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Moves to resist King's bid to topple board

Rangers directors say Ibrox may need to be used as loan security

IbroxRangers board has conceded that it may have to allow Ibrox stadium to be used as security in order to raise urgently needed capital and is taking steps to stop South Africa businessman ousting the current directors.

In the first of two statements issued this morning it said it has held discussions with a number of parties to try and find a solution to settle the club’s financial future and says it is running out of time to issue shares.

It also admits that the club does not have the assets to allow it to raise the funds required on the open market and is now talking to two potential backers who are stakeholders in the club.

In a separate statement the board made clear its intention to resist calls for a general meeting called by shareholder Dave King who needs a 51% majority to oust the current board and install himself and two others as directors. It referred to his suitability to be a director, clearly pointing to tax issues back in South Africa where he is based.

Noting the application from Mr King, Rangers said:  “if valid, the board intends to seek to have such notice withdrawn in order to avoid the cost and disruption of an ad hoc general meeting. The AIM (Alternative Investment Market) rules require that all individuals appointed to the board of an AIM company are suitable to be a director of a UK public company.

 “If the Notice is valid and is not withdrawn, the directors intend to recommend that shareholders vote against the proposed resolutions. A circular will be sent to shareholders in accordance with the Act, however in the meantime the directors will not be distracted from the more important matter of securing the future of the business.  A further announcement will be made shortly.”

The board’s u-turn on using Ibrox as security emphasised the fragile state of the club’s finances.

Mike Ashley, who owns 8.92% of the club, has lodged papers in the name of his company Sports Direct to use the stadium as security over a new loan to the club.

The statement suggests that a deal is being thrashed out and may be close to being completed.

The board said: “These discussions contemplate a significant amount of capital being available to the business on a long term basis in order to enhance the squad which the directors believe is necessary.

“A consequence of funding to this level is that, in reality, it may be necessary to use Ibrox stadium as security; such a decision would not be taken lightly.”

The board said no decision has been taken while these talks are being “finalised”.

“The advance notice does not mean that security will be given, and the directors are adamant that it will not unfairly advantage the party with whom it was agreed.

“The board will conclude a transaction, based on its merits, which it believes is in the best interests of shareholders as a whole in accordance with their fiduciary duty.”

The use of Ibrox as security is a controversial move given the backlash from supporters last week. Last May the directors assured supporters that this would not happen.

 

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