The Hearts Share Issue – Risk Factors Galore – One For the Die-Hards Only?

Who would have thought that Hearts would beat Rangers to offering shares in the club to its fans? At this stage let’s ignore the club/company issue. What I want to focus on is the section issued by Hearts detailing “Risk Factors”. It can be found here.

No one can accuse Hearts of “soft soaping” the fans. The Risk Factors are spelt out most starkly. It will be interesting to see the contract with the Rangers Prospectus when it is issued.

Clearly the two organisations are very different, in terms of debt, fan base, finances and reliance on third parties.

Many of the Risks associated with Hearts will not apply to Rangers and vice-versa. However it does give a template for things to be looked at.

General Warning

The statement makes clear that acquisition of shares “involves a significant degree of risk”. It states that “specifically in the context of an equity investment in a Scottish football club in the current economic climate and last reported net debt of £24 million you should not expect any income from or return on your investment”.

It continues:-

“You should not acquire shares in the company unless you are capable of evaluating the risks and merits of such investment and have sufficient resources to bear the loss of all the money invested by you.”

It then states:-

“The Directors are committed to strategies that are intended to deliver long term value but there is no guarantee that those strategies will succeed.”

It is quite clear therefore that there ought to be no expectation whatsoever of any financial return from investment in Hearts shares, nor even a speculative one. Therefore it would seem to be the case that this one is not targeted at institutional investors, unlike that of Rangers. This one is for the Hearts die-hards only, it seems.

Mr Green Was Grilled by Keys and Gray Yesterday – Provides More Evidence of “Gratuitous Alienation” of Rangers Assets

Charles Green endured a testing and forensic examination yesterday. He went on the Talksport radio programme of Richard Keys and Andy Gray. Not for nothing are they known as the Marshall Hall and Clarence Darrow of the airwaves!

I considered listening to the entire 55 minute broadcast, but even I have my limits.

I have therefore taken the article below from the Herald, and have comments on Mr Green’s statements, my comments and thoughts being in bold.

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Charles Green has revealed that Craig Whyte is suing the club for money he believes he is entitled to for agreeing to sell his shares to Green’s consortium last summer. Whyte made several demands during talks about the shares, including a request for £1m a season and seats in the director’s box, and he wants to be paid for negotiating with the club. The Ibrox board rejected Whyte’s demands out of hand.

Green reiterated, during an interview today on Talksport, that Green has never been part of his consortium, and neither has the finance company, Ticketus, which lost £22m they loaned to Whyte against future season ticket sales when the club went into administration last February.

“I’ve never worked with Craig Whyte,” Green said. “I was introduced to him by Imran Ahmad [Rangers’ commercial director], Craig Whyte did introduce me to Duff & Phelps. We needed to get hold of Craig Whyte’s shares, so Duff & Phelps would treat us as credible.

Where do we start with this?

Which Company Is Charles Green Floating? Why No SH01 Lodged Re the 22 Million Shares?

In which I ponder –

• the mystery of what Mr Green is selling
• the likely structure of the sale
• how likely will Rangers fans be to buy shares in the company which owns the company which owns the football club
• the new Rangers owner having as bad luck with official forms as his predecessor, Mr Whyte

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As we know, Rangers Football Club (and I use the term deliberately) is on the point of seeking to raise finds by an issue of shares. The Prospectus is eagerly awaited, and indeed might be almost as popular as the last Harry Potter book.

There has been extensive debate about precisely what fans and investors will be invited to “own”.

In the aftermath of the administration of Rangers Football Club PLC, which is now RFC 2012 PLC, the argument was put forward that the imminent liquidation of that company would not affect the football club itself. Instead, it was argued, the company was effectively a “holding company” although not as defined by the Companies Acts, and as such “held” the club in its metaphorical hands.

When the assets and business of the football club were sold by the administrators to Mr Green’s Sevco (and I deliberately leave the reference as Sevco) then it was seen that his company had bought the club, and its history, and that it continued – Then, Now and Forever.

Some More on Freedom of Information – Guest Post by Carl31

I must credit Carl31 with having sent this piece to me before I posted my article this morning. However, I have only now read it, and as it looks as things from a different perspective than mine, I thought it useful to post.

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Should Scotland become independent, they would either have to apply for EU membership as a new state, or retain membership since they are currently a territory with membership, as part of the UK. The Scottish Government (SG) was subject to a FoI request on the existence of legal advice on this question. They refused, but the Scottish Information Commissioner (SIC) ruled that the info should be made public. I wrote recently in a short piece, about the dual position of the law over the release of the existence of this legal advice (please see these pages, Guest Posts, September 24th).

Mr Salmond and the Schrodinger’s Legal Advice on the EU – An Issue Which Will Not Go Away?

This past week has seen what has been a smooth running SNP machine start to sputter and misfire. The apparently dry issue of legal advice to the Scottish Government about admission to the EU of an independent Scotland (the dry issue being the legal advice rather than independence or EU admission) exploded as a result of what seemed to be differing versions of the same matter from Mr Salmond and Ms Sturgeon. Ms Sturgeon’s comment that now, following the Edinburgh Agreement regarding a referendum, the Scottish Government would be seeking legal advice on EU membership was in contradiction, it appeared, to what Mr Salmond had told Andrew Neil in an interview earlier this year.

Political opponents and the media sought to drive wedges into the crack which seemed to have opened up between them.

What has been said on the official record by Mr Salmond?

(There now follows a lengthy analysis of what has been said on the record and of the Ministerial Code and of the Scottish Information Commissioner’s ruling on the point. If you want to skip that, I have some commentary at the foot of the article. If you would rather skip my analysis, and who can blame you, then feel free to stop at the end of Mr Salmond’s last quote. Thank you.)

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On 10^th November 2011 the issue was raised by Iain Gray at First Minister’s Questions (FMQ) with specific reference to joining the euro currency, but also in the context of EU admission.

He asked:-

If the First Minister has crystal-clear legal advice on the question, will he publish it?

Mr Salmond replied:-

I refer Iain Gray to paragraph 2.3 of the Scottish ministerial code concerning legal advice, its assistance and its publication.