Green prepares to fly with Rangers Share Flotation but will it soar or crash and burn? – by Ecojon

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.

https://scotslawthoughts.wordpress.com/2012/08/11/will-the-holy-grail-of-a-rangers-share-flotation-turn-into-a-green-prune-by-ecojon/

https://scotslawthoughts.wordpress.com/2012/07/17/has-green-got-the-right-aim-for-rangers-footballing-share-issues-guest-post-by-ecojon/

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

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21 Comments

Filed under Charles Green, Rangers

21 responses to “Green prepares to fly with Rangers Share Flotation but will it soar or crash and burn? – by Ecojon

  1. Johnboy

    Any chance you could post up that “presentation” that Green made in May?
    I’d really like to have a look at that.

  2. beanos

    I can certainly see it crashing. I predict they will overvalue both the club and interest level. only a few took up the offer before and after being burned that time, I’m not sure they will be too keen again.

  3. ecojon

    @Johnboy – I’m sure you will find it very easily with a quick internet search.

  4. BlantyreKev

    I think there’s a paradox that has yet to be acknowledged let alone addressed by the punters. We hear the argument that ‘The Club’ and ‘The Company’ are not one in the same, ergo Rangers still exists (then, now, forever etc).

    So why would anyone put their money into the flotation of a corporate shell when ‘The Club’ inside could ditch it at any time?

    Now is the time for a co-operative, a member owned ‘club’. The German model as it is loosely referenced.

    Well actually the opportunity was there, clear as day, and it was missed, obfuscated by Duff and Phelps and incredibly, again, by the media. The smoke and mirrors were rolled out and sadly the fans of the old Rangers bought it, jumped on the bandwagon, blamed everyone from the SPL to Peter Lawwell for their self inflicted death, and missed their chance. There were no men, good and true to step forward and rescue the true notion of it being a Club separate from a corporate entity. The proof is there for all to see, because all that stands in its place is a brand new company wearing its clothes. The notion of it being the same ‘Club’ ate itself.

    What this notional ‘Rangers’ have is Charles Green leading it by the tail with the exit route mapped and a number of investors set to take home the cash of the punters who, on purchasing these shares, will have bought 3 corporate entities (RFC 1872 in its Murray flotations and club deck debentures, Wavetower via Season Tickets to Ticketus, and Sevco/The Rangers in the upcoming issue).

    Is it too late? Well actually no. A revolt and an ousting of Green is still possible while Rangers languish in SFL3. A complete boycott, Sevco goes pop very, very quickly. A consortium of decent, experienced heads champion the idea of a club. Annual subscriptions, an elected Board. Now that’s a Club, and it’s almost indestructible.

    Amid all the angry exchanges the truth of the matter is the voice of decent folk is lost in the shouting. Lots of decent blue noses out there, but the bandwagon of siege mentality, you’re all doomed without us, and no one likes us has drowned them out and it would appear, has won the day. The new club will carry all the baggage and corporate duplicity of the old one and sadly lots of decent folk will fund it.

  5. ecojon

    @BlantyreKev

    Agree with most of what you say and in particular the educated ordinary Rangers supporters that are actually good pals of mine. They quite literally have given up the ghost but it’s like watching someone in shock. They no what is going wrong and they fear for the future but they ain’t the type to be arguing on internet forums or going on marches.

    They are the mature sensible element of the Rangers support that I thought might actually flourish on the road up from SFL3 but I think that has gone now.

    Observing the Darkside Green has either won the hearts of the support – although not all minds – or a highly-geared PR campaign is underway or probably a mixture of both. I firmly believe financial problems will lie ahead for Rangers and if there is another collapse I really wonder what will be left.

    I have been fascinated by the failure of so many Rangers fans to actually question the contradictory and wooly statements that have been and anyone who does raise their head is roundly abused, accused of being a taig and all the rest. I don’t think the Green momentum will be stopped unless the AIM Flotation fails – the ST money will keep him going up until the Flotation + match tickets if the crowds keep turning up.

    A key question for me is why the ‘Rangers Men’ with money walked away and I think it has to be something more than a financial black hole. That could have been plugged and they could have hired someone to do a ‘Green’. I can only reckon that they knew the ‘support’ wouldn’t have stood for the financial cut-backs that were necessary. But who knows?

