A sceptical review of the prospectus

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Having perused the prospectus in the attempt to convince myself to part with some cash and once again become a shareholder in Rangers Football Club I finished reading it distinctly underwhelmed. I can’t become a shareholder in RFC because I'm not being offered the opportunity to, rather I'm being offered shares in some holding company seemingly for no other reason than because some “investors” want to maximise tax breaks for themselves, how fucking ironic is that? Far from answering questions for me the prospectus just raises lots more.

The list of shareholdings larger than 3% reminds us once again that Green has failed to come good on his promise back in June to reveal just who exactly owns us. Blue Pitch Holdings, Margarita Funds Holdings Trust and Norne Ansalt together presently hold 23.34% of the equity yet we haven’t got a clue as to who are the ultimate beneficial owners of those shares are. For a considerable period Green was quite content to let speculation that Blue Pitch Holdings was a vehicle under the control of Arif Naqvi of Abraaj Capital persist until he had to release a statement presumably at Mr Naqvi’s behest in which Green claimed that a Middle East lawyer called Mazen Houssami was the “legal beneficiary” whether that is the same as beneficial owner is highly doubtful.

We now come to the post flotation list of shareholders and at first glance it seems impressive and comforting and is adorned with the names well known and well respected in the investment business. However things can be deceptive and in this case it is not clear if those companies are investing their own pooled funds or simply acting as “fronts” for their individual private clients which if is the case does not afford the same amount of comfort.

On page 7 it tells us loans totalling £1.815m were received and repaid which seems strange since through the period in question Green kept telling us we were “debt free” it seems he was being a little mendacious.

Item C.5 on page 8 consigns another of Greens favourite claims, "no one will be able to own more than 10%”, firmly into the pile marked bullshit because the “Ordinary Shares are feely transferable and there are no restrictions on transfer”. Anyone can buy them in whatever amount they want.

Section D Risks fairly standard legalese but one point does stand out that’s that “The RFCL Group and the Rangers Group may require additional capital in the longer-term to fund development, but this might only be available on onerous terms”, it seems that we do not have a full range of business banking facilities and it doesn't look like we will have for a while given the current economic background. Let’s hope that whatever the onerous terms are that they’re nowhere near as onerous as a short term loan from Imran “makes Wonga blush” Ahmed (more about that later). There is also a warning that future issues of equity could dilute ownership and depress the market price of shares, given the relatively few options available for raising capital I’ll be amazed if there isn't a further issue of shares a couple of years (if that long) down the line despite of the claim that there are no current plans to issue more equity.

E2.a Gives some basic detail about where some of the flotation money will go, upgrading Ibrox £5.5m, land acquisition £4.5m, other projects £3m and an undisclosed amount for “general working capital purposes”, ( I assume £3.5m will be to cover this seasons predicted loss, perhaps nearer £4m if we’re once again burden with Goian’s wages). Of the Offer monies (the fans shares) £3.5m of additional upgrades to Ibrox and another £2m for unspecified projects is earmarked.

The paragraph titled “Exposure to litigation” raises other risk factors the main one being in relation to the purchase of assets from the administrators of RFC plc, the Directors while conceding that any action raised could have “a material adverse effect” with regards to “business growth, prospects, sales, results of operations and/or financial condition” and that any claim may not be covered by insurance, are of the opinion that time has mitigated the risk and any material liabilities would be known by know. The potential impacts of the consequences of the Directors opinion being wrong are such that the possibility cannot afford to be discounted.

The following paragraph covers much the same ground as the one above but more specifically relating to the possible actions of the liquidators of RFC plc under the Insolvency Act 1986 to challenge the acts of the administrators (Duff & Phelps) once again the Directors are of the opinion that everything is in order however concede that should such an action occur it would have an impact on the management’s ability to properly run the business, given the relatively recent appointment of the liquidators and the potentially lengthy job ahead of them I'm not convinced enough to share the Directors apparent confidence.

A list of the Company’s Directors, Secretary and Advisers, shows nothing of real significance save maybe the fact that Brian Stockbridge is doubling up as Finance Director and Company Secretary. Also we have London PR advisers Newgate Threedneedle Limited which perhaps means the parting of the ways with Media House in what has been a long and incredibly rewarding relationship for Media House and Jack Irvine but one of such infinitive sorrow for those of us who hold the club close to our hearts.

The section entitled Key Strengths and Opportunities gives an insight as to what the Directors think may be an avenue of additional income. The Rangers brand. A worldwide network of around 600 supporters clubs from Sydney to Los Angeles then it goes on to say 416 registered supporters clubs worldwide (wasn't aware there were any unregistered clubs!) with over 17,500 members registered to purchase match tickets. 46 clubs in North America alone and the Club has over 43,00 registered supporters under the age of 18. The Directors expect us to remain loyal to the brand in future.

Then there comes a paragraph entitled, The Club’s capacity for commercial activities in addition to gate receipts, or more simply more ways to milk the fans. They hold a database of over 715,000 registered fans with over 170,000 active email addresses and nearly 165,000 active mobile numbers, the Directors think there’s scope for using the database more efficiently which probably means we should prepare for an avalanche of PPI spam emails and texts.

