Wow, a 3-5 year flip. This is a classic private equity strategy where they take a listed business private, cut cost to the bone, cram as much debt on the balance sheet as possible, bleed it for cash/dividends, then flip it back to fools in the public market. This doesn’t seem a viable strategy for RIFC. To make a return they’d need to invest up-front for football success hoping it creates a self-sustaining virtuous circle leading to improved financial/operating fundamentals. This seems a very tall order in 3-5 years. It’s taken Celtic over 30 years to get to where we are. Anyway, if the recent market volatility continues, investors will quickly become more discerning about where they allocate capital.
Nick is a superb investigative journalist, who is certainly an upgrade on the current (and past) Scottish media landscape in relation to this kind of detailed journalism. I read his piece as he noted, as a might be, might not be situation due to to complete lack of any detail, facts nor quotes from anyone on the potential buyers side or the rangers board.
There are obviously companies house rules that the rangers board have to be mindful of regarding takeover approaches as they represent all shareholders. If, as is reported, there is a takeover agreed in principle, subject to due diligence, that suggests they have accepted some sort of proposal. That being the case they must inform all shareholders. There are also rules in place about buying 30% or more of the shares that requires a similar offer to go to all shareholders, again that must be communicated to all shareholders. Neither of these things have happened so far.
The recent conversation of debt to equity of just over £8m in total, which is in line with the previously published forecasts by the board, muddies the waters as "reporting" suggested debt would be repaid as part of the takeover. That being the case, why would the lenders not just wait and be repaid their outstanding amount instead of getting more shares that may not be worth the conversion price of 20p. Shares in rangers can be bought on a trading platform (not the stock exchange that celtic shares are traded on) which matches willing buyers and sellers where recent trades have been at 5p per share. Price is critical to all parties, King reportedly wants 25p a share, any potential buyer will want to pay significantly less as none of that money goes into the business. Due Diligence would certainly involve signing a non disclosure agreement (NDA) and given the leaking of certain details already, it doesn't reflect well on certain parties if reporting around the takeover are accurate.
The key question rangers fans should be asking is why would so called outsiders want to take over their club/company. They have seen "real" rangers men plow in millions upon millions of their own money, on top of the fans substantial contributions via match and merchandising over the past 12 years and still ended up in their current situation. What will change?
Being part of a football "group" along with Leeds United for instance could have benefits such as shared costs for recruitment, merchandising, admin, ticketing plus access to players and coaching expertise. Being the junior member in such a relationship, given the financial upside for Leeds over rangers is much bigger given the annual EPL television revenue set against any potential growth that they can generate with rangers, definitely won't sit well with the rangers fan base.
This story has a long way to go and needs to be challenged in a serious way by rangers fans, their directors need to be more honest in their public pronouncements with shareholders and fans plus they all need to be realistic about their targets and ambitions and how that can be financed in line with financial fair play rules in Scotland and Europe.
As a Celtic fan, it impacts the "market" we operate in and definitely impacts how the Celtic board operates, hence our interest in our rival. If Hibs and Hearts take advantage of their collaborations with EPL based investors, they will also draw attention from opposition fans as they all impact our world and hopefully improves the competition in Scotland to everyone's advantage.
1. "Agreement in principle" = unless it is ALL agreed, NOTHING is agreed.
2. Rules for non FTSE quoted companies have changed re takeovers to best to check on that.
3. The new issuance of shares for around £8m was signposted at the last AGM. It will however further dilute existing shareholders. Secondly it makes it more expensive to gain a controlling share and finally, it further locks in the notion that 20p per share is the minimum sell price.
4. The reason for 3. may simply be operational expediency or "keeping the lights on". This further signposts to any buyer "distressed".
5. TRFC and its predecessor has been loss making for 40 years. It exists on the largesse of a benevolent benefactor (Murray using other peoples money) or wealthy fans who are now "fatigued". That HAS to change.
6. Marathe has already stated publicly that any acquired club would standalone and not be part of a multi club pyramid. We should believe him until the evidence changes.
7. I agree TRFC fans should be more questioning and sceptical but we all know how that goes.
8. If Hearts, Hibs, Aberdeen embrace "smarts" then 2nd is up for grabs.
Excellent Alan, a bit of clarity in an otherwise doped frenzy of despicable journalism pouring out of Scotland. Nick certainly knows how to do his job.
There is a long enough history of potential investors coming in, doing there due diligence and walking away so it’s still very much in the air for me.
If they are looking at a 3-5 year return before flipping as Nick suggests, that’s a very short time to become competitive with Celtic and get over the litany of other issues the club has. So I’d tend toward James’ suggestion that they’re looking at it as a call option on getting into a new European/World club structure with potential huge gains on that side at a low price.
Harry Brady's piece in Celtic Underground yesterday would tend to support that. That's a judgement call on likelihood. But if you can acquire the club cheap enough it becomes a lower risk bet.
My feeling is nothing will happen. Due diligence will highlight issues that will reduce the offer to such a low level that the existing "investors" will decide to stick with what they have.
Hi Conor i tend to disagree for the same reason as Nick says the sellers are in many cases "distressed" and i feel so long as their loans are repayed they won't be difficult to deal with. And the consortium will feel they can get a large football club for a very cheap price. Then the fun begins!
