Rangers hope new £4m share issue brings stability

Rangers will face sanctions if they are unable to pay staff. Picture: PA
Rangers will face sanctions if they are unable to pay staff. Picture: PA
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RANGERS have confirmed plans via an open offer to try and raise around £4 million with new shares being made available to existing shareholders.

The Stock Exchange was told the Ibrox club hopes the latest tranche of funding will help “re-build and re-establish Rangers as a stable, sustainable and successful business”.

It was also revealed that the club “expects to raise between £20 million and £30 million” over the next three years with the open offer an “important planned part of this fund raising strategy.”

Chief executive Graham Wallace admitted in his controversial business review released in April that the Ibrox club may turn to existing shareholders to help meet the shortfall in their revenue stream.

That came after it was revealed the club had burned through almost £70m in the 18 months since it was reformed following liquidation.

The club will offer 19,864,918 new Ordinary Shares at 20p each and the open offer is not underwritten.

If the aggregate level of subscription is less than 15,000,000 the open offer will not proceed.

Should this occur, “the Company will be unable to pay its creditors as they fall due and the future of the Company will be uncertain; The Directors will immediately have to seek emergency financing which may or may not be available”.

The club also confirmed that the £1.5m secured loans from shareholders Sandy Easdale and George Letham were due for repayment on September 1, 2014, “part of which will come from the proceeds of the Open Offer”.

Even if there is full subscription, the club will still “require additional external funding in the latter half of the current financial year in order to meet working capital requirements as a result of the cyclical nature of its business”.

A statement from the club read: “At the minimum level of subscription additional working capital will be required towards the end of the current calendar year.

“This funding, could be sourced from lines of credit, other forms of short term finance or as a component of a further equity raise, in line with the strategy identified in the Business Review.

“There can be no certainty that such funding will be available on commercial terms or at all.”

Amid ongoing acrimony at the club between some fans and the board, season ticket sales have dropped to “approximately” 23,000 from around 38,000 last year .

Rangers, playing this season in the Championship, announced a pre-tax operating loss of £3.5m for the six months to December 2013, but added in their statement that: “If the club continues to progress to the top flight of Scottish football it will have the opportunity to benefit from increased attendances, increased ticket prices, access to prize monies from European competition and new commercial partnerships.

“The cash position today requires careful monitoring but has improved since the beginning of April 2014 with the sale of season tickets, improved commercial relationships, and cost management initiatives identified by the business review.

“The company had an unaudited cash balance of £4.258m at 30 June 2014. Included in this unaudited cash balance is £2.72m relating to Rangers Retail Limited, which is not immediately available as working capital to the group as a whole.”