Then a paragraph about the Club’s playing squad. The Directors and the manager intend the club to return to top league Scottish football and to European Football as soon as possible, a quick glimpse at the bonuses they've (potentially) awarded themselves should remove any lingering doubts about that particular claim. We have apparently maintained a strong squad which the manager believes will be sufficient to secure promotion and also progress in cup competitions, we’ll I think there’s a touch of Mandy Rice Davies to that particular claim. Both the Directors and the manager are pleased with the performance of the squad so far this season, alas I don’t share that view but if I were looking forward to picking up the wads of filthy lucre that they will be then I’d have a smile on my face too.

Then we come to Media opportunities but alas no sign of the £100m pot of gold at the end of the rainbow that Green previously espoused. Rangers.co.uk gets 800,000 hits a month with over 437,000 unique users a month making it Scottish Footballs highest ranking site (though the terminally deluded would have you think it was the Rangers Tax Case site (haha!) or it’s bastard offspring the Irish Football Prefect or whatever it’s called) whilst not being overawed by these figures I am nonetheless quite impressed but remain sceptical of how they will transform into cold hard cash. There are 280,000 followers on the official club Facebook page again quite impressive even for a Facebook phobic like myself. Taken alongside the clubs new ability to broadcast matches overseas and with the clubs existing brand the Directors believe modern media creates significant opportunities for the company which have previously been underutilised, that claim probably has some merit but again I doubt it will transform into lots of cold hard cash and it will be considerable time before it approaches the reputed £31m Murray screwed out of NTL.

Stadium, facilities and hospitality. 50,987 capacity stadium owned by the club and contains shop, restaurants, function rooms and hospitality suites, up to 1500 hospitality punters on a match day. Will be used in the 2014 Commonwealth Games for the Rugby Sevens, that’ll work wonders for the pitch surface eh? Within 6 months of the float the shop will relocate to Edmiston House along with a bar, Ticket Office will move into the shop, I don’t think there’s a Bear who doesn’t welcome that. Intended investment in Murray Park but no details (fix the previous storm damage perhaps?)

Page 67 is rather illuminating. For some bizarre reason Brian Stockbridge provide a £50k loan for the period of 24 hours. It also shows why the original Sevco 5088 Limited was abandoned for Sevco Scotland Limited.

“On 11 May 2012, Imran Ahmad, a director of RFCL, provided a loan of £200,000. £178,000 was repaid on 15 August 2012 and £22,000 was converted into ordinary share capital of RFCL. Imran Ahmad also received an arrangement fee of £50,000 relating to this loan.”

The first couple of dozen times I read that I kept waiting for Jeremy Beadle to jump out from behind the sofa then it dawned on me Jeremy is no more and what I was reading was not a joke! (It’s far from funny but it’s certainly one of the biggest piss takes ever!)

So in exchange for £200k for 3 months and 4 days Mr Ahmed receives £28k cash profit and 2,200,000 shares valued at £1.54m, It would take IBM’s Big Blue to work out the interest rate on that.

I hereby offer the Rangers board an identical loan on identical terms any time they so desire.

It’s also strange why Imran Ahmed is not on the Board of Directors but I suppose he can console himself with the £350k annual salary plus bonus plus expenses (all nicely backdated to 12 June) for the newly created post of Commercial Director, perhaps by not sitting on the board certain disclosures that would have had to be made no longer don’t?

Green despite his oft repeated claim to be paid only with shares after a successful flotation has in fact been paid since 12 June, a basic salary of £360k plus benefits plus expenses (plus £1600 per month for accommodation with all utilities and Council Tax thrown in) a bonus of 100% gross salary for getting out of the SFL even via a league reconstruction!, a 10% post IPO shareholding and options to the value of twice his salary, Green's mouth is practically welded to the tit of RFC and is milking it for all it’s worth.

Brian Stockbridge on a basic £200k plus benefits plus expenses, (he too gets a 100% bonus in the event we play in a different league) and a nice £500k worth of share options.

Malcolm Murray on £50k per annum from 14 June but rising to £60k plus all reasonable out-of-pocket expenses reasonably and properly incurred fron the IPO.

The non-executives Hart, Cartmell, and Smart are on £40k, Smith on £50k plus all receive all reasonable out-of-pocket expenses reasonably and properly incurred.

That’s one hell of an expensive board for a 3rd Division Scottish football club, frankly it’s an absurd amount of remuneration and out of all proportion to turnover.

Plenty money going to be made out of RFC but it doesn't look like it’ll be Joe Punter making it but once those transients who have suckled from the tit of RFC ride onto the sunset their trouser pockets stuffed full of filthy lucre what then for Rangers?

 

[icon class="info"]Site admin note: We've also published a more positive critique so hopefully that will deliver the kind of balance this site always strives for.  Obviously, if anyone else would like to take issue with the above then please feel free to use the comments section below or join our popular forum.[/icon]