As previously reported Rugger Guy was temporarily off the team here.
This morning he got back in touch and I think he had a good time on his egg chasing odyssey as he sounded in top form.
As ever I’m grateful for his expert eye on these financial matters.
I asked him to peruse the Close Brothers document and give me his professional opinion.
Here is what he sent me:
Phil, further to your request to review the agreement between Rangers football club limited “Rangers” and Close leasing limited “Close”, I have read the 26 page agreement and also did some further reading on Close Brothers, the parent company of Close.
Close Brothers is a London based investment bank who made operating profits of more than £250m in the last financial year. They provide a whole raft of financial services including stockbroking. They do not perform the services of retail bank such as Natwest or Barclays. They do not provide overdrafts, they are lenders. One of their comments in the last year’s accounts summarises the lending part of the business quite well.
“Our lending is predominantly secured with conservative loan to value ratios and high margins”. The bad debt ratio of their loan book is minimal 0.6%, and the group return on equity is 18%, a highly successful efficient and quality operation. Although the interest rate is not highlighted in the agreement, I would think that these will be very significant indeed and would not reflect retail banks but closer to those of the distressed end of the market.
In looking at the agreement in some detail, the first impression is that it is very comprehensive, lots of attention to detail, very little wriggle room for Rangers and any conceivable cost is borne by Rangers not Close. In addition interest charges in event of any default are punitive.
I will pass on comments section by section and refer to the section so that any reader can go to the section and read it in full should they wish to do this.
The agreement is a charge against the west side of Broomloan road and Edmiston house.
In section 1, this deals with the prospect of administration and the protection given to Close in the event of any default and also reference to a default rate. This is simply paving the way for a situation where all the control resides with Close and the likely punitive costs arising from any default. No wriggle room whatsoever.
Section 2, undertaking to pay. Rangers must pay and discharge the secured liabilities on demand by Close whether by acceleration or otherwise.
Section 3 Default interest. This is brutal. Any amount not paid on time is subject to a default rate charged on a daily basis. The default rate will be calculated on the number of days elapsed and a further years rate of interest and will be compounded at monthly intervals. I think it is fair to say that these penalty charges will ensure that Rangers cannot afford to default in any way.
Section 6.1 Maintenance. The properties must be maintained in good and sufficient repair and most importantly to the satisfaction of Close, otherwise they will be in breach of conditions.
Section 6.2 Insurance. All forms of Insurance are payable by Rangers and that Close is recognised as composite insured for its own insurable amounts, clearly removing any cost risk to Close.
Section 6.3 Use. Rangers cannot alter the use without the consent of Close.
Section 7 Liability of Close. Close will not in any circumstances be liable to Rangers or any other person for losses damage liabilities or expenses in connection with the enforcement of the security.
Section 8.5 Power of Attorney. Rangers appoints Close as its agent and attorney on behalf of all matters relating to the security.
Section 10.7 Costs and expenses. Rangers will reimburse Close in respect of all reasonable expenses including legal , valuation accountancy and consultancy fees, in preparation and execution of the agreement, and any subsequent changes. This could be expensive and Rangers are paying 100% of these costs.
There is so much detail in the document that if I listed all details then it would be a cure for insomniacs, however, I would summarise the main takeaways as follows.
Rangers are dealing with a very experienced professional lender who has indemnified themselves fully. The interest cost under any default scenario will be punitive and all the costs in preparing the agreement are borne by Rangers.
I believe that the managing director of Rangers indicated that the loan value is £3m. Including all costs and interest rates, it would not surprise me if the total bill, assuming it is paid on time is close, pardon the pun, to £4m, once again indicating the cost for a distressed borrower.
So there you have it.
You may wish to compare and contrast my treatment of this document with what has appeared in the Radar Press.
I’m not qualified to forensically unpack such a document.
Therefore, I approached people who are.
I have now published the opinions of THREE suitably qualified professionals on the significance of the Close Brothers deal.
Moreover, this trio is not in any way concerned about the Glasgow Fitba feud.
I would respectfully suggest that this is a rather different journalistic approach than faithfully regurgitating what Sevco PR offer up at a presser where not a single difficult question is asked.
Discover more from Phil Mac Giolla Bháin
Subscribe to get the latest posts sent to your email.
