Board urges shareholders to pull together
Sports Direct provides £10m bail-out to ease Rangers cash crisis
The directors say they hope the new deal will bring an end to the battle for control and bring all shareholders together.
Half the facility will be used to repay Ashley’s earlier loans through MASH Holdings and Sports Direct will get security over Murray park, Edimiston House, Albion car park and the club’s registered trademarks. Ibrox will remain outside the agreement
Sports Direct can put two directors on the board and also gets control over 26% of Rangers Retail for the duration of the loan, although there is no time limit for repayment.
The second £5m tranche will be used for working capital and to invest in strengthening the playing squad, but has to be repaid within five years. Ashley has also secured a shirt sponsorship package. From 2017/18 any deal will be for the benefit of Rangers Retail which is a joint venture between the club and Sports Direct. In the ear to end of last April it made a pre-tax profit of £1.17m.
Rangers Retail will pay a dividend of £1,6m prior to the transfer and the club will use the proceeds to repay Sports Direct to get out of onerous leases on unprofitable stores entered into by a previous Rangers management team.
In a statement to the London Stock Exchange, Rangers board said the financial condition of the club “has been perilous for a number of months exacerbated by lower than expected match attendances”
It said the cost cutting programme had 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 Sports Direct (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.”
Chairman 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.”