Rangers takeover: Blue Knights withdraw offer and warn of club’s demise
BRIAN Kennedy and the Blue Knights consortium have withdrawn their offer for Rangers with a warning to administrators Duff and Phelps that liquidation of the club is inevitable if their next choice of preferred bidder falls by the wayside.
• Ally McCoist had said earlier that administrators were “very close” to naming a preferred bidder
• Blue Knights consortium had lined up Walter Smith and Graeme Souness to join a football board at the club
• Ex-Sheffield United chief executive Charles Green linked to consortium
Duff and Phelps, who claimed on Friday night that negotiations with two interested parties were at a “very advanced stage”, are believed to be close to handing preferred bidder status to a London-based consortium which, it emerged, is headed by former Sheffield United chief executive Charles Green.
But at a highly-charged media conference in Glasgow on Friday afternoon, Kennedy and Murray expressed their fears for Rangers’ future and insisted their plan to exit administration through a Company Voluntary Arrangement (CVA) had been the most viable form of rescue for the club which has been in administration for three months.
Sale Sharks owner Kennedy, who revealed he had made a personal visit to Rangers owner Craig Whyte last weekend in order to reach agreement for the transfer of his shares, believes the club is now at “death’s door”.
“Anyone with a brain in their head could see ours was a credible plan, fully funded by credible people with the right motives,” said Edinburgh-born millionaire Kennedy. “By virtue of the fact Duff and Phelps have chosen not to go with us, then they better have somebody good. It better be a fully funded, credible consortium and not fall away next week. The result would be the liquidation of Rangers Football Club.
“It’s too late for us now. Our bid had to be accepted today to allow us to complete a CVA in time. This is not some kind of clever brinkmanship. We were ready to be in there at 9am on Saturday morning to start the process. When you have an institution like Rangers which is at death’s door, what is crucial is deliverability. Duff and Phelps cannot afford to make another mistake, as they did with Bill Miller. We knew what the numbers were, we understood what funding was needed, we could have executed a deal. Anyone else coming in at this stage is behind the eight ball.”
Former director Murray, who formed the Blue Knights consortium before later joining forces with Kennedy, says Rangers are now in “a very real crisis”.
“It’s not a decision we have taken lightly today,” said Murray. “Unfortunately, time has now run out. There is no time left to effect a successful CVA and bring the club out in a healthy capacity from that process. We told Duff and Phelps on a number of occasions that it has gone on far too long. We told them last night we had until midday today and they came back to us wanting more time.
“They told us they had another interested party, whose name has now come out. I just hope they are making the right choice, because they have already made one which turned out not to be right for the club. I really hope they have got it right this time. If they haven’t, the future is pretty bleak.
“It was always clear to us that a CVA exit from administration was the best way of ensuring Rangers’ survival. We never wavered from that from day one. Bill Miller’s withdrawal illustrated the problems with a Newco structure. It was important the club was saved in its current form, that was always the objective of the Blue Knights.”
Both Murray and Kennedy accused Duff and Phelps of “misrepresenting” elements of their bid over the past few weeks and months. Kennedy was accompanied by former SRU chief executive Gordon McKie who spent several days poring over the books of the Ibrox club.
“There has been a lot of spin going on over the past few weeks, so we just want absolute clarity on where our bid stands,” said Kennedy. “I discussed the quantum of this bid with Paul Clark of the administrators just a few hours ago, just to make sure both ends meet and we are not contradicting each other.
“First of all, it was £5.5 million up front. This is on condition of a CVA, delivery of Craig Whyte’s shares and release of his security. That was composed of £5 million, plus £500,000 on delivery of Craig Whyte’s shares. We now have an agreement with Mr Whyte for his shares.
“I flew up to Inverness and got a taxi to Craig’s castle last weekend and spent three hours with Craig. He wants Rangers to survive and agreed to release the shares. He has done a lot of things wrong but, man to man, we agreed everything needed to be done to save Rangers.
“Secondly, contingent on European football over the next few years, was a further £2 million into the CVA pot. Thirdly, we would have to find a mechanism to pay the football creditors because if we didn’t, we couldn’t play in the SPL and then qualify for Europe in years two and three. So that’s a further £3.5 million debt we were taking on. When you buy a company, you generally buy it debt free. So that further £3.5 million debt is exactly the same as cost. That makes the total quantum of our bid £11 million.
“We would also inherit £3.5 million of debtors, money owed to the club, so you could argue that could be taken off the £11 million. But the club runs out of money at the end of May, so from 1 June it needs to utilise these debtor payments. We would have done that, we would have been paying the bills from 1 June had we got preferred bidder status.
“That £3.5 million would have been used as cashflow and any shortfall beyond that, which would probably have been substantial, we had promised to fund as part of our deal as well. It was not subject to due diligence or anything else. This bid had gone up over the weeks, not gone down.
“We were going to create a board structure of very experienced businessmen and top quality operators. The first rule of business is to stay in business. In year one, we had to find a structure to make sure revenue matched expenditure.
“There is no better man than I know on this planet to take on such a task as Gordon McKie and his able deputy, financial director Eamonn Hegarty. Gordon is a gruff, tough, intelligent businessman who rescued the SRU from insolvency.
“We had also agreed with Walter Smith and Graeme Souness that they would come in and run the football board, along with Ally McCoist who would be managing the team. Walter and Graeme had agreed to come in on a non-executive basis. We all thought those three working together would be an absolutely phenomenal team.”
Duff and Phelps hit back at many of the claims made by the Blue Knights, insisting that “the most important information today for Rangers supporters is that discussions with two bidding parties are at a very advanced stage and we hope to reach agreement with one at the earliest opportunity.”
Joint administrator David Whitehouse said: “It is most unusual for us to comment publicly on individual bids but due to the allegations made by Mr Kennedy and Mr Murray today with the regard to our conduct as administrators we feel compelled to reveal important facts in relation to the various Blue Knights attempts to buy the club.
“For the avoidance of doubt some of the comments made at today’s press conference were grossly misleading. First I would state unequivocally that every opportunity was afforded to these parties.
“The fundamental reason we could not proceed with the Blue Knights/Ticketus combination was that we were advised there was not agreement within the consortium in relation to the funding of their bid. Throughout the process Mr Kennedy told us repeatedly he would be the ‘last man standing’.”
Whitehouse added: “As Mr Kennedy today made a virtue of explaining publicly details of his bid we are in a position to comment on those remarks.
“Of the £5.5 million cash on ‘day one’ figure Mr Kennedy quoted, £3.5 million of that would be provided by us in any case from the club’s debtors. The bid structure also factors in performance in Europe, and reaching the later stages of the Uefa Champions League which cannot be achieved next season.”
The Blue Knights, without Kennedy, were previously offered preferred bidder status but could not pay the £500,000 exclusivity fee as their partnership with investment firm Ticketus disintegrated. The new partnership was beaten by Miller, who subsequently withdrew his offer.
Whitehouse said: “We find it extraordinary and very disappointing that Mr Kennedy in particular should assert that the amount being offered is irrelevant. Time and again he and others have been afforded the opportunity to become the best bid and it has not happened.
“We have a statutory duty to accept the best bid. The bid should also be commercially better than liquidation. Mr Miller’s bid was deliverable but he chose not to proceed. We believe the best interests of the club would be served by all involved in the process respecting the bidding process.”
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Saturday 18 May 2013
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