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Mike Ashley strengthens grip on Rangers after £10m loan accepted

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Rangers have accepted a £10 million loan offer from Mike Ashley ahead of pay day on Thursday, to keep the club in business.

£5 million will be immediately available for working capital, £3 million of which will be used to repay the loan that the Newcastle United owner gave the Ibrox side in October. In return for the first £5m of the £10m loan, Ashley gets security over the Murray Park training ground, the club’s registered trademarks, Edmiston House and Albion Car Park.

However, Ibrox stadium is not part of the deal.

Rangers are also handing over a further 26% of shares in Rangers Retail Limited to Ashley, who already owns 49% of Rangers’ retail arm.

The experts conducted a survey, according to which proceeds from Shirt sponsorship revenue from season 2017-18 onwards will be paid to Rangers Retail Limited for the duration of the loan agreement.

On top of that, Ashley will also have the right to nominate another two directors to Rangers’ board for the duration of the loan. Following on from the appointments of former Newcastle chief executive Derek Llambias alongwith Barry Leach who was appointed finance director.

In a statement to the London Stock Exchange, Rangers said: “The Board of Rangers announces that Rangers Football Club Limited (“the Club”) has entered in to agreements with SportsDirect.com Retail Limited and associated companies (“SD”), to provide a long term on-going credit facility of up to £10m (the “Facility”).

“The Company’s financial condition has been perilous for a number of months exacerbated by lower than expected match attendances. The Directors have implemented a cost cutting program with which they have made significant progress. There is however an immediate need for a substantial injection of capital, and the Directors have considered a number of options. The terms negotiated with SD (which are reversible in respect of the Facility) represent the optimum combination of quantum and duration of funding, allowing the Company time to arrange permanent capital which can be used for strengthening the playing squad.

“The Facility is structured in two separate interest free tranches. GBP 5million will be available immediately for working capital purposes and for the repayment of the credit facilities with MASH Holdings Limited which was entered into on 27 October 2014. All rights and security associated with the MASH facility will be cancelled.

“The Club will transfer 26% of the share capital in Rangers Retail Limited (“RRL”) to SD for the duration of the Facility (the “Transfer”), which will be transferred back, at no cost, upon repayment of all outstanding sums owed by Rangers and its subsidiaries to SD. There is no specified repayment period for the first tranche of the Facility.

“The Facility is to be secured by (1) a floating charge over the Club’s assets and (2) fixed charges over Murray Park, Edmiston House, Albion Car Park, and the Club’s registered trademarks. None of the security that is being given to SD covers Ibrox Stadium, which is specifically excluded and remains in the full ownership of the Club, free from any security. SD will also have the right to nominate two directors to the board of Rangers for the duration of the Facility, any such nomination will be subject to regulatory consent pursuant to the AIM Rules and other regulatory bodies. If the entire sum drawn down is repaid, the Facility will be deemed to be terminated, all security will be released, the 26% of RRL will revert to the Company and all rights of SD to nominate Directors to the Board of the Company will cease.”

The second half of the £10 million loan – repayable five years after it has been withdrawn – will be used also for working capital purposes, subject to due diligence by Sportsdirect prior to the facility being given to Rangers.

Statement continued: “The second tranche of GBP5 million, which repayable 5 years after drawdown, will be used, if required, for working capital purposes and is subject to due diligence by SD prior to drawn down.

“RRL will declare a dividend of a total of GBP 1,610,000 prior to the Transfer. The Club will use the proceeds of its share of this dividend, inter alia, to repay sums owing to SD in respect of the cessation of onerous leases on unprofitable stores entered into by a previous Rangers management team.

“RRL is a joint venture between the Club and SD whose business is selling merchandise both on-line and in stores. In the period ending 27 April 2014, RRL made a profit before tax of GBP 1,172,893.”

Rangers chairman David Somers commented: “The Board has sought for some time to establish a long term funding solution for the Company in order to create a platform of stability to build for the future. This Facility begins this process and we very much hope that it will be augmented with further permanent capital in due course.

“In addition, the executive team have made strides in addressing the cost base of the Company in order to improve our financial condition and working capital profile. We very much hope that we can now move away from having to seek short term funding solutions and can focus our efforts towards investing in the first team playing squad, a return to profitability and to re-establishing Rangers in the top league in Scottish Football and in due course, to European competition. The Board now calls upon all shareholders to rally together to achieve this goal.”

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About Author

scotzine

Andy Muirhead is the Editor of Scotzine and the Scottish Football fanzine FITBA. He is the Scottish Football columnist for The Morning Star and has written for a number of other publications including ESPN, Huffington Post UK, BT Life's a Pitch and has had his work featured in the Daily Record, The Scotsman and the Daily Mail.

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