King’s Bluff

There is a perfect paradox at the heart of Gary Ralston’s piece in the red top rag that is best viewed online. Mr Ralston has now disclosed that the seven year notice period can only be initiated once the £5m debt has been repaid. That’s yet another breach of a High Court order. The stupidity of this board never fails to amaze me.

There appears to be some confusion in those who take the time to contribute on this site. First of all there was no interest on the £5m loan as specified in the RNS to LSE AIM. No-one, not even Phil Mac, has access to any penalty clauses that may exist within the agreement. The current board are in breach of the agreement. Ashley gave the board one final chance to repay their debt in June. This eleventh hour offer of £5m will fail. King and his board know that they are in default and know that the IP has gone. This is a desperate attempt to get back to the negotiation table.

It’s a very clever PR exercise, but it fell over when King added Murray’s name to the list of the £5m saviours. Mr Murray has been an abject failure as Vice Chairman. He has delivered nothing and his botched attempts to negotiate with Ashley has led to the current impasse. He is a failed entrepreneur with no appreciable wealth. King as everyone knows, has not risked one South African Rand of his own money to acquire shares. The £1.5m loan attributed to King was a barefaced lie by Paul Murray. In April, if not before, the source of the £1.5m will be revealed in court. King and Murray’s lies to shareholders will be exposed.

Mike Ashley will not rest until King and Murray are removed from office. He has unleashed a tsunami of legal action. The board are drowning, hence their desperate attempt to construct a £5m life boat. The opportunity for negotiation ended in June. Going forward, everything will be decided in court.

King contradicted himself at the AGM. In one breath he said ‘once we raise the £5m‘ and in another that ‘it was in place.’ There is no £5m. It is not in our Metro Bank account. King is bluffing and when negotiations break down he will have given the shareholders a sense of his acting in good faith, with Mr Ashley not prepared to compromise. It’s a clever bluff. The last throw of the dice prior to King’s contempt of court hearing.

James Blair, who has no training in English tort, expressed the opinion of someone who would be perceived as a layman in The High Courts of Justice. If the Chairman, David Somers, was authorized by his Chief Executive, Derek Llambias, and Financial Director Barry Leach, then that’s the end of the argument. If challenged in court they will affirm their assent. Sandy Easdale, who was Managing Director of  The Rangers Football Club plc, was required to sign as the floating charge has an impact on TRFC plc. If this is the best argument that they have to breach the injunction, they will fail.

King has the SMSM eating out of their hands. I wonder who will be first to break the story of Ashley’s intransigence to King’s ‘good faith.’

More thoughts on AGM

Prior to writing this article it’s worth pointing out that this site achieved an important milestone today. I broke through the one million hits barrier.Visitor numbers are in excess of 202,000, likes are 193, with approved comments slightly north of 2,500. I noted a twitter exchange this evening where Gordo RFC’s comment today was discussed, proving that those who comment here have a voice.

When King stepped off the stage at The Clyde Auditorium, television crews caught up with him to ask the questions most of us wanted answers to. The first question was who specifically would be providing the £5m. King stated himself, Douglas Park, George Taylor, George Letham, Paul Murray and John Bennett. The latter joined the board on 10 March, but his appointment was overshadowed by Je Suis Graham’s forty-eight hour game of snakes and ladders.

The maximum King could invest without transgressing exchange control regulations would be £462,000. Given that this is half his last known liquidity, and that he lied about buying shares and providing a loan(a £4m lie) then King having skin in the game should be quickly discounted. How much could Paul Murray bring to the table. It’s hard to say. His school is a registered charity and his business has never turned a profit, but that would not deter him or fellow director Martin Bain from awarding themselves emoluments. I doubt whether he could raise any more than £250,000. The three bears would be good for £1m each, with the £1.75m balance falling  due to Henderson’s Director of European Equities, John Bennett.

The second question was why now after their spirited resistance at the EGM in June. King stated that conditions had changed, but that he could not discuss specifics. Ashley’s litigation has taken its toll. The threatened injunctions, should they choose to allot shares at their discretion, would be so destabilizing, prohibitive and expensive to litigtate against that the board were compelled to act. With £2.5m in a soft loan being attributed to the three bears, my estimate of their soft loans is circa £9.25m, which they want to be converted into equity. Funding from Rangers First CIC, which will keep the lights on from January until May, is also predicated on the disapplication of preemptive rights. Ashley could breach this much needed liquidity pipeline with injunctions. It is not the right thing to do, it’s the only thing they can do lest their house of cards collapses.

