Rangers: Show Us The Deeds Of Novation
Test match cricket commentators are a little over-fond of saying that “the next session is crucial.” BUT… the “next session” in the “Rangers” saga looks very crucial indeed. There is no-one left to deny that Rangers desperately need money. And their early-April call for current season-ticket holders to renew said tickets by May 6th is Plan A for getting that money in before it is too late. In a direct response, South Africa-based ex-Rangers director Dave King renewed his call to said season-ticket holders not to renew unless or until they are granted security over Rangers’ main assets, Ibrox Stadium and the Auchenhowie training ground formerly known as Murray Park. In a very direct response to this direct response, the Rangers board, effectively, told King to go away and boil his head. In a very direct response to this very direct response… oh, you get the message…
Meanwhile, The Rangers Football Club Limited (TRFCL) released their first annual accounts – to June 30th 2013. These garnered little attention, as the story they told was largely that of parent company Rangers International Football Club (RIFC), when their accounts for that period were published last October. However, one small chapter needed retelling and could…SHOULD help Rangers ease their current predicament. The RIFC board and King issued statements after their March 14th meeting, carrying differing but compatible interpretations of events. There appeared to be mutual agreement over “the aims of the club.” “Compete at the highest level of Scottish and European football”, said the board. “Competition with Celtic and in Europe,” said King.
However, the Rangers “Union of Fans” (UOF) said the board were “no longer considering the massive scaling back of club operations,” a statement which appeared to come from thin air. While King claimed: “In a couple of weeks we can expect a business review,” Wallace’s well-publicised “120-day” review of RIFC’s operations, “that will reflect the board’s ambition and a funding plan to achieve this,” which no-one was going to translate as “massive scaling back.” And King emphasised that “statements from a public company board are intended to be relied upon,” adding: “if circumstances change, the board would be bound to advise the public in advance.” So, while critics had interpreted his call to halt fan protests as backing down, he was, actually, backing the board into a corner by letting people assume they’d made ambitious and somehow legally-binding spending commitments.
This was his strategy in a series of newspaper interviews he gave once he was back in South Africa – including an embarrassing near-hagiography in the Scottish Daily Mail – late last month. And this was his strategy last week, when the board issued renewal forms to Rangers’ season-ticket holders. However, fans’ spokespeople were unsure of their next move. The UOF’s biggest mouthpiece, Chris Graham, spoke of a “need to decide over the next couple of days how we proceed,” in an April 10th Glasgow Evening Times interview mostly so vague it almost wasn’t there. Graham said fans were “working in the background” on the Trust into which King said season-ticket holders should place their money. But the words between Graham’s lines were “Dave, tell us what to do.” Fortunately for them, Dave did.
The following day, King expressed his “surprise” that the board had reneged on their commitment to give fans “access” to the business review “prior to advancing funds by way of season-ticket renewals.” He explained he had given the board time because “breach of such a share-price sensitive commitment would be an ethical, moral and possibly criminal breach.” And he accused them of “an extreme act of bad faith,” while apologising to fans “for…lending credibility to the board’s false representations.” Followers of King’s dealings with South Africa’s Revenue Service (SARS) will have recognised the language. Indeed, you could believe King was a bad faith magnet, so often did SARS allegedly show it to him during their 13-year battle over unpaid tax millions.
The board responded within hours, exposing King’s claims as rubbish. They noted his statement “with astonishment”, claimed his allegations of “bad faith and false representation” were “untrue” and said “Mr King is well aware” that their position on the business review’s publication timetable was “unchanged.” It was. King hadn’t had the monopoly on ‘clever’ wording in March. The board’s “commitment” then was “to announce the results of the business review…in the next few weeks, ahead of the season-ticket renewal deadline” (my emphasis). That deadline is May 6th. The board have now said that the results announcement will be on April 25th. Commitment met. The board also said King had “made it clear…that he did not want to put another penny” into Rangers and would “prefer” to see them “use other investors’ money.” So “the board was surprised, but gave him the benefit of the doubt, when Mr King made media comments about a willingness to invest.”
“This is an easy statement to make, but is contrary to what he told the whole board” they stressed. And they were clearly angry; refuting King’s allegations “in the strongest possible terms”; announcing that they had “referred Mr King’s statement to the club’s legal advisors”; and concluding that “for someone who claims to have the interests of Rangers at heart, and as an ex-director, King’s untrue comments are nothing short of disgraceful.” No more “Mr” King, then. King responded 48 hours later, focusing – perhaps unwisely given his South African tax travails – on the board’s integrity. He cited their “ill-judged attempt to discredit me” by “disclosing” his true investment intentions, in breach of an agreement that the “balance of our discussions” (whatever they were) “would remain private.” And he added: “This attempt at a ‘juicy’ leak… merely proves that it is impossible to engage with the board on a basis of confidentiality and integrity.”
