Well even Kentucky Blue grass obviously doesn’t get to grow under Charlie Green’s feet with his declaration to release details of a stock market flotation for the Ibrox club within a few weeks.
Even before buying the bust Rangers from the administrators, the grand plan for Green involved a £30million flotation on the Alternative Investment Market which would net him £3million commission. Of course, Imran Ahmad (Rangers director and of Zeus Capital an Ibrox shareholder) said he valued Rangers at £50m ‘all day long’ and if correct then Charlie can look forward to a £5million pay-off.
So while we wait for his new plan it’s worth looking back to that time in May when Green laid-out the bones of his original AIM money-making scheme in a marketing presentation aimed at ‘savvy – high net worth – professional investors’ and not your normal football punters.
It’s also interesting to see how the scheme favoured the BIG investors by allowing them to secure 85% of the shareholding of Rangers Football Club Plc – remember you have been beamed back to May this year before HMRC put the hammer on the CVA and Rangers went into Administration owing up to £135million. Rangers Football Club Plc was to remain the operating company and Sevco 5088 Limited was to become the holding company under the plan.
The BIG investors also had a valuable ‘waiver of a secured debenture over the club’s property assets’ according to the ‘presentation’ by Charles Green. This is important because ‘debentures’ (basically a loan to a company raising capital) can be secured by a floating or fixed charge against company assets which mean they rank above ordinary creditors or unsecured debenture holders should a company become insolvent. In this case the BIG investors would have their money secured against the property at Ibrox and Murray Park.
And the BIG founder investors who invest £10million between them also got the right to effectively double their shareholding by being offered 10 million shares at £1 each on a pro rata basis. I have commented before that this £20million share bloc puts any hopes of supporters ever actually ‘owning’ Rangers into the realms of fantasy.
And what about the LITTLE guys – the 26,000 fans who were being offered 15% of the AIM Flotation. Well they didn’t get the protection of a secured debenture but got the opportunity to once again sink their hard-earned cash into their club having already lost-out on their previous shareholding and debenture seats. They were being allowed to invest in Sevco 5088 Limited by having the same number of shares which previously became worthless after trading in them was suspended.
Interestingly the proposed shareholding split echoed that of Green’s predecessor Craig Whyte who owned 85% of the shares while the remaining 15% was held by 26,000 supporters but I am sure this is just coincidental.
In more recent times Green has talked about fans having a much higher share percentage even approaching a controlling interest although there has been a recurrent theme of no shareholder having more than 15% of the shareholding although there is always the unexplained mystery investors and Blue Pitch Holdings with apparently 23% of the shareholding where full transparency has been missing. Of course in a successful AIM Flotation these cornerstone investors would get their money back with a hefty dividend. However, time will tell.
The marketing presentation also throws up some interesting points worth pondering such as the £40 million in brought forward tax losses to go into the Current Balance Sheet subject to HMRC approval. I don’t ever remember seeing that listed as a Rangers asset that was being sold by D&P and I wonder if HMRC will still allow it to be carried forward if they find against the EBTs and also because of the massive tax bills racked-up by owners prior to Green, or, is it lost because Rangers FC Plc went into Administration.
But perhaps the one that I allow a wry smile at although I don’t see the Ibrox punters joining me is the actual ‘Business’ attitude that Green has towards Celtic which belies the mouth music he has recently made to encourage Bears to buy season tickets. Aim three of Green’s strategy states: ‘To have the Old Firm recognised as the biggest rivalry in World Football’. Not sure how much of a rivalry that would be with Rangers fans boycotting Parkhead which would lead to a counter-boycott no doubt. Would the TV companies think a game bereft of passionate supporters from both sides be worth paying out cash for 🙂
However, if Green can take Rangers to ‘market’ then he will be joining Celtic and Arsenal as the only other football clubs with a public UK stock market listing. Indeed Arsenal hardly counts as its shares are mostly in the hands of a few wealthy individuals and tend to be traded privately. Once upon a time it was the favoured route for football clubs to raise capital but in recent years it has fallen from favour for a variety of reasons which I have dealt with previously.
Man Utd floated 10% of the club on the New York Stock Exchange earlier this month at a cut-price $14 a share because it was thought the ‘market’ wouldn’t support the expected ‘target’ range of $16-$20 per share. By Monday the share dipped to a low of $12.80 although it has recovered slightly but it seems that even a club with the allure of Manchester Utd can never guarantee that share prices will always rise.
There is of course little comparison between Manchester Utd and Rangers as regards recent footballing circumstances and on the surface it would appear that Rangers can’t compete with Man Utd other than being currently debt-free compared to the £423million owed by Man Utd. However to put this into perspective, General Motors Chevrolet recently completing a £422million shirt deal with Man Utd for the 2014-15 season which slightly trumps the fanfare surrounding the recent Rangers/Sports Direct relationship.
However there is a huge difference in valuation of the two clubs with Man Utd’s 10% flotation raising £150million which prices 100% of the club at £1.5billion. Rangers investors appear to be paying £1million approximately for 10% of the club which values the Rangers at £10million making me wonder if the AIM Flotation has any hope of raising £30million despite what Mr Ahmad believes Rangers is worth.
Posted by Ecojon