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.