Rangers agree £10m loan with Mike Ashley secured against Murray Park Rangers have agreed a £10m loan with Mike Ashley that will see him takeover 26% of the clubs retail business. The Ibrox board released a statement to the stock exchange on Tuesday outlining the details of the deal. The loan will be split into two £5m tranches with the first available immediately to the club for urgent working capital. The deal does not include security over Ibrox stadium, however Ashleys Sports Direct firm holds a floating charge and strangling more revenue streams by getting shirt sponsorship revenues. Ashley is also now able to appoint two directors to the board for the duration of the loan facility, tightening the Newcastle owners grip on the club. Another part of the deal states that Sports Direct would benefit from the majority of shirt sponsorship deals from the 2017/18 season until the loan is repaid. Rangers will also now transfer 26% of its shares in Rangers Retail Ltd for the duration of loan deal. The statement from the board highlighted the clubs perilous financial condition has been exacerbated by lower than expected match attendances in recent months. It said: The Board of Rangers announces that Rangers Football Club Limited has entered in to agreements with SportsDirect Retail Limited and associated companies (SD), to provide a long term on-going credit facility of up to £10m (the Facility). The Companys 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. £5m 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 October 27 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 a floating charge over the Clubs assets and fixed charges over Murray Park, Edmiston House, Albion Car Park, and the Clubs 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 tranche of £5m, which repayable 5 years after draw down, will be used, if required, for working capital purposes and is subject to due diligence by SD prior to drawn down. The Company has also agreed that from the 2017/18 season, for the duration of the Facility, any future shirt sponsorship proceeds will be for the benefit of RRL. RRL will declare a dividend of a total of £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 April 27 2014, RRL made a profit before tax of £1,172,893. SD is a Related Party under the AIM Rules and accordingly the Facility is a Related Party Transaction pursuant to AIM Rule 13. £The Independent Directors, consider, having consulted with WH Ireland its nominated adviser, that the terms of the Facility are fair and reasonable insofar as shareholders of the Company are concerned. David Somers said: 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.
Posted on: Tue, 27 Jan 2015 13:47:59 +0000
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