Rangers takeover: Rangers squad could move straight to ‘newco’

THE registrations of the current Rangers playing squad would be automatically transferred to the new company that Bill Miller intends to set up if he is successful in buying the assets of the current Ibrox club, sources close to administrators Duff & Phelps have claimed.

American towing tycoon Miller, as expected, was chosen over Paul Murray and Brian Kennedy’s supporter-endorsed Blue Knight consortium as the preferred bidder for the “business and assets of Rangers Football Club plc”.

His unconditional offer, believed to be worth £11.2million, is predicated on the stadium, training ground, players and club’s Scottish Premier League share immediately being moved to a “newco” and this later being joined up with the old company, once the debts left there have been dealt with by a Company Voluntary Arrangement. However, the view that players can be moved to a newco just like the company’s other assets is completely at odds with the understanding of the players’ union.

PFA Scotland chief executive Fraser Wishart said recently that the Transfer of Undertaking (Protection of Employment) regulations mean players could decide whether or not they moved to a newco.

A source close to the administrators said there was a “clash of law” on the issue and that they, Miller, and the SFA believe the players union had been “rash” in their pronouncement.

“The registration rests with the club, not a limited company,” said the source. “There is a question how you define a club but, if a newco acquired the league share, it would be the club.”

The source also insisted that such a share transfer would also preserve the history of Rangers.

He said: “The football club is all important, with the actual registered company number and effective name not as important. As long as a football club stays together so does the football share, players and titles.”

Miller is believed not to have paid an exclusivity fee and could therefore still be gazumped in the unlikely event a better bid is lodged.

The club administrators admit he is seeking to avoid a lengthy purchase process and the need to acquire Craig Whyte’s 85.3 per cent shareholding, which they say will “wither on the vine” if he owns a company with no assets.

The Detroit-based businessman also wants to avoid exposure to the “toxicity” of the old company and being “held to ransom” by football authorities.

Duff & Phelps admit that Miller has been given “a degree of comfort” in respect of the SFA’s 12-month signing embargo and the SPL’s position on admitting a newco, as well as the investigation into the non-disclosure of payments to players relating to Rangers’ use of Employee Benefit Trusts between 1998 and 2010.

He has decided that the apparent assurances are sufficient for him to proceed with his bid.

Moreover, the potential £60m bill from HMRC once the tax tribunal delivers its verdict, expected to be shortly, would be a “red herring” under the Miller plan, according to the administrators. With the club’s assets sold to put £11.2m into the pot, HMRC and other creditors will have no choice but to vote for a CVA because it will be the only means of a commercial return with the company having no other assets that could bring a greater return in liquidation.

However, the administrators acknowledge that European football governing body Uefa would not make any distinction between the old and new companies and that a newco Rangers would be barred from playing European football for three years.

The Uefa stance is clear and unequivocal on how it treats any newco created to shield a football team from any financial or regulatory ills experienced by the organisation from which it sprang.

“If a club sets up a new company simply to avoid paying its debts or obligations then they would almost certainly fail the three-year rule [for obtaining the required Uefa licence],” a spokesperson for Uefa told The Scotsman.

“This is to ensure clubs do not simply create a ‘newco’ and leave the previous entity in charge of dealing with debts.”

Previously, Uefa have made the following statement pertaining to newcos: “Clubs are not allowed to change their legal form or structure in order to obtain a licence, simply by ‘cleaning up’ their balance sheet while offloading debts – thus harming creditors (including employees and social/tax authorities) as well as threatening the integrity of sporting competition. Any

such alteration of a club’s legal form or structure is deemed to be an interruption to its membership of a UEFA member association and, consequently, three years must pass before a club can apply again for a UEFA licence. In other words, the three-year rule is designed basically to avoid circumvention of the club licensing system.”

Paul Murray, head of the Blue Knights’ bid, last night claimed the loss of European revenue until at least 2015 was potentially more damaging than it might seem.

Although the Blue Knights, joined by previous bidder Brian Kennedy, appeared to be favoured by many supporters, a source close to the administrators painted a picture of a their bid as lacking real credibility. It was said to be “substantially lower” than Miller’s and did not have proof of funds.

Murray claimed the administrators had slowed the process by failing to pursue a court action to neutralise Whyte’s shareholding. But the rebuttal was that such a hearing would only be expedited if it could be shown a commercially viable bid was only being held up by the obstacle of Whyte.

In a statement last night, Murray said: “We believe our bid was, and remains, the best bid for Rangers Football Club and its supporters. We were therefore surprised and disappointed to be informed earlier today that a preferred, non-exclusive bidder has been appointed which appears to entail the transfer of the assets and Rangers business into a newco structure.

“We were not prepared to follow that course of action. We believe that the complexities of a newco process should not be underestimated and the likely loss of European football for a minimum period of three years may carry longer term financial consequences. Under our CVA-proposed transaction, these issues could have been addressed more easily.

“Whilst we also acknowledge that the delivery of Craig Whyte’s shares created a degree of uncertainty, our frustration lies in the fact that it is only in recent days has this issue been seen as an impediment to overcome in enabling us to make an unconditional CVA offer to Duff and Phelps. With the end of the season now very close, the current uncertainty and delay in resolving matters has to be urgently resolved as there are many key decisions that need to be made to ensure that the club can plan properly for next season and beyond.”