  6. Chris

    I guess it doesn’t need repeated ad infinitum, but what of the paradox being created by Green and the MSM refusal to raise the issue:

    IF the original Rangers Football Club (which, if we are to believe Green, was merely “operated” by The Rangers Football Club Plc) wasn’t actually the same entity legally as the company, then in reality it was a purely abstract concept, an asset of IP/Goodwill that was not tangible and could not be owned by shareholders…

    IF that’s true then the Rangers Football Club (which, if we are to believe Green is now being “operated” by The Rangers Football Club Ltd) isn’t actually the same entity legally as the company, then it cannot be floated and cannot be owned by the fans as part of a share issue.

    The question arises, therefore: ARE the CLUB and the COMPANY the same thing?

    I say yes it is. This means the club which Charles Green intends to float is by definition a new football club, regardless of its name, it is categorically NOT the same club which was founded in 1872.

    If Green maintains the club is the same club that was founded in 1872 (as evidenced by his “Rangers then, Rangers now” speeches to the Ibrox throng) then it will not be the club that is being floated on the stock market but a mere holding company.

    It cannot happen both ways.

    Either the club and company are the same and therefore this is a new club they’re floating (because the old club is about to be liquidated) or the club and company are separate and therefore the fans cannot and will not be buying shares in the club, they’ll be buying shares in Charles Green’s renamed “Sevco” company which just happens to have a name with the words “Rangers Football Club” in it.

    So which one is it Charles? Tell the public.

    • ecojon

      @Chris

      Another piece of a jigsaw – don’t even know now what jigsaw we are talking about now btw. However you might remember RFC 0712 Ltd – the 12th of July company as some fondly referred to it – which Green formed on 21/06/12 and was the sole shareholder of. Well he changed its name the next day on 22 June to RFC 2012 Ltd.

      Interestingly the relevant paperwork filed at Companies House states that the name chamge resolution was ‘agreed and passed by members’. ‘Members’ is the fancy name for shareholders. The point though is that there is only one member (shareholder) listed at Companies House and that is Green. A typo perhaps?

      It was reported on 5 July: Rangers administrators Duff and Phelps said today: “We have written to all shareholders of The Rangers Football Club plc (in administration) to provide notice of a general meeting of the company to be held at Ibrox Stadium on July 31. The resolution to be put forward at that meeting is to change the name of the company to RFC 2012 plc and there will be no other business on the day.

      “This is a procedural measure in order for Sevco Scotland Limited – which acquired the business and assets of the company from the administrators on June 14 – to change its name simultaneously to The Rangers Football Club Limited.”

      And on 31/07/2012 THE RANGERS FOOTBALL CLUB P.L.C. duly changed its name to RFC 2012 P.L.C.

      So far so good. So what’s left. Oh yea – RFC 2012 Ltd. Oh NO! Because on 31/07/2012 Green changed the name of RFC 2012 Ltd to ASDFGHJKL Ltd. In case you think that name looks familiar you are quite correct. It is the middle row of letters on a computer keyboard. Wow, what an imagination that man has 🙂

      Just like the last name change the resolution talks about the agreement of members when there is only Green publicly listed as a ‘member’. Oh that’s right it must be that typo again 🙂

      • BlantyreKev

        That is absolutely mental. Well done on all the follow ups on this blog ecojon, incredible reading. If the fans have now backed Green they are going to suffer the same thing all over again in time.

  7. Chris

    Ahaha, I see BlantyreKev got in there first…I had this page sitting from earlier, hadn’t refreshed otherwise I’d have seen his comment.

    I like your way of thinking Kev, just what I was thinking actually.

  8. Jacko

    As clear as the nose of anyone`s face Chris. The previous shareholder were simply holding company shareholders. As I said before what would those high profile shareholders such as the ever funny Andy Cameron say to that. Absolute tosh they would have said. Until doomsday came and suddenly it`s “eh, no that was the holding company that went bust. Rangers carry on.”

    So will this flotation clearly define the shares as being rangers the football entity shares or is this another holding company ? And if so who really invests their heart in The holding company ?

    Cmon guys. Holding company now and then or football club now and then.

    No doubt an argument will try to make us believe it’s holding company then and football club now. Unless it goes bust again.

    Jacko

    • ecojon

      @Jacko

      Yes the shell game has always interested me 🙂

      But as to the matter of confusion I do confess to struggling over this undernoted section from the share maketing presentation made my Green last May. Always remember that since then the company names have changed because the CVA was voted down by HMRC.

