In two weeks’ time, the board of Rangers International Football Club (RIFC) are obliged to hold an extraordinary general meeting (EGM) for the company’s shareholders. After two London hotels withdrew from staging the event, it will be convened at Ibrox, the team’s home and the venue for the previous two annual general meetings. It will probably be a short meeting, since there are only seven resolutions to be read out and voted on, and no opening or closing addresses. It is, though, the culmination in a long battle for control of the club.
What is the EGM about?
In its broadest sense, the future of Rangers; but in pragmatic terms, control of the board. The EGM has been called by Dave King, the former Rangers director who owns 14.5% of RIFC. He has raised seven resolutions: the removal of all four current directors – chairman David Somers, chief executive Derek Llambias, finance director Barry Leach, and James Easdale – and the appointments of King, Paul Murray and John Gilligan. As far as the bigger picture is concerned, this can be framed as Mike Ashley versus ‘the rest’. The former is the majority shareholder of Sports Direct and Newcastle United, and his MASH company owns an 8.92% stake in RIFC. King is at the head of the latter, but he has clear and unambiguous support from fellow Rangers-supporting shareholders, ranging from ordinary fans with small holdings to Douglas Park, George Letham and George Taylor, who between them own 20% of the RIFC shares.
Who are the key parties?
Ashley looms over the current regime. He wanted to increase his stake, in underwriting a share issue, but the Scottish Football Association paid heed to the spirit of their dual ownership guidelines and denied him permission. Sports Direct have a joint retail agreement with Rangers and have lent RIFC £5m, secured against various assets, with a second tranche of £5m available to be drawn down. As part of this agreement, Sports Direct are entitled to appoint two directors until the loan has been repaid, but no new directors have been appointed. Llambias is the former managing director of Newcastle United and when he was appointed as a non-executive director, the Stock Exchange was informed by the club that this was on behalf of MASH. Leach left his executive role at Sports Direct to take up the position at Ibrox. Sandy Easdale is also part of this group, having supported the board appointments through his brother, James. Sandy Easdale owns 6.45% of RIFC and holds proxy votes for a further 19.67%, which includes the shares held by Blue Pitch and Margarita Holdings.
King was born and raised in Castlemilk before moving to South Africa early in his working life. He was a director of Rangers under Sir David Murray and then Craig Whyte, with his position on the board under the latter one of two issues that he faces in terms of ‘fit and proper person’ criteria. After an 11-year battle with the South African Revenue Services, King was convicted of 41 breaches of the Income Tax Act – paying a cumulative fine of around £186,000 – and a tax bill of more than £40m. King has said that he has a company lined up to act as the nominated advisor of RIFC – which manages the company’s listing on the Alternative Investment Market – that will approve his appointment as a director. He would then need to seek the approval of the SFA’s professional game board, having been on the board under Whyte when Rangers Football Club plc was put into administration, and due to his breaches of the Income Tax Act.
Paul Murray is also a former director of Rangers, and faces the same issue with the SFA having been on the board under Whyte, albeit he was sacked by the former owner before RFC plc entered administration and had previously been very vocal about Whyte’s unsuitability as an owner. A private equity investor, Murray has campaigned for proper corporate governance at Ibrox, becoming a thorn in the side of Charles Green and others who have passed through the boardroom in the past three years. Gilligan is the former managing director of Tennents Caledonian Breweries and a former vice-chair of the Rangers Supporters Trust (RST). There is a further block of powerful shareholders in Park, Letham and Taylor. The three offered to provide equity finance to RIFC earlier this year, but the board chose instead to take a loan from Sports Direct. All three want to invest in the club, and will vote for King’s resolutions. They have yet to respond to comments to the Rangers Fans Board by Leach, that were noted in minutes and released online, in which he said – in very uncomplimentary language – that they had been terrified when they thought their offer would be accepted. Later, Rangers said: “These minutes have not been seen or approved by the board. We are very disappointed by the behaviour of the existing fans’ board”.
How do the votes stack up?
Votes are currently being cast by post or by proxy, but informed estimations can be made. King is adamant that he will win, and has the backing of his own 14.5%, the 19.49% held by Park, Letham and Taylor, River & Mercantile’s 5.7%, Rangers First’s 1.75%, Rangers Supporters Trust’s 1.56%, Kieron Prior’s 1.35%, Ally McCoist’s 1.34%, Felix Magath’s 0.99%, Graeme Henderson’s 0.72%, Malcolm Murray’s 0.25% and Walter Smith’s 0.09%. That gives King a starting point of 47.74%.
The board can count on MASH’s 8.92%, Sandy Easdale’s 6.45%, Blue Pitch Holding’s 4.91%, Margarita Funds Holding’s 3.19%, James Easdale’s 0.7%, David Somers’ 0.08%, and the remainder of Sandy Easdale’s proxy, 11.57%. That gives the board a starting point of 35.74%.
The floating voters?
The remainder of the shares – 16.52% – are held by a smattering of small investors and individual fan shareholders. The latter are thought to hold around 10%, and many have been motivated to vote in advance by the board’s attempts to hold the EGM in London. The RST, in particular, and Rangers First have been gathering proxy votes and will cast them ahead of the EGM. Given the amount of proxies lodged so far, those votes alone could see King have the backing of more than 50% of shareholders, and a straight majority is all that is required for resolutions to be passed. It is conceivable that the board will be informed ahead of the EGM that King’s resolutions have the required support, prompting them to appoint the three and then resign.
What happens after the EGM?
Whichever side wins, there are clear and critical issues to address. The first is finance, since the Sports Direct loan is short-term and the club needs rebuilding from top to bottom. It is also conceivable that the second £5m tranche from Sports Direct will be drawn down before the EGM, with additional securities. If King wins he will not seek the second tranche of finance. He will refinance himself and with the support of Rangers-fan investors. The performance of the team also needs to be addressed, since Rangers’ only likely route to the Scottish Premiership is now via the play-offs, and performances have sagged during the recent political strife.
Note to reader: This is a repost of BBC Scotland article written by Richard Wilson and the BBC. Full credit is given to him. Images have been added by BOTN and are credited as such
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