The news today is that Rangers have accepted a £10M loan from Mike Ashley that means the Newcastle United owner’s company Sports Direct will have 26% of the club’s retail business.
Mike Ashley – Newcastle United owner
The loan is secured against the Murray Park training ground and other assets, but does not include Ibrox, which was Ashley’s initial demand, but Rangers fans protested that possible agreement.
Rangers are in desperate need of funds to keep them going and Mike Ashley is getting agreements from the club in return for the loan, and he is really the man in control of Rangers now although he owns 8.92% of the shares.
The loan is split into two £5M transactions – with the first one being made immediately available to the cash strapped club.
The Rangers Board issued a rather lengthy statement to the stock exchange on Tuesday:
“The Board of Rangers announces that Rangers Football Club Limited has entered in to agreements with SportsDirect.com Retail Limited and associated companies (“SD”), to provide a long term on-going credit facility of up to £10M (the “Facility”).”
“The Company’s financial condition has been perilous for a number of months exacerbated by lower than expected match attendances.”
“The Directors have implemented a cost cutting program with which they have made significant progress.” “There is however an immediate need for a substantial injection of capital, and the directors have considered a number of options.”
“The terms negotiated with SD (which are reversible in respect of the Facility) represent the optimum combination of quantum and duration of funding, allowing the Company time to arrange permanent capital which can be used for strengthening the playing squad.”
“The Facility is structured in two separate interest free tranches. £5M will be available immediately for working capital purposes and for the repayment of the credit facilities with MASH Holdings Limited which was entered into on October 27 2014. All rights and security associated with the MASH facility will be cancelled.”
“The Club will transfer 26% of the share capital in Rangers Retail Limited (“RRL”) to SD for the duration of the Facility (the “Transfer”), which will be transferred back, at no cost, upon repayment of all outstanding sums owed by Rangers and its subsidiaries to SD. There is no specified repayment period for the first tranche of the Facility.”
“The Facility is to be secured by a floating charge over the Club’s assets and fixed charges over Murray Park, Edmiston House, Albion Car Park, and the Club’s registered trademarks.”
“None of the security that is being given to SD covers Ibrox Stadium, which is specifically excluded and remains in the full ownership of the Club, free from any security.”
“SD will also have the right to nominate two directors to the board of Rangers for the duration of the Facility, any such nomination will be subject to regulatory consent pursuant to the AIM Rules and other regulatory bodies.”
“If the entire sum drawn down is repaid, the Facility will be deemed to be terminated, all security will be released, the 26% of RRL will revert to the Company and all rights of SD to nominate Directors to the Board of the Company will cease.”
“The second tranche of £5M, which repayable 5 years after draw down, will be used, if required, for working capital purposes and is subject to due diligence by SD prior to drawn down.”
“The Company has also agreed that from the 2017/18 season, for the duration of the Facility, any future shirt sponsorship proceeds will be for the benefit of RRL.”
“RRL will declare a dividend of a total of £1,610,000 prior to the Transfer. The Club will use the proceeds of its share of this dividend, inter alia, to repay sums owing to SD in respect of the cessation of onerous leases on unprofitable stores entered into by a previous Rangers management team.”
“RRL is a joint venture between the Club and SD whose business is selling merchandise both on-line and in stores. In the period ending April 27 2014, RRL made a profit before tax of £1,172,893.”
“SD is a Related Party under the AIM Rules and accordingly the Facility is a Related Party Transaction pursuant to AIM Rule 13.”
Notice that Mike Ashley is also now able to appoint two Directors to the Board for the duration of the loan, and that gives him even more power at the Scottish club.
There is also a meeting today in Scotland on dual ownership being held by the Scottish FA (SFA) and being conducted by conference call and involves lawyers representing the SFA, Rangers and Mike Ashley.
But it seems it’s just to discuss a time-frame for the next hearing, when Mike Ashley will be expected to attend in person.
What’s Mike Ashley up to with Rangers?
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