The real value of Rangers fixed assets may soon be known.

Something to keep an eye out for is the possibility of a “write down” of the book value of Rangers’ fixed assets in the coming months. These are made up almost exclusively of Ibrox Stadium and Murray Park, and were listed as having a value of £121 million in Rangers’ last annual report.

With Lloyds Banking Group vigorously implementing a plan to sell-off its distressed loan assets, the bank has been taking steps to clean up the balance sheet of Murray International Holdings (MIH) – Rangers’ parent company.  Recent action to eliminate the £60 million in ‘phantom’ assets (related to the complex web of companies created by Sir David Murray to manage 30% of Rangers’ shares) is a sign that the day of transparency for Rangers’ accounts may be drawing closer.  Multiple revaluations of Rangers’ property values during the mid-2000s was widely seen as simply holding a tissue over Rangers’ technical insolvency to hide HBOS’ embarrassment while the bank continued to extend credit to an absurd degree.

In these more prudent times, Lloyds is paying a hefty price for inheriting HBOS’ madness.  To prepare businesses and assets for sale- and to even manage their massive toxic debt portfolio efficiently- accuracy and realism are critical.  Therefore, phantom and over-valued assets are being marked down to realistic levels at companies across the land.

Writing down the value of Rangers’ assets may also simplify matters should Rangers file for administration following resolution of their ongoing tax troubles.  The bank likely has a security interest in these assets, but unsecured creditors may claim that receiving assets “worth” £121 million should discharge the bank’s claims.  The bank suddenly claiming that this property has become worth as little as £10-15 million overnight would certainly create complications in dividing up the proceeds of the sale of assets in administration.  It would all be much simpler if Rangers’ property assets are marked down to their resale value before an administration filing is made.

A writedown of Rangers’ assets will also cascade through to MIH’s balance sheet.  So bringing the cleansing light of reality to Rangers’ accounts will help clean up MIH’s balance sheet.  So for both of these reasons- protecting the bank’s interests in administration and to bring greater clarity to the MIH predicament, Lloyds can be expected to look at a massive writedown.  It is unlikely that a revaluation would be completed (or disclosed) for the mid-year report, but it will be interesting to see the full season’s results which are usually published each September.  Even Journalists that are very well disposed towards Sir David Murray  in Scotland will then struggle to continue to help him deflect responsibility and blame for Rangers’ current financial malaise away from himself.

With a ruling from the First Tier Tribunal on the legality of Rangers’ tax activities expected at around the same time, Autumn 2011 could be the time when the great wall of silence and feigned ignorance surrounding Rangers’ efforts to match Celtic since 2001 is finally torn down.

Worth watching…..