This is a charge against Rangers FC Ltd, ie the subsidiary not the PLC holding company. This implies that the sub acquired and owns the assets. Where did the money for this come from? All the flotation monies went to the PLC. Does this mean the sub owns the ground etc? So the holding company only owns shares in sub. Strange.
Very interesting Phil, a real eye opener. Let them die slowly and painfully. YNWA
Cap doffed for your journalism Phil and thanks to rugger guy for the succinct yet comprehensive summary.
Hail Hail
Absolutely Brilliant Piece. Proves King hasn’t got a pot to piss in. Staring into the abyss once again. Brilliant.
Phil, whats happened to the financial cold shoulder scenario? Are the vulture capitalists circling, ignoring the ruling and knowing that sevco are on their knees financially?
So if and when the second liquidation / debt shedding , surely they cannot claim to be the same club , and claims to the 2 previous clubs achievements cannot be allowed to remain , or can they .
You can’t be liquidated a second time, once your dead your dead.
Let’s hope the Close Brothers… CLOSE… down that Den of Reprobates sooner than later. When it happens the cheer from Ireland ?? will ring around the World. HH
Brilliant !
So Close brothers spikey golf shoes are on the necks of Sevco directors.
Follow follow classic.
“60:40, right down the middle” ?
I would say they are preparing for Admin 1 by financing player contracts for those they wish to take with them and abandon the large wage earners as cannon fodder.All will be swept aside to accommodate these real rangers men as they completely deliver a third entity to play at Ibrox ( Gullibles United)
Basically rugger guy is saying if they fart in the wrong direction then, they be fooked.
Marvellous
Oh ya and in a big way. No more getting away with anymore… CLOSE… calls for the huns it will be lights out time HH
When I get involved in “debate” with any of the “peepul” I just use the statement used so eloquently at Glasgow Airport by our very own Leigh Griffiths , “Yer clubs deid m8 “. HH Phil.
Oh god here i am again banging on about all this.
Iv had experience dealing with close brothers subsidiary companies.
Setting up loans for various purposes, i was one of the bad guys, but just doing a job to put food on table. I always told borrowers on said product, see the term out, you have passed the criteria (very light back at start of the 2000s). See this term out and come back to get more choices with regards to financing your next purchase.
What the rugger chap is saying here only makes me more and more sure of how bad this all this. Brutal is a word i have used before, brutal is a word he uses.
At first comment approx 2weeks back, was “is this the close finance mob”. I was horrified from a genuine business point of view, i never realised they did high end business loans much.
They are a brutal company. I knew and know there are problems at ibrox. But to take a loan off this lot shows how bad things are.
Touching back to earlier in this comment, i said to borrowers (not being too specific about various roles i had over a period of a few years, as im ashamed of what i was involved in). See this out and get better options…..
My thoughts are this is what the sevco high command (sic) are looking at this, see the loan out, try reap in some european income, maybe a cup win (i know but they have to have some hope of getting out of this). Pay loan back, without damaaging general running cost too much, sneak in some soft investment. Then this time next year get another loan with less punitive conditions. Say just £0.5m interest to pay back amd build from there.
All above is a bit of wing and prayer stuff. Reality is they wont and it will be getting worse.
Their only hope is punting morelos for £3m. Maybe 4m. I think thats very hopeful.
The whole thing is all based on hope.
Its only a matter of time…..
Tic tock tic tock tic toxic!
Phil; Chapeau! full credit again on getting the real story about this loan. Actual journalism at its best.
Groundhog day phil have we not seen this before.
phil , the herald has went off message and today report details.
ok , a bit late .
loan dependent on properties being kept up to a standard , maybe a problem with the dump that is edmonson house.
this club today announces a charity legends game with some of the charity money going to the youth development company .
even if this separate company is somehow a registered charity I would suggest the charities commission have a look at the details given the “peoples “ history re diverting charity money in house .
when they old club diverted the money from a charity match they were slaughtered by the Scottish charities commission and if I`m correct the 2 main individuals in charge were resigned.
On a similar topic how does Club 1872 still qualify as a CIC?
Take off your green tinted specs Phil. This is just a short term loan for some loose change. As soon as the Chinese whispers bid for Morelos reaches £1bn The Rangers* will sell.
Domination of Scotland, Europe and World football will swiftly follow, and there will be jam.
