The Rangers board’s decision to accept a credit facility of up to £10 million from Mike Ashley was last night slammed by the rival ‘Three Bears’ group The Douglas Park, George Letham and George Taylor consortium had a £6.5m loan offer rejected in favour of two tranches of £5m that will be available to Rangers’ through Ashley’s Sports Direct group.
Park, Letham and Taylor last night issued a statement which claimed Ashley’s cash will do nothing to repair financially damaging relations with supporters and insisted that their counter offer would have been far more advantageous to the Ibrox club.
A host of conditions have been applied to Ashley’s latest patching up of finances which the club themselves described as “perilous” yesterday.
Ashley’s Sports Direct firm, which already has a 49 per cent holding, will take a further 26 per cent of club retail activities.
Ashley’s companies will also be given a floating charge on the club, as well as taking the Murray Park training ground, Edmiston House, the Albion car park and the club’s registered trademarks – including the Rangers crest – as collateral. Ibrox Stadium itself is not included in the deal. From the summer of 2017, cash generated from shirt sponsorship deals will go to Ashley – until the loan is repaid.
The Three Bears claimed their bid, which had fewer strings attached, foundered on their unwillingness to give chief executive Derek Llambias assurances that they would vote against resolutions to remove directors at the forthcoming extraordinary general meeting called by former director Dave King, another who has offered to invest in the club. Reports suggest that the club was seeking to safeguard bus tycoon James Easedale’s position on the board.
The terms of Ashley’s latest £5m loan – £3m of which will be eaten up in paying off the £3m he injected on a temporary basis to keep the club afloat during the closing months of last year – will also allow the Sports Direct group to nominate two further board members.
In finance director Barry Leach and Llambias, two of the four current board members are already placemen for Ashley.
An earlier suggestion that Ashley would be granted a charge over Ibrox infuriated the Rangers support, who had been given assurances that the stadium would never be put a risk.
Rangers chairman David Somers greeted the agreeing of these interest-free loan facilities – five years the timescale for paying off the first £5m - as “great news” that provided the club with a “platform of stability”. The Park consortium countered that the necessary stability and “revenue streams” required to reinvigorate Rangers would never be achieved with a reliance on Ashley. His interest is anathema to a support blamed again by the board for the cash crises of this season, with their statement yesterday claiming these had been “exacerbated by lower than expected match attendances”.
The Park group, who have the backing of the vast majority of Rangers followers, believe they could have addressed both the disaffection and disarray in the finances in a fashion no Ashley input ever could. The Park, Letham and Taylor axis, that command a 20 per cent shareholding as against the 8.92 per cent Ashley was allowed by the SFA, were willing to turn £4.5m of the £6.5m offer into shares and sought securities over Murray Park, Edmiston House and Albion car park and two places on the board.
“We fail to see how the SD facility can be described as better for the club than the funding offer we made. It isn’t and should not have been accepted if the best interests of all the shareholders were considered,” said a statement released by the group.
“Acceptance of the SD facility will do nothing to repair relationships with the fans which is critical in improving the revenue streams of the club.
“The announcement from the board suggests that the SD facility is interest free but the loss of revenue to the club from the transfer of 26 per cent of the share capital in RRL and 50 per cent of the shirt sponsorship proceeds from 2017/18 equates to an annual interest rate significantly higher than our offer and probably in double digits.
“Security for the SD facility involves the club’s registered trademarks and a floating charge over the club’s assets. This is disadvantageous to the club compared to the security required under our offer. It appears the only measure by which the SD facility could be considered favourable to our offer is in respect of the quantum and duration of the second tranche of £5m but there appears to be some uncertainty as to whether this will actually be required and it is subject to further due diligence by SD.
“At one stage during the negotiations we indicated we could increase our funding package to £10m to match the SD facility and provided proof of funds in excess of this amount. However after the EGM was called we felt that agreeing an excessive long-term loan package with a board who may be removed in six weeks was not appropriate.
“We were subsequently advised by Derek Llambias that our funding offer would be difficult for the board to accept if we did not provide irrevocable undertakings to vote against EGM resolutions to remove certain existing board members. We felt this was completely inappropriate and advised that our current funding offer was not affected by the EGM process.”
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