So Who Owns Rangers – Part 2

So who actually owns Rangers?

Who?

The proverbial $64,000 question and one that is difficult to shed much light on.

The simple answer is of course: Craig Whyte.  A man who acquired the club for the price of £1 from Sir David Murray, earlier in 2011.

In real terms Glasgow Rangers are owned by accompany called: The Rangers Football Group Limited. A company formerly known as ‘Wavetower Limited’.The company has acquired 92,842,388 ordinary shares of 10 pence each in The Rangers Football ClubP.L.C.Now this is where it gets interesting, the group names it’s Directors as Craig Whyte, Phil Betts and Andrew Ellis. Remember that name!

The Rangers FC Group is wholly owned by Liberty Capital Limited (“Liberty”), a company incorporated in the British Virgin Islands. Liberty is wholly owned by Craig Whyte. The Rangers FC Group acquired its shares in the Club from Murray MHL Limited (the “Vendor”) on 6May 2011.

As a result, Craig Whyte and Phil Betts have been names as Directors of Rangers Football Club. But not interestingly enough: Andrew Ellis.

An important mention in this document is this, “The consideration for the Acquisition was £1, satisfied in full in cash.” Basically, if £1 is what has been paid for the shares then under the rules of being a limited company that would be the groups only liability in case of insolvency. As the money has been paid, their liability is complete.

The document also outlines the ‘future plans’ of the company that I will list below as they are reasonably self-explanatory.

Future Plans

As required by the Takeover Panel, where The Rangers FC Group makes any statement regarding any course of action it intends to take, such statement will be considered to apply for a period of 12months from the date of this document. It is The Rangers FC Group’s intention to:

 continue to run the Club as a football club from Ibrox Stadium in Glasgow. It is anticipated that

there will be no likely repercussions on employment and the locations of the Club’s place of

business, nor is it the intention of The Rangers FC Group to redeploy any of the fixed assets of

the Club;

 not make any changes in respect of the continued employment of the employees and

management of the Club and of its subsidiaries, including material change in their terms of

employment; and

 maintain the Club’s listing on PLUS Markets for at least a year from the date of the Acquisition

Some may remember at the time there were reservations from the current Ibrox board regarding the takeover. This is also outlined in the document however I will try and summarise it to the best of my ability.

The board, named the Independent Board Committee (IBC) made a statement alongside the deal. The board was made up of: Alastair Johnston, Martin Bain, John Greig, John McClelland and Donald McIntyre.

First of all the board confirm the financial commitment from Wavetower for the future investment into the club. They also concede that the sale and purchase of the club rested ultimately with Murray Holdings and Lloyds Bank at that time and those entities had the official power to sell the club as it were. The 85% held by MHL for £1.

It also states at this point that the debt owed to Lloyds bank at that time would be transferred to Wavetower. (£18 Million). This puts to bed the myth that Whyte has paid off Rangers debts, it would appear that he may have transferred the debt but the debt would still be owed to him or at least his company.   At this stage, under Rule 9 of The Takeover Code a mandatory offer should be made to the other shareholders due to the transaction to take 85% of the shares from MHL.  On this occasion however it was deemed to be rather a pointless exercise because if 85% of the shares are sold for £1 it would effectively make the remaining shares ‘worthless’.

So the IBC were committed to assurances, but what assurances were actually set out in the takeover plan, here they follow:

The Agreement, together with a separate side letter between The Rangers FC Group and the

Club, contains a number of undertakings in relation to The Rangers FC Group’s commitment

to the Club and these are expressed to be enforceable by both the Club and the Vendor. The

principal undertakings may be summarised as follows:

(a) if the Club has not suffered an insolvency event within 90 days of the Club’s appeal in relation

to the tax claim brought against the Club by HM Revenue & Customs (the “Tax Case”) being

finally determined, then The Rangers FC Group will either waive the debt that it has acquired

or convert it into equity by way of an issue of new voting ordinary shares in the Club. The

acquisition of the debt by The Rangers FC Group is described further at paragraph 2 below.

