Rugger Guy has a look at the implications of the RIFC resolutions

I am grateful to Rugger Guy for casting his expert eye over the implication of the resolutions that were passed at the Sevco AGM.

Here is his take:

Phil, you have asked for my thoughts on the implications of the Resolutions that were passed at the AGM of Rangers International Football Club (RIFC).

Firstly, the vote seems to be a lot closer than I would have envisaged. Last year 74.6% voted for the resolution, this year the vote was 78.3%, so clearly, the purchase of Mike Ashley’s shares was critical to the success of the resolution. This begs a question, why were such a large proportion of shareholders wary of passing over the control of issuing fresh equity to the directors?

My suspicion for this is that although there will be a dilution of ownership in the event that there is a debt for equity swap, there is a distinct chance that RIFC will issue shares to provide fresh working capital to keep the lights on.

Given that the accounts of RIFC highlighted that NOAL remains the only provider of fresh funds and given the comments at the court of sessions regarding impecuniosity.

Clearly, there are conflicting messages coming out. The issue of fresh shares for working capital allows Mr King /NOAL to avoid the need for further investments, in the short term at least. In addition, these shares could be issued at a higher price than the 20p recommendation of the takeover panel. An issue of shares at 27.5p, the price of the purchase of Ashley’s shares can be “indicative” of the truer worth of RIFC, would appear well from a PR perspective and could be used to influence opinion on the true worth of RIFC and persuade investors not to sell in the event that Mr King is forced to comply with the takeover panel directive.

I suspect that the window for the share issue is short if the Court of Session ruling is imminent and confirms the need for an offer to be made. Should the Court of Session not agree with the takeover panel, then more time will be bought because the takeover panel will be sure to appeal. It is difficult to arrive at a fair value of the shares anywhere near 20p given the going concern issues, the need for substantial investment at Ibrox, Auchenhowie, the football squad, and any other contingent issues. There is little visibility of additional income from European football and the retail situation remains quite opaque, so not sure about the extent of any significant revenue uplift.

As I indicated in the review of the RIFC accounts, the situation remains very precarious.

I hope you find this analysis useful because I certainly do.

His use of the term “the situation remains very precarious” is probably what to focus on.

Of course, the stenographers in the SMSM are stating that all is well financially at Sevco.

You may recall that the same intrepid chaps once spouted the same pish about the original club at Ibrox.

However, an alternative narrative was reported here.

We all know who was reporting the facts.




16 thoughts on “Rugger Guy has a look at the implications of the RIFC resolutions”

  1. God forbid that an organisation issued shares, selling these to all-comers, only for key director to have to step down, and cash in his holding, allowing him to depart on a personal financial high but leaving ownership of the eternal club diluted and effectively carrying the cost of unloading him with the unwary investors. But surely this is a misapprehension on my part, surely nobody could seriously get away with such self-serving generation of pelf? (Pelf, n. money, dishonourably generated.)

  2. Sevco tried a release of new shares a couple of years ago – offered only to existing shareholders – and they barely got enough takers to proceed (rumour was that they had to strong-arm the directors to take additional equity to move over that minimum threshold). And their initial flotation only sold because institutional investors took the lion’s share. I don’t see who is likely to buy large quantities of new shares to give working capital to a loss-making company whose only way of breaking even seems to be to issue new shares. So the current creditors might swap debt for equity only in order to be able to sell the shares and get pennies back for their pounds. There is no serious financial gain to be made through holding shares in an unprofitable business.

  3. Let’s not talk about the law,or legal matters,as they don’t apply to Sevco
    All this talk about soft loans from hard headed business men willing to throw money away,what nonsense, where is this money really coming from.
    Who,or what is supplying this money,maybe Scottish government, or illegal drug money,but one thing for sure,it’s not the people that are being credited with it.
    Forget the cold shoulder happening as the judgement will favour King,and it will go to appeal,and then disappear in time.

  4. Phil can you confirm if I have this right as I am no Rugger guy.

    They issue more shares in a debt for equity deal.

    This dilutes the monetary worth of the existing shares.

    The new shares will increase what each recipient holds, and therefore makes to ToP even more right in pursuing The Lying King, as he will hold more than he does now, and more than the regulations allow before being forced to make an offer for all.

  5. Do these Resolutions allow the Board to compel a swap of debt for shares or can the lender choose to simply continue holding a debt against the club? If the 3 Bears swap debt for shares but NOAL don’t then in certain circumstances, such as Administration, that would potentially give King an advantage in getting his money back (debtors get repaid, shareholders left with pennies in the pound).

