Rangers’ Circular Released
06/06/2011 1,222 Comments
Craig Whyte has released the long awaited shareholder circular providing an explanation of his company’s takeover of the club. The original document can be found here:
Some initial points:
The club’s debt has NOT been cleared:
As was reported on this blog, the statements made previously about clearing the club’s debt were misleading. What has transpired is that The Rangers FC Group Ltd (TRFCG Ltd), Rangers’ owners, have promised to waive the debt purchased from Lloyds if Rangers have managed to avoid insolvency in a period of 90 days after the tax case has concluded. In plain English, if Rangers win the tax case, Whyte will write off the debt (converting it to shares). If Rangers lose their ‘appeal’, then TRFCG Ltd will be protected by its guarantees over Rangers’ fixed assets. Note Whyte’s word ‘appeal’– so much for the claims that it is just an investigation and that there are no tax bills!
Fixed assets not intended to be sold:
“nor is it the intention of The Rangers FC Group to redeploy any of the fixed assets of the Club;” However, as we have been discussing, this does not include season ticket sales. This seems to be a confirmation of our interpretation of the MG05s filing last week. Rangers’ future season tickets revenues can be sold for cash now.
No schedule for promises of investment:
While the document is very specific about the timeline for when the debt would have to be written off, it is conspicuously vague about the timeline for any investment in the team & in repairs to Ibrox. Such additional investments, should they be made prior to the conditions for writing off the debt (i.e. before the tax case is resolved), will be added to Rangers’ debt and would be protected by the floating charge on Rangers’ remaining assets. (i.e. everything except a large chunk of season ticket revenues over the next four years).
Unequivocal declaration of ownership and 3rd party interests:
The document says that TRFCG Ltd is wholly owned by Liberty Capital, which is in turn wholly owned by Craig Whyte. It amounts to a denial that there are any mysterious backers – either as shareholders or as holders of formal loan notes or guarantees. (However, speculation can be expected over whether any 3rd parties need such formalities to make an agreement).
This is a quick summary of what struck me immediately. Without doubt, we will parse this document and find more to discuss and debate.