Yet King also admitted he “had already, as part of my frank discussions with the fan groups, advised them that I had no prime ambition to invest further into the club.” And the board had not “disclosed” anything not already put in the public domain by the Scottish Daily Mail on March 28th when King HIMSELF said he didn’t “want to put new money in” and called himself “the last resort guy, no more than that.”
Nevertheless, he had already announced his “season-ticket trust,” and revealed that ex-Rangers centre-half, California-resident Richard Gough, “has agreed to join me as a custodian of the bank account that will be established, and fan groups can nominate additional members” while “specific terms and conditions will be made available to fans” and announced “shortly.” Whether this was what fans’ groups had been “working on in the background” was not immediately obvious. But they dutifully announced their plans “in line with (i.e. slavishly following) Dave King’s statements.”
The UOF also queried Wallace’s remuneration and “whether or not he has ended the bonus culture” at Rangers. As Wallace was appointed last November, the “shareholders” who had “contacted” the UOF “to express their concerns” about this culture seemed a bit slow. A cynic might think such moves were timed to discredit Wallace ahead of any cost-cutting announcement… and might think this too to be “in-line with King.” King’s main strategy, however, is readily exposable – if Scotland’s mainstream media were of a mind to do so. The issue of giving security over Ibrox and Auchenhowie is a charade, although fans groups appear to be unaware of this, given their insistence that there is no “legitimate reason to reject this proposal.” The board could happily tell King that “it has no intention of using these properties for any measure of security” because they were unable to do so. All “Rangers” recently-published financial results noted the “contingent liability” of ex-owner Craig Whyte’s claims on the properties. This liability scuppered RIFC’s January efforts to secure loan financing from City of London institutions.
King knows this. He can read accounts. His demand that a “loan” of perhaps only £12m season-ticket money be secured by assets valued at over £60m is merely another attempt to cast the board as unreasonable and less-than-transparent. He knows the board could not comply, being hamstrung by issues pre-dating them and far beyond their control. But the contingent liability need not BE an issue, as was methodically explained by a caller to local Glasgow radio station Clyde’s Superscoreboard football phone-in show on April 10th. The caller, ‘Eddie’, asked a clearly bemused panel of journalists about the location and existence (or otherwise) of a “deed of novation” from the transactions which formed the new Rangers.
From TRFCL’s accounts, Eddie read: “On 14 June 2012, Sevco 5088 entered into agreements for no consideration to legally reassign the beneficial interest in funding placing letters held and to novate the trade and assets purchase agreement with RFC plc 2012 (in administration) to Sevco Scotland (now TRFCL).” The significance of this was/is that Sevco 5088 was Whyte’s company, while Sevco Scotland was successor Charles Green’s company. Also, Rangers were admitting “that Sevco 5088” (Whyte) “had a legally-binding agreement” which “was novated” (transferred) “to Sevco Scotland” (Green). And Eddie added: “The reason Rangers can’t get a loan just now from a normal source is that they cannot secure these loans against assets because there’s a question mark over them,” i.e. Whyte claims this transfer of, effectively, the new Rangers’ ownership, did not take place as agreed.
Eddie explained the transfer was “only possible if you have a legal document in place… a ‘deed of novation’ where (all) parties agree on what’s going to happen and why and how and who benefits in what way.” He didn’t “understand why people are not asking ‘where is this document, what did it say and who signed it?’” And he asked: “If they won’t show us this deed of novation, why not?” They could “show what it says, who signed it and that clears (everything) up, (Rangers) will be able to borrow in a normal way and move on as a normal business.” He also said Rangers, Whyte, Green and the administrators who made the agreement (Duff and Phelps) should have been signatories and have copies.
Eddie was promised that “if and when Mr Wallace does some kind of news conference after his 120-day review, we will try and get the question asked,” though why they were waiting until then wasn’t explained. It was as if they hadn’t understood Eddie at all. So forget the “statement war” with King and UOF. The current Rangers has an opportunity to wipe out the most damaging legacy of its conception and shrink its financial woes, without succumbing to King’s strategy. The only logical reason for not doing so, apparently, is that somehow Whyte has a claim on the assets. The deed of novation might defeat Whyte’s claim. Its non-existence would confirm it. The next session of the Rangers saga, therefore, WILL be crucial. Very crucial indeed.
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