Potential hefty tax bill leaves latest interest in Rangers a '50-50' chance

THE latest bid to buy Rangers Football Club is likely to hinge on whether an agreement can be reached regarding any costs incurred from an ongoing HMRC tax investigation.

London-based multi-millionaire Craig Whyte confirmed his interest in the Ibrox club in a statement released to the Stock Exchange yesterday, with property developer Andrew Ellis also said to be a involved. Sir David Murray, the Rangers owner, is understood to be taking Whyte seriously. But, while some reports have stated that the transfer of ownership could be concluded as early as January, the reality is that a lot of ground still has to be covered before a deal can be struck. According to a source close to the Old Firm club, the issue remains "very much 50-50", with the ongoing inquiry into payments made into players' remuneration trusts a crucial factor.

Whyte, a lifelong Rangers supporter who has made his millions as a venture capitalist, would like indemnity from any financial penalty but, despite reports that he has secured a warranty from the Murray Group, accepting full liability for any back-dated tax bill, no such agreement has been discussed with Murray so far.

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As part of the due diligence process, Murray is expected to stress the need for any prospective buyers to be able to cover the costs, which could be substantial. A hearing with HM Revenue and Custom is on-going but it has been adjourned with no conclusion as yet. It will reconvene in January, with the club facing the prospect of unwelcome liabilities.

HMRC are determined to see this process completed, to ensure that Rangers are seen to be treated the same way as other clubs, and thus recouping all of the revenue that may be owed by big British clubs. That means Rangers must be prepared for the possibility of a multi-million pound bill and, as part of his vetting of any interested purchasers, Ibrox director Donald Muir - a 'turnaround specialist' brought in last year to help facilitate a sale - must ensure the latest bidder is aware of that and has the means to absorb those costs as well as run the club.

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It has been suggested that this is the reason the purchase price for the club had not been dropped, despite the fact that several million has already been wiped from the debt since the financial crisis broke at Ibrox. Whyte is certainly looking for the out-going owner to pick up the tab.

While this could prove a stumbling block, it is understood that Murray does like Whyte and has been convinced he has the ambition and the financial clout to be a serious contender to succeed him. Away from the tax bill, other figures have been agreed in principle, although Whyte has yet to meet with the Rangers board or make a formal offer.In a statement released to the stock market yesterday the Motherwell-born 39-year-old's representatives said: "Craig Whyte notes the articles in today's press regarding discussions between him and Murray International Holdings Limited (MIH) with a view to him acquiring MIH's majority shareholding in Rangers Football Club Plc (RFC). Mr Whyte confirms that he is considering making an offer for RFC and is in talks with MIH but that these are at an early stage and there can be no certainty that an offer will ultimately be made. Mr Whyte has not yet approached the board of RFC. A further statement will be made in due course."

Mr Whyte could not add further comment because of Stock Exchange rules but it is understood that he has vouched to appease Lloyd's Bank, who stepped in last year when debts reached an alarming 32m. He has agreed to write off the club's debt which fluctuates on a daily basis but could be anything between 25m-28m by the beginning of the year. On top of that, around 5.5m has been set aside for shareholders, and given his majority stake in the club, Murray would be entitled to the bulk of that, with the remainder free to cash in or retain their shares.

But it is his ability to finance the club's ambitions should he be successful in assuming control that is currently being examined at Ibrox.

There will be understandable caution if the latest interest involves Ellis, who was rejected as a viable candidate earlier this year after negotiations to buy Rangers failed.

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Murray, who has had a majority share in the Old Firm club for over two decades, has always stressed his desire to pass on the reins to the right people, who have Rangers' best interests at heart, on and off the field. To convince in that domain, Whyte has set aside a basic 25m to be invested in the playing staff over the next five years and those close to him say there is no way he would continue with his bid if he did not feel he could back it up with ongoing investment.

But there was caution in the response from the club yesterday. The defending league champions have been here several times before since Murray announced his intention to sell the club around three years ago. Among those linked with unfulfilled takeover bids are Graham Duffy, Dave King and Ellis, while there were also suggestions that Jim McColl was considering financing a supporters' takeover. All stole headlines before disappearing back into the shadows. It led to a further statement to the Stock Exchange claiming that Murray International Holdings were "no longer actively marketing its controlling stake in the club for sale."

But, given recent revelations, it is clear that Murray is still listening to offers. "The board notes the announcement released on behalf of Craig Whyte," said a club spokesman. "The board confirms that it has been advised by Murray International Holdings Limited that it is in early discussions with Craig Whyte regarding the acquisition of MIH's majority shareholding in Rangers Football Club plc. The board will keep all shareholders informed of further developments."

However, although the latest deal is reportedly being financed by Whyte himself, he has reportedly been in contact with Ellis with regards the property developer providing additional cash backing.