Wow, a 3-5 year flip. This is a classic private equity strategy where they take a listed business private, cut cost to the bone, cram as much debt on the balance sheet as possible, bleed it for cash/dividends, then flip it back to fools in the public market. This doesn’t seem a viable strategy for RIFC. To make a return they’d need to invest up-front for football success hoping it creates a self-sustaining virtuous circle leading to improved financial/operating fundamentals. This seems a very tall order in 3-5 years. It’s taken Celtic over 30 years to get to where we are. Anyway, if the recent market volatility continues, investors will quickly become more discerning about where they allocate capital.
Indeed Max, it's a tall order
Nick is a superb investigative journalist, who is certainly an upgrade on the current (and past) Scottish media landscape in relation to this kind of detailed journalism. I read his piece as he noted, as a might be, might not be situation due to to complete lack of any detail, facts nor quotes from anyone on the potential buyers side or the rangers board.
There are obviously companies house rules that the rangers board have to be mindful of regarding takeover approaches as they represent all shareholders. If, as is reported, there is a takeover agreed in principle, subject to due diligence, that suggests they have accepted some sort of proposal. That being the case they must inform all shareholders. There are also rules in place about buying 30% or more of the shares that requires a similar offer to go to all shareholders, again that must be communicated to all shareholders. Neither of these things have happened so far.
The recent conversation of debt to equity of just over £8m in total, which is in line with the previously published forecasts by the board, muddies the waters as "reporting" suggested debt would be repaid as part of the takeover. That being the case, why would the lenders not just wait and be repaid their outstanding amount instead of getting more shares that may not be worth the conversion price of 20p. Shares in rangers can be bought on a trading platform (not the stock exchange that celtic shares are traded on) which matches willing buyers and sellers where recent trades have been at 5p per share. Price is critical to all parties, King reportedly wants 25p a share, any potential buyer will want to pay significantly less as none of that money goes into the business. Due Diligence would certainly involve signing a non disclosure agreement (NDA) and given the leaking of certain details already, it doesn't reflect well on certain parties if reporting around the takeover are accurate.
The key question rangers fans should be asking is why would so called outsiders want to take over their club/company. They have seen "real" rangers men plow in millions upon millions of their own money, on top of the fans substantial contributions via match and merchandising over the past 12 years and still ended up in their current situation. What will change?
Being part of a football "group" along with Leeds United for instance could have benefits such as shared costs for recruitment, merchandising, admin, ticketing plus access to players and coaching expertise. Being the junior member in such a relationship, given the financial upside for Leeds over rangers is much bigger given the annual EPL television revenue set against any potential growth that they can generate with rangers, definitely won't sit well with the rangers fan base.
This story has a long way to go and needs to be challenged in a serious way by rangers fans, their directors need to be more honest in their public pronouncements with shareholders and fans plus they all need to be realistic about their targets and ambitions and how that can be financed in line with financial fair play rules in Scotland and Europe.
As a Celtic fan, it impacts the "market" we operate in and definitely impacts how the Celtic board operates, hence our interest in our rival. If Hibs and Hearts take advantage of their collaborations with EPL based investors, they will also draw attention from opposition fans as they all impact our world and hopefully improves the competition in Scotland to everyone's advantage.
Thanks Gerard
1. "Agreement in principle" = unless it is ALL agreed, NOTHING is agreed.
2. Rules for non FTSE quoted companies have changed re takeovers to best to check on that.
3. The new issuance of shares for around £8m was signposted at the last AGM. It will however further dilute existing shareholders. Secondly it makes it more expensive to gain a controlling share and finally, it further locks in the notion that 20p per share is the minimum sell price.
4. The reason for 3. may simply be operational expediency or "keeping the lights on". This further signposts to any buyer "distressed".
5. TRFC and its predecessor has been loss making for 40 years. It exists on the largesse of a benevolent benefactor (Murray using other peoples money) or wealthy fans who are now "fatigued". That HAS to change.
6. Marathe has already stated publicly that any acquired club would standalone and not be part of a multi club pyramid. We should believe him until the evidence changes.
7. I agree TRFC fans should be more questioning and sceptical but we all know how that goes.
8. If Hearts, Hibs, Aberdeen embrace "smarts" then 2nd is up for grabs.
Excellent Alan, a bit of clarity in an otherwise doped frenzy of despicable journalism pouring out of Scotland. Nick certainly knows how to do his job.
There is a long enough history of potential investors coming in, doing there due diligence and walking away so it’s still very much in the air for me.
If they are looking at a 3-5 year return before flipping as Nick suggests, that’s a very short time to become competitive with Celtic and get over the litany of other issues the club has. So I’d tend toward James’ suggestion that they’re looking at it as a call option on getting into a new European/World club structure with potential huge gains on that side at a low price.
Hi Neil
Harry Brady's piece in Celtic Underground yesterday would tend to support that. That's a judgement call on likelihood. But if you can acquire the club cheap enough it becomes a lower risk bet.
My feeling is nothing will happen. Due diligence will highlight issues that will reduce the offer to such a low level that the existing "investors" will decide to stick with what they have.
I tend to agree hear , and by such time the season tickets sales will be complete to the gullibillies.
Hi Conor i tend to disagree for the same reason as Nick says the sellers are in many cases "distressed" and i feel so long as their loans are repayed they won't be difficult to deal with. And the consortium will feel they can get a large football club for a very cheap price. Then the fun begins!