However, The Rangers FC Group has separately undertaken to the Club that it will waive the

debt that it has acquired and not exercise its option to convert it into equity as provided for in

the Agreement;

(b) The Rangers FC Group has undertaken to provide £5,000,000 for investment in the playing

squad;

(c) The Rangers FC Group has stated its intention to invest, or procure an investment of, £20

million by 2016 for investment in the playing squad. If, as part of any player acquisition, the

Club agrees to make a transfer payment in a future year before 2016, The Rangers FC Group

will be obliged to invest cash to cover such transfer payment, up to £5 million per year; such

amounts coming out of the £20 million investment that The Rangers FC Group has stated its

intention to invest;

(d) The Rangers FC Group has undertaken to provide or procure the provision of up to

£5,000,000 of additional working capital facilities to the Club;

(e) The Rangers FC Group is to contribute to the Club the amount required to meet a liability

owed by the Club to HM Revenue & Customs in relation to a discounted option scheme tax;

(f) The Rangers FC Group is to provide £1.7 million to the Club to fund capital expenditure in

relation to improving kitchen and public address equipment at the stadium and meeting other

necessary or reasonable capital expenditure required in the ordinary course;

(g) The Rangers FC Group undertakes that, until the debt has been waived, the Club will not be

required to lend money to The Rangers FC Group or grant security in respect of The Rangers

FC Group’s borrowings unless the borrowing (and the granting of the security in relation to it)

is principally for the Club’s benefit; and

(h) a breach of any of the undertakings given by The Rangers FC Group in the Agreement will

result in the debt acquired being automatically extinguished. The terms on which the debt

would be extinguished are to be agreed by the parties at the relevant time.

2.Until such time as the debt acquired by The Rangers FC Group is either waived or converted

into equity, if the Club suffers an insolvency event or is unable to pay its debts as they fall, the

debt acquired by The Rangers FC Group shall be deemed to be increased by an amount

equal to the amounts contributed by The Rangers FC Group as set out in paragraphs 1 (b),

(e) and (f) above.

So who are these three people behind The Rangers FC Group???

Craig Whyte, aged 40, is a Scottish entrepreneur and investor born in Motherwell. He built his career on his expertise as a turnaround specialist financing and managing established businesses experiencing cash-flow difficulties.  He is founder and chief executive of Liberty Capital Limited, which currently has investments across several market sectors including technology, financial services, ticketing and commodities trading, with operations in the UK, the Netherlands, Switzerland and France. He also holds interests in a large number of other companies specialising in areas such as finance, corporate recovery, investment and stockbroking.

Phil Betts, aged 48, has over 30 years’ experience in the banking and finance industry with particular expertise in asset finance. He started his career with Midland Bank before moving to Royscot Trust Plc. as a hire purchase and leasing specialist, arranging funding facilities for SMEs across a number of different industries. Phil then moved to Fraser Russell chartered accountants (now Baker Tilly) as their in-house asset finance specialist advising clients on fixed asset purchases and suitable funding mechanisms. In 2005, Phil formed Primary Asset Finance LLP, which specialises in refinancing and restructuring companies, and has helped many businesses to rise funding and worked closely with them to support their turnaround.

Andrew Ellis, aged 44, has significant experience at director level at professional football clubs, having been a board member at Queens Park Rangers and Northampton Town. Andrew’s area of expertise is UK residential and commercial property. In 1987 he founded a Knightsbridge-based property company which he continues to run today. He also acts as a consultant to high net worth individuals on domestic and overseas property developments.

The inclusion of Andrew Ellis is the one that surprises most people. Andrew Ellis was involved in takeover talks with Rangers around March 2010 but it appeared that all talks broke down – not least that he would not pass a fit and proper person test as speculated. The fact that Andrew Ellis apparently has nothing to do with the running of Rangers Football Club is contradicted somewhat by his incorporation as a Director of the company mainly responsible for the ownership of Glasgow Rangers.

There have been many speculations about the ownership of Glasgow Rangers however the only thing completely clear is that which is set out above. If anything further comes to view then I will be sure to amend this accordingly.

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