdrew but they had been studying the situation.
Maybe it is a normal bid strategy. Wait, whilst studying the situation, until a preferred bidder is chosen, and then commit to a bid, with all the associated costs etc. Ms Bell should realise that it is rather more than “some fans” who are wondering about this!
“What we can say is that without going into exact figures we are satisfied that all three parties have the financial wherewithal to complete a deal.
So D&P have been able to do their “due diligence” on the prospective purchasers and their bids, since Thursday, with a holiday weekend in between, and when D&P were working full tilt with Mr Miller? Why not go into figures? Surely the creditors (remember them) might be interested in hearing what offer is on the table to replace Mr Miller’s?
“We have also taken the decision not to send out renewals for season tickets so that any party coming in to take over the club would have that funding.
Very good of them. Nothing to do with having no idea if there will be a Rangers at all, or if there is, what division it will be in? No – it’s so that the new owner has the money.
D&P could sell season tickets and ring-fence the money for the new owner, and if there is no Rangers, return the sums paid. Maybe D&P are afraid that many Rangers fans might not want to part with the costs of an SPL season ticket, only to end up with Division 3 football? Maybe D&P feel that selling only 5,000 season tickets might be demoralising for a new owner or prospects of survival?
In any event, as I understand it, D&P could not start spending the season ticket cash on running the club anyway. It is payment in advance, and if D&P spent it, and then Rangers did not fulfil its fixtures as contracted, the buyers would be due money back. As a post administration debt, D&P would be liable for that refund.
“I can say that HMRC are interested to see the merits of each one of the offers and they are open to further discussion with us.
I am sure this is true. It is however a long way from saying that HMRC is in agreement with any bid – or with any CVA proposal. No one has told HMRC the details and therefore it is of course interested. If one bidder, for example, wants to put £1000 million into the pot for a CVA, I am sure HMRC would be keenly interested!
Equally HMRC is open to further discussion, but that is a million miles from saying that it is in agreement.
“We want to try to reassure supporters that while our duty as administrators is to secure the best deal for creditors this is not just about the survival of the club but giving it the ability to thrive.
Hooray! Someone mentions the creditors, but only in the context of the club surviving and thriving. However, that can only be in the context of the company continuing as a going concern, IN THE INTEREST OF THE CREDITORS. If Rangers can thrive but the deal for creditors is worse than liquidation, then Rangers will not thrive.
“As I said we hope to be in running with one party by the end of this week.”
And I hope to win the next Euro Millions draw, although I suspect my chances would be greater if I bought a ticket!
And as an extra, here is the earlier statement from D&P yesterday too.
Supporters were stunned yesterday when American tow truck tycoon Bill Miller withdrew his bid having been given preferred bidder status last Thursday.
He cited financial concerns and opposition from some supporters as the main reasons for his decision.
Many fans are now panicking that time will run out to save the future of the club but three bidders are now at the table – two of them new – and the administrators believe they can work a deal with one of them.
David Whitehouse told the BBC: “It’s certainly possible to get a deal done. I think whether we can say that is likely, we will be in a better position to say that tomorrow lunchtime.
Lunchtime today (Thursday) is the new deadline. So Mr Whitehouse believes he could choose a “preferred bidder” Mark II, and conclude a deal, and obtain all of the necessary regulatory approvals, between Thursday lunchtime and close of business Friday? The best conveyancers I know would struggle to process a simple house purchase from scratch in 36 hours. D&P suggest that they can effect the sales of millions of pounds worth of assets, fixed and moveable, to a newco, with all of the TUPE implications for all staff, not just the players, and obtain SPL and SFA approval – in such a short time? Brilliant if they can, and I would be reluctant to declare it to be impossible…
Perhaps D&P have found the Infinite Improbability Drive from the Hitch Hiker’s Guide to the Galaxy?
“The structures of deals that are being discussed vary but all are working to a timetable that they have to be completed by the end of the season.”
This debacle is good for the finances of the legal profession though! That means that there are at least four Scots law firms, and probably associated English ones too, poised to work through the night to make the deal happen. As well as the legal profession, late night pizza delivery companies will thrive as supplies are ordered in to the solicitors’ offices.
Or maybe Mr Whitehouse is talking rubbish…
It’s understood two of the three bidders have already held discussions with Ally McCoist. One is local and two are from overseas.
Why speak to the manager? Is he a key player? If Ally leaves, would a prospective buyer pull out? What, with the greatest of respect, is a purchase of the assets of Rangers Football Club PLC (In administration) to do with Mr McCoist? In view of the short time left, why would a buyer waste his or her time talking to him?
Or is the fear that, even at this terminal moment for Rangers, a wrong word from Mr McCoist would rule a bidder out, even if the consequence was that no one buys the assets?
And what is “local”? Is one bidder from Govan, from Glasgow, from Scotland, or the UK? Where are the overseas bidders from? I am not suggesting D&P have invented the “offers”. But when it was thought this process could not get more bizarre, even more bizarre stuff happens!
It is also being reported that one of the bids is a stand-alone CVA.
David Whitehouse has also indicated to the BBC that the UK consortium have concluded a deal whereby Craig Whyte will hand over his shares.
Ah. Local means UK. Odd word to use. Who is in this UK consortium? And to be fair, what is the point of acquiring Mr Whyte’s shares?
As I see it there are 2 choices.
Firstly, someone puts enough cash into RFC (IA) to fund a CVA and to keep the existing company alive. In that context, there needs to be a deal with Mr Whyte as he owns 85% of the shares. If someone is buying his shares however, they must, under City rules, offer to buy out all the other shareholders unless the Takeover Panel agree that it is unnecessary (as happened with Mr Whyte’s own purchase). But why pay money to Mr Whyte when the cash can be saved and used for option 2?
Second option – buy the assets for a newco. Mr Whyte’s shares are irrelevant. The asset purchase price is the pot for the CVA (after payment of D&P, Close Leasing and possibly Mr Whyte under the security) but that is of no concern to the new owner. He has all the assets.
Why take money that could fund that purchase, or even ongoing costs of the club and pay it to Mr Whyte? Would Rangers fans accept that?
By the way, guess who don’t get a mention in this release – THE CREDITORS!
And on a final note, on 3rd May Duff and Phelps said the following.
Paul Clark, joint administrator, said: “After many weeks of negotiation and deliberation we believe that the structure of the bid from Mr Miller provides not only the most deliverable outcome but preserves the history of the Club. Rangers Football Club will continue as the football club it has been for 140 years.”
So it took many weeks to decide that Mr Miller’s bid was best, and they now will assess all three new bids by lunchtime, with a view to having the deal done by the end of the season!
It might be that D&P have been doing sterling work which will produce an acceptable deal completed by Friday. However, how will the issues of legacy contracts and restrictions on income etc which put off Mr Miller be addressed, even ignoring potential protests from “purported Rangers fans”?
Duff & Phelps is a major worldwide Insolvency Practitioner.
Its ambitions are to be as prominent in its field as Real Madrid or Manchester United in the football market.
So far, and the final whistle has not blown yet, they are coming across as being as successful as Bon Accord in the famous Scottish Cup match of many years ago – Arbroath 36 – Bon Accord 0.
Posted by Paul McConville