Rangers’ £134m debt puts squeeze on creditors

THE full extent of Rangers’ crippling debts have been laid bare in a new report by administrators Duff & Phelps, showing that the club could now owe a staggering £134 million.

HMRC alone could be due more then £93m, if Rangers lose what is commonly known as “the big tax case”, worth an estimated £75m.

Rival clubs, including Arsenal, Chelsea, Manchester City, Celtic, Hearts and Dundee United, are owed tens, and in most cases hundreds, of thousands of pounds by the stricken Ibrox club.

And Murray Group Holdings, whose chairman is former Rangers majority shareholder Sir David Murray, is also owed £278,000.

The list of hundreds of creditors includes several local authorities, British Gas, Edinburgh and Glasgow Audi, JJB Sports, Strathclyde and Lothian and Borders police forces, and even the Scottish Ambulance Service.

Ticketus is another creditor, after paying £26.7m for the right to sell season tickets.

And 6,050 “debentures”, who in 1990 paid between £1,000 and £1,650 to help to build the club deck on the stadium’s Govan stand in return for rights, such as to buy a season ticket for a designated seat, are potentially due £7.7m.

Despite this, Duff & Phelps, which itself is owed £1.2m, having charged up to £477 an hour for some work, believes a Company Voluntary Arrangement (CVA) is still possible.

That would see the club maintain its Scottish Premier League status and be eligible for Europe from 2013-14 – if creditors are willing to settle for a proportion of what is owed, possibly as little as 15p in the pound.

Duff & Phelps revealed yesterday that it had whittled the number of bidders down from four groups to three, believed to include Paul Murray’s Blue Knights consortium, as well as parties from the United States and Singapore.

David Whitehouse, joint administrator, said: “We can now see light at the end of the tunnel whereby the club can exit from administration and focus upon success on the pitch.

“While we cannot be precise on timescale, exit from administration does look achievable by the end of the season.

“We also hope to announce next week acceptance of one bid, which would then be subject to a period of due diligence and exclusivity.

“Most importantly, following the bidding process, we believe the most likely exit from administration will be the successful implementation of a CVA.”

He added: “The ability of the company to exit through a CVA process is dependent in part on the level of offers submitted for the business and is in the gift of the potential purchasers to deliver. As stated, we believe this can be achieved.

“We would stress, however, that if a CVA could not be achieved, bidders have discussed with us the next best alternative, being the sale of the business to a new legal entity which would continue to trade as Rangers Football Club.”

The report also revealed how thorough Duff & Phelps has been in sizing up the club’s assets.

Not only has its agents, Lambert Smith, valued Ibrox Stadium and the Murray Park training ground, but auctioneers Sweeney Kincaid has also been sent in to run the rule over the fixtures and fittings at both sites.

The administrators also revealed that fans are prepared to hold a protest against any form of liquidation at the home match against St Mirren on Saturday.

They are backing the Blue Knights after securing an agreement of a share issue to spread ownership of the club among fans, following a takeover.

Mark Dingwall, board member of the Rangers Supporters Trust, said: “The three supporters groups – the trust, assembly and association – put out a challenge to all potential bidders to come up to scratch on accountability, governance and, going forward, the widening of shared ownership. No one man – or his ego – can have complete control of this club again.

“The only people who have bothered to engage with us is the Blue Knights, so we have negotiated to back them to obtain a CVA and own the club and then do a share issue which ordinary fans can subscribe to.”

If the administrators are to secure a CVA, they will have to make an offer to the creditors that 75 per cent are willing to sign up to.

With HMRC potentially accounting for more half of the club’s debt, the taxman will have a major say in the club’s future. Football finance expert Neil Patey believes the club may be willing to throw in the towel on the case, if it does not believe it will win, and make the HMRC an offer.

“If they get the outcome of the big tax case in time, fine, but in the absence of that, they may say ‘what will it take to settle you?’,” he said.

“I think, since they’ve got to get this resolved, they’re operating on a basis where they will assume they will lose and have to pay the HMRC an amount of money, and then it comes down to negotiating with the HMRC.”

Although the big tax case is worth £75m, if the HMRC is offered 15p in £1, it would actually be worth just over £11m.

Mr Patey, a partner in Ernst and Young, said: “The (£134m) figure is slightly larger than I was anticipating, but it’s of the order – I always thought it would go above £100m.

“It’s the difference between 30p in the pound and 15p, and I’m not sure it alters the chances of getting a CVA away.”

• Read the Duff and Phelps report in full