  6. Is it truly terrible journalism or something much darker that prevents the smsm from reporting what’s really happening over in sunny govan? The first option is quite tragic but the second is actually quite scary that “news” can be sculpted to suit whoever chooses the narrative.

    1. Look at how the media narrative was shaped to suit malign vested interests during IndyRef, Brexit and now on the Irish border negotiations. Sevco are just a daft wee football team. They’re chickenfeed.

  7. No. I just don’t get it. I know never to underestimate the stupidity of people, but this is stretching my credulity to the limit.
    Who in their right mind would give loan after loan unsecured on any asset?
    Who would then be stupid enough to accept a pile of Embassy coupons in exchange for said loans?
    What idiot would then proceed to swap more money for Embassy coupons?
    How in the name of all that’s holy, did King get re-elected back onto the Board?
    Even the most cretinous fan group would not vote to dilute their share percentage and thereby their influence at Board level when their raison d’etre is to have influence at Board level through share purchase.
    Victor Lustig couldn’t have done any better himself.

    1. Finn. My view. No logic as you note is a consideration. No economics were ever a consideration. They will do whatever (tax cheating, religious bias, you name it) to preserve any entity performing (at any level) at that ground in their warped view that they are ‘the only truly British (and Protestant)’ football club.
      They are a cult.
      A provincial, West of Scotland one only.
      And they’re dying.
      They are desperate.

  8. Great stuff, Phil and have been giving this some thought basef on my own background in Finance.

    First thing that came to mind was why everyone assumes that they can easily find outside investors (legitimate ones) to buy additional shares? Those folks dont throw money away!

    Whether it comes from investors or fans, they would need to suspend rational thought and business savvy to throw money into this furnace. There is no coherent business plan to break-even unless you count by chance stumbling across a sugar-daddy!

    Anyway, IMO they would need to mostly rely on fans buying them up and that hasn’t worked out well on past occasions they tried it. The ones silly enough to do it are already doing it via the direct debits from Club1872. Can they be milked more than they are being milked at moment?

    I’m not convinced that a new share issue will save them. At best it buys them a few months. But can you ask ‘Rugger guy’ what legal responsibilty a NOMAD has to verify that the funds are legitimate and clean? Just curious….

  9. According to Wikipedia Dave King was actually born in Bridgeton, in a flat that is now a tanning salon, and was educated at Allen Glenn’s private school after winning a bursary. I thought legend had it that he was BORN and RAISED in Castlemilk.

  10. Good work on the resolutions. Thank you.

    In the ( surely never) event of an insolvency – the directors have at least some financial protection as loan creditors. And little/no prospect of a return if they convert to equity. So I doubt they will convert in the near future.

    A quick issue of say £3/4 /5 million of new shares at 27p underwritten by the directors/ noal – looks good and might get The Peepul stepping up haha. And The Castlemilk educated one would thus avoid the need to fund an offer at 20p if required to make one and thus avoid paying out c£12m ( using the money he doesn’t have!).

    It all neatly continues the bumbling along strategy.
    Buys them a few more months.

  11. Hi Phil
    Surely to issue more shares they’d need a nomad and a listing which the glib and shameless liar doesn’t want anywhere near ibrokes. Can they issue shares without going to the market. Your feedback would be interesting on these points

    1. They dont need a stock exchange to issue shares.

      They are offering them up to anybody who wants them, this frankly will be supporters and existing shareholders of the club.

      The lack of a nomad and listing, means it’s highly unlikely major outside investors will purchase shares…… as obviously these shares have no real value, other than what the supporters are willing to pay for them.

      The 20-28p a share is not determined by a stock exchange , it’s simply based on what people have paid before….(which is how stock exchange works too obviously) the only people paying that are the gullibillies, nobody else in their right mind would,

      a year upon year upon year loss making business,

      many liabilities and ongoing issues with infrastructure.

      Little prospect of a big jump in revenues (Ie champ lge groups, even group Europa league groups seems unlikely)

      Soft loans required which further dilute existing equity.

      Only an idiot would and has previously bought these shares or invested. Only Mike Ashley and SD. Or Charles Green and his associates have made money out of this.

      As phil has said emotional investors, green and Ashley sure weren’t emotional, but green played to the emotions and came up trumps.

      This is quality comedy.

      1. Cheers NT
        That clears it up a bit in my mind so for want of a better phrase Turkeys voting for Xmas lol. Only they could vote to reduce their “ influence ‘. They’ll swallow anything DCK throws at them.

  12. A big thank you Phil and to ‘Rugger guy’ for his input. Always thought provoking and always a right good laugh too.

    Who knew finance could be so continuously amusing?

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