      Can anyone explain what it actually means as I am baffled:

      UNDERNOTE

      New investors invited to participate at a pre new money valuation of £10,000,000 in Sevco 5088 Limited
      – Investors will secure an 85% shareholding of Rangers Football Club plc and a waiver of a secured debenture over the club’s property assets
      – Remaining 15% shareholders comprising 26,000 shareholders/fans will receive a warrant to subscribe for shares on a pro rata basis with the new holding company.

      -Sevco will function as the holding company and Rangers plc will be the operating company going forward

  9. Lubo115

    Sorry for changing the subject but did Jim Duffy just say on Clyde that Celtic are looking at Barton?

  10. ecojon

    What is interesting about the BBC story is how the succulent lamb has been served up yet again on a huge platter this time carried to the table by means of a PR structured leak IMHO. (The lamb btw was stone cold as I had revealed the Naqvi connection on 14 July).

    In his story the Beeb’s Chris McLaughlin lists approx 52% of shareholding but obviously in a bid to reassure Rangers fans he adds: ‘The shares will be diluted, though, after Green launches an IPO share issue allowing fans to buy into the club.’

    I fail to see that happening as the Rangers fans shareholding prior to Green only reached 15% of the total shareholding and in the main story I pointed out that the share marketing presentation given by Green in May still saw the fans only having 15% of the shareholding.

    There is also the problem that the founder shareholders raising £10million between them can double their shareholding for £1 a share. This as I see it will actually be more likely to dilute the fans’ shareholding,

    It’s a great pity that there is no mention of the other shareholders confirmed by Mr Green such as Colin Mather and Glenmuir as well as Malaysian hotelier Jude Allan, apparently also known as Javed Abdullah; Middle Eastern lawyer Mazen Houssami; Elias Kaisar; and Jean Haddad.

    So what happened to them – did they invest – or did they cut and run? As the going rate appears to be roughly 10% for £1million those six are worth £6million and 60% of the shareholding. Going on the Beeb story 52% of the shares have gone for approx £6.8million which values Rangers at £13million.

    So there will need to be a lot of pzazz and PR to get the AIM Flotation price soaring because there can’t be a lot of that £6.8million left which leads me to believe there could be cornerstone investors who needn’t have a shareholding but would be issued with debentures to cover their loan to Rangers and it would be usual to have this secured on the likes of Ibrox and Murray Park.

    Again it would have been helpful if Mr McLaughlin had asked some probing questions instead of just probing the cold lamb with his fork 🙂

    And what about Ian Hart and his shareholding which was paid for out of money lying around in youth development at Ibrox – did Mr McLaughlin not think to raise that question. I think it’s one that BDO most certainly will.

    And Ally, what can one say? The obvious question is did you pay for your shares or was it a reward for all the work you have been putting in recently supporting Green?

  11. Alex Doherty

    lease please tell me are rangers a real club or a dream of some person
    C Green ? or possible the late rangers fans dream on there gone thank GOD
    Life is better without them no more we are the people now its we are the people that do not pay tax to the queen by the way who is she NOT a HUN O she pays no tax as well

  12. ecojon

    Having learnt of the draw at Berwick it would appear that even as a shareholder Ally will need to get his act together pretty quickly or he will be gone.

    He has achieved the main function that Green has set him and that was to get the Faithful fully on board and buying season tickets. Green I think might have believed that he would cruise to victory after victory in the SFL3 and the feel-good factor that would bring to his BIG AIM investors as all he can really get out of the fans now is some kit sales and I have the feeling Ashley might take the lion’s share of the profits there.

    No Green needs on the pitch victories to show that his team will be back in the top-flight and Europe ASAP as that is where the money is as far as his investors are concerned.

    Rangers fans can delude themselves if they wish but if Green could get a guaranteed pass back into the SPL next season then it would be a great selling pitch for the snake-oil salesman for his AIM Flotation and he would bite the hands off the SPL and SFA to get the step up. He would probably be quite happy to ‘sell’ the tainted trophies as part of his mea culpa to the Associations. At the end of the day the new investors have no emotional attachment to the history of Rangers just to the money they can make from the club.

    In a strange sort of way Celtic fans have probably more attachment to Rangers’ history, which touches their own at so many points and times since the late 1800s, thatn these new shareholders and debenture holders.

  13. Marching on Together

    I had not spotted this before, but the biggest revelation to me out of all this is the fact that Green & Co think that they can carry £40m of tax losses forward in to the new structure.

    Is there any tax lawyer or tax accountant out there who can comment on the reality of this happening?

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