Rangers’ decision to borrow £1.5 million in short-term loans from two of the club’s biggest shareholders was pre-planned as part of the financial and organisational restructuring of the Ibrox club, according to chief executive Graham Wallace.
The Rangers Football Club Limited yesterday confirmed to the stock exchange that director Sandy Easdale and single biggest shareholder Laxey Partners were lending the club £500,000 and £1 million respectively for ‘working capital’.
Both sums are secured against the Edmiston House and Albion car park facilities near to Ibrox. The loans are repayable by 1 September, and while Easdale will not make a single penny, Laxey Partners, the Isle of Man-based hedge fund who are the club’s single-biggest shareholder with an 11.64 per cent stake, could make a £150,000 profit on their part of the deal.
The club’s Nominated Adviser (NOMAD), Daniel Stewart and Company plc, has approved the Laxey deal as “fair and reasonable” but fans groups last night questioned the Laxey loan in particular.
Speaking after the announcement, Wallace said fans should not be concerned about the borrowing, which he said was “always part of the plan”.
The Scotsman can reveal that the restructuring which is already under way will see Rangers’ mid-year financial results, due out late next month, show a massive improvement on last year’s £14 million loss in just 13 months.
Ibrox sources can neither confirm or deny the mid-year figures, but The Scotsman understands that the losses, which were running at £1 million per month, have been significantly reduced.
While not commenting on the forthcoming results, Wallace was nevertheless bullish about the club’s future on and off the field and he launched his fiercest criticism yet of those who are predicting that Rangers will go into administration again, branding them “irresponsible” and pointing out that there is no need for administration as the club has no debt – the overriding factor in bringing about administrations. “We have no bank debt, we have no overdraft, and we have a debt-free balance sheet which would be the envy of most clubs,” said Wallace, “yet we keep getting drawn back in to the question ‘is Rangers in crisis’ which seems to me to be rather unique.
“There is no prospect of this business going into administration. I have staked my personal reputation on it. I do get frustrated with the constant use of the word administration, because what it can tend to do is potentially spook the wider fan base.
“When you look at what has happened at the club over the past couple of years, you could understand why certain segments of the fan base could be concerned when they read in the newspapers or hear comment from the media about a second administration.
“To my mind, sometimes there is a sense of irresponsibility when people start to use that word.”
The chief executive is only too aware that the short-term loans by Easdale and Laxey Partners need to be repaid by September, and in effect it is ‘tide me over’ money until the season-ticket income starts to roll in once Rangers secure their inevitable League 1 title. They play Stranraer at Stair Park tonight, looking to extend their 21-point gap at the top of the table.
Wallace explained: “It is a short-term facility that we will use as required over the next three to four months, and the important message is that this has always been anticipated in the business plan that I inherited and which we are working our way through.
“There was always a need for some short-term funding. The quantum of it was to be determined, and we were looking for the best way to source it. This is not a last-minute crisis panic move, this is just consistent with what I would regard as doing business in the right way. Football clubs are very cyclical in terms of their revenue generation and at the rate at which they spend money.
“Typically this period at the end of the financial year tends to be the time when you are looking forward to income coming in, and not just talking about season ticket income, as we have significant inflows from commercial partnership deals and from our retail business joint venture. So really all we are doing is putting in place a facility that gives us a little bit of financial headroom.”
Promising that everyone at Ibrox was working hard “to get the fundamentals sorted out”, Wallace was adamant that borrowing from major shareholders was preferable to approaching banks for the same loan facilities.
“We see it as a really positive step for the club,” said Wallace, “as they are demonstrating their support for the board and the management.”
Last night the Rangers Supporters Association, Assembly and Trust issued a statement saying they had been contacted by a number of supporters, who are also current shareholders, indicating they would have provided a secured loan of £1.5m on more favourable terms than the combined Laxey Partners and Easdale loans.
“The terms of the Laxey loan in particular seem unduly onerous,” stated the three groups. “We are concerned that not all shareholders are being treated equally. Fans and shareholders both deserve an explanation as to why other shareholders were not approached to provide this loan. The three groups call on Rangers, or the NOMAD Daniel Stewart, to clarify the matter. Either in public or through a direct meeting with fan representatives. We have contacted both companies with our concerns.”
Meanwhile, Wallace is midway through the 120 days he asked for in order to examine the club from top to bottom and then change what is necessary to safeguard and improve Rangers’ future. The club’s forthcoming results will show if he is true to his word about Rangers changing for the better.