If I were Hamilton Accies I’d be worried.
Interesting, but still the most arresting comment on this matter is the one published on this site a couple of days ago – that Celtic took in as much money on match day vs Zenit as Rangers (sic) have borrowed.
Brilliant, Phil! My father is a Sports columnist in Arizona writing mostly about University of Arizona basketball. He doesnt play favorites and never pulls his punches. 90% of the reaction I get when people find out I’m his son is to tell me he doesn’t know shit(e). That’s how you know he’s quality. Keep up the good work, we know your quality.
A secured loan against a car park and a derelict building.I wouldn’t think sevco are shitting themselves here
The carpark does have some importance though, without it they cant open the club deck
I would imagine Glasgow City Council will amend planning consent. They have a history or looking elsewhere re: matters Ibrox
Sevco have assigned Close Leasing as agents and attorney over the secured assets. Conceivably Close could either lease the property out or sell it. Remember the car park is essential in terms of safety licence for access to Club Deck seating and as a emergency muster point /escape route. Whole situation is fraught with danger for Sevco. As Phil stated previously, some of the occupants of the Blue Room were surprised at news of the loan. If this is the case was Sevco’s lawyer or accountant/finance director involved in the procurement of the loan? Were they aware of the “fine print”? Perhaps Phil can ascertain.
So, in event of a default, Close would do to Sevco what the All Blacks would do to Niue.
The “Herald” nearly broke ranks by highlighting the security on the two established “structures.”…but failed to mention “other assets”…. as did Rugger guy..??
Or have I got that wrong…?
And for what its worth…I don’t think Sevco will default.
That would sink them…forever.
Still we live in hope…:0)
Well done Phil and rugger guy,even I think I just about understood that.
‘Oh what a wicked web we weave etc…..’ surly must be a His Glibness’ mantra.
Not be too long,Friday I believe,when he has to attend court again,will that Close Bros. loan help him on that day??
We shall see what transpires,HOPEFULLY it’s more bad/great news,depending on how you like you Schadenfreude done.
Cheers Phil HH?
Jesus christ, Sounds to me like the next lender down the line would be ‘The Big Man’.
The only thing missing from the agreement on the defualt on any payments is blunt force trauma to the knees followed by a final resting place of concrete wellies in the Clyde. Banking Facility my erse.
Brilliant work, a million thanks. But surely all will be good when they sell Morelos for £350 Billion?
Sorry meant to add- Robertson declared this loan as a facility- inferring it was an overdraft and that this was representative of RIFC’s impending and developing credit worthiness!!
Quite a substantial very high interest loan!! Given the sophistry of Robertson when declaring the punitive loan from the lender of last resort that is Close Leasing ( obviously a cash cow for Close Brothers and a straitjacket lender of last resort for its borrowers) do you still feel that Stewart Robertson has any credibility whatsoever??
Hi Phil. A couple of questions if I may. Your insight would be helpful.
Do sevco have other assets to borrow against ?
Do sevco actually own ibrox and Auchenhowie?
If the 3 bears take their loans back in the summer will it throw sevco into financial turmoil? The reason I ask this one is because I don’t believe that businessmen of their acumen would not have some security. Even though the loans were interest free I don’t think they’ll want to see their capital lost.
Thanks in advance of any answers you can provide.
Once again keep up the good work.
HH
Bomber Brown could answer some of your questions….
Eh….wait a minute….
Naw…He couldnae.
Sorry.
I have the distinct feeling any response or reporting will consist of “Blah, blah, blah, we don’t need to sell, blah, blah, blah, Donegal blogger, blah blah, IRA supporter, Blah, blah, blah, we are the peepal, blah, blah, finances in a good place, Blah blah blahdy blah, £10m chinese offer, blah blah, we don’t need to sell anyone, blah blah, nothing to see here move along now, blah blah, timmy lies, blah blah closed the gap, bumper offers, 20% extra free, blah blah
Too true. For good measure, you can add “obsessed” and “nae difference between the Murphy and Mbappe deals”. I’m sure there’s much more!
My wife works in a bank and says one day over the loan could cost £300000 as it states the default interest is from day one silly Billys right enough
I think you will find that Close Bros are appointed attorney as soon as the document was delivered signed by the borrower. Borrowers with any leverage would want to delay the attorney power until there was an event of default – not so here.