Charles Green’s Latest Battle – With Duff & Phelps?

Since Charles Green walked into Ibrox as the new owner of the assets and business of Rangers, he has taken on an aggressive stance against those he perceives as acting against the interests of what he acquired for his investors. He is happy to take on the football authorities, the other clubs and the BBC, all of which has impressed the fans of Rangers and seems to have won many of them over, despite initial misgivings.

According to the Daily Mail today (yes, I know) Mr Green has now a potential battle coming up with someone else. The paper suggests that the dispute regarding sums paid by UEFA to the SFA for use of players in the European Championship qualifiers is complicated, not simply because of the SFA’s refusal, so far, to pay this money to newco, being Mr Green’s company,  rather than to Duff & Phelps, as administrators of oldco.

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Rangers and Rights Issues – Will History Repeat Itself?

Skinny posted a piece regarding possibilities around a share issue or flotation by Mr Green of his company which owns Rangers. It provoked, as usual, some interesting discussion.

A regular commenter, Iain, offered some thoughts from the perspective of the Rangers fan, pointing out that the apparent failure of Sir David Murray’s rights issue in 2004 was nothing of the sort, and it is therefore wrong to take it as an indication of what might happen should the former Sevco Scotland Ltd reach a stock market.

As Iain put it:-

The RIGHTS ISSUE was indeed a 1:1 offer of preference shares to existing shareholders.
(there was an opportunity for any non shareholders who really wanted to buy to do so….with no general prospectus, publicity or finance available it’s no surprise that it wasn’t taken up in any number).

The RIGHTS ISSUE comprised of preference shares issued at a premium to what they were trading at the time. I’m sure our friend Eco will confirm that this is most unusual as preference shares are normally issued at a discount (hence the preference part).
So…not a flotation. Not a general shares issue, but a 1:1 RIGHTS ISSUE, where the offer price was HIGHER than could be bought on the open market, and there was ZERO chance of Sir David’s shareholding being diluted!

And people try to hold this up as evidence of a reticence of Rangers fans in owning their club!

The reality is Sir David knew all along that the uptake would be very low. That’s why he used MIH to underwrite it. That was the plan! Shift Rangers’ debt from them to another part of his empire….and in the process face no risk whatsoever of diluting his ownership.

We know now of course that this was all conceived under the knowledge that his mates in the banks were perfectly happy for MIH’s debt to rise. That’s why he did it!

I was interested in this analysis, as I had not seen it suggested before that the rights issue was in fact simply a device to inflate Sir David’s shareholding whilst transferring debt from Rangers Football Club PLC to the banks supporting the rest of his business empire.

South Africa’s Tax Authorities v Dave King – Now In the High Court in London

I was looking, at the inadvertent prompting of Iain, one of the Rangers supporting commenters on the blog, at the history of Rangers rights and share issues.

I was diverted, as I often am. This time it was by a mention in the Murray International publicity about the £53 million share issue in Rangers Football Club plc in 2000 as follows:-

“Of the £32.3 million, the Murray Group is investing £9.3 million with new investment of approximately £20 million from Ben Nevis Holdings, a company associated with Dave King, a successful Scottish businessman based in South Africa.”

I have written about Mr King and his tax issues with the South African authorities before.

However a recently reported case from the Court of Chancery in England is of interest, both to tax practitioners, but also to those with an historical interest in the “fit and proper” person test in Scottish football.

The case of Revenue and Customs & Anor v Ben Nevis (Holdings) Ltd & Ors [2012] EWHC 1807 (Ch) was decided on 20 July 2012. The decision can be found here.

The case sheds an interesting light on some of Mr King’s dealings and history, and we see the vigorous defence being put up by his lawyers, no part of which is that he does not owe the money!

The Opinion details the allegations against Mr King in detail, and the remarkable fact that, as mentioned above, he invested £20 million in Rangers at a time a tax bill eleven times that size was being run up. If it was an effort at concealing funds, as I am sure it was not, then it failed – firstly because it was done in plain view and secondly because the £20 million of shares are worthless.

However, at no time did the raft of allegations against Mr King affect his position as a director of Rangers Football Club plc, nor indeed his status as a fit and proper person to be a company director.

Be warned – there is a lot of technical tax, jurisdiction and procedure stuff to follow, and the bits about Mr King are near the top.

Some Thoughts About Shares in Rangers – Guest Post by Skinny

One of my readers has sent me the following piece. It was written last week, but I have not had the chance to post it till now and so I have edited it as regards time periods mentioned. I suspect tonight’s well won match (pun intended) would help the planned share issue.

Otherwise I will leave the stage clear for Skinny, with only the necessary health warning – the value of shares can go down as well as up.

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The problem with shares is in the valuation of the company and vice-versa

In order to value a ‘share’ one must have a valuation of what the ‘share’ is a share of. And in terms of a flotation, why the money is needed in the first place.

A company that needs financing for expansion is obviously a better ‘bet’ than one that needs to pay off debts.

For my example I shall use recent announcements by Charles Green regarding his flotation of Rangers.

Charles Green wants to raise £20 million. Why?

Charles Green’s Latest Rangers Statement – 18 Paragraphs – Wrong in 17!

Charles Green’s battle with the SPL and SFA continues. He has released a statement today which manages (almost) to contain at least one error in every single one of its eighteen paragraphs.

Either he is stupid, which he is not, or he has decided to continue to appeal to his core support, trotting out the lines he has repeated a number of times already, and ignoring almost everything said by the Commission, except for one point he grossly misinterprets!

I suspect that the reaction of Rangers fans to this statement would be almost 100% positive.

I wonder if, next time Mr Green appears to answer questions, someone of the press corps will ask him to explain or justify anything in this statement?

Maybe someone will ask him about his statement about the SPL ignoring his lawyers, which was contradicted by the Commission?

Maybe someone will ask why the lawyer for oldco and newco had said he was turning up, and pulled out at the last day?

Probably not…