However, there are two other scenarios to consider. King could be lying. It would be an understatement to point out that he has previous.King stated that negotiations would be conducted by solicitors. King’s solicitors could obfuscate, delaying  the transfer, of assets for funds, long enough to slip the bulk of his equity deals through under the cover of detente.

I could also be persuaded that the £5m might not be enough to release the assets. SD would want all their debts paid prior to releasing the assets.

King’s meeting with the SPFL is also significant. Doncaster and Topping are both represented on the SFA’s Professional Gaming Board. They may have impressed upon King that they want Ashley’s litigation to end and that if he did not pay his debts, his approval as a director would be rescinded.

The answer to this riddle can be found in Ashley’s litigation and the involvement of Scottish football governance.





The most surprising aspect of the AGM is the humiliating climb down by King and his board from ‘holistic review’ to full repayment of the Sports Direct £5m loan. We know that King played no part in raising these funds. King has been backed with £4m of loans, with the provenance of £1.5m of this not known. King stated that once SD loan has been paid off, and I quote “We will be one of strongest clubs in world with regards to financial position.”

This statement does no square with the accounts, where we made a trading loss of £7.5m and are currently getting by on soft loans and finance leases. Despite being in this enviable financial position, no bank is prepared to offer us an overdraft facility. The reality is a foreign country to our career criminal chairman.

So why the sudden change in the board’s position? The simple fact is that Mike Ashley is the gatekeeper to the equity release. King stated: “Those providing soft loans are doing so as equity substitute. Not really a loan. They won’t be repaid. They will be converted.”

Perhaps someone should draw Mr King’s attention to the fact that should resolution 10 achieve its 75% majority, as I fully expect, Mike Ashley is on record as stating he will raise an injunction to block any equity release. This is the crux of the board’s position. Ashley will not back down. He will not agree to any conditions for the repayment of his £5m. King will be taken to court on Contempt of Court proceedings on 9 December and his status as ‘fit and proper’ will still be challenged on the 28th April of next year. Ashley won’t accept the £5m as an olive branch, or an ‘oak tree‘ to use King’s turn of phrase. Ashley smells blood and he won’t stop until King is removed from the board. Ashley has lost face. King and Murray breached a confidentiality clause. Everyone in the business world knows of the seven years termination clause in the Rangers Retail contract.

King was asked about whether he had any information in regard to a BDO appeal to The Supreme Court. Given that both liquidators are regular guests at Ibrox, we can assume that this avenue will not be explored, as per my numerous statements on the matter. At this point we discovered why King had met with Doncaster on Wednesday. Mr Doncaster was informed, with robust rhetoric, that Rangers would vigorously resist the clamour for title stripping. James Blair went further stating that there was no legal case to do so. The fundamentally flawed Smith report will be used by Doncaster to resist any attempts to strip titles. Doncaster needs Rangers to sign up to the SPFL’s broadcasting arrangement. If Doncaster does not do as he’s told, there is a tacit threat that Rangers will negotiate their own broadcasting deal. This broadcasting deal will not include WI-FI at Ibrox. Despite being one of the strongest clubs in the world, we cannot afford to repair our WI-FI provision.

King informed the audience that Ashley no longer had naming rights to the stadium with no wi-fi facilities. He confirmed that 40% of turnover would be spent on players payroll. This is £6.6m, the second highest outlay in Scottish football. King also dismissed Green’s court case for costs. Questions by Craig Houston and Ricki Neil were evidently agreed in advance. The latter, who will play a prominent part in Rangers First CIC, asked how best he could give Rangers money? Mr Neil was not asking for equity in lieu of cash. He was talking about a gift. As I stated in my previous article this is the gift that keeps on giving.

John Gilligan had a pop at Phil Mac Giolla Bhain, thus: ” When you get people in foreign countries writing lies about you, it’s very disturbing.” If this is the case, why does one of the strongest clubs in the world, with a company secretary who works for Anderson Strathern, not sue him for libel?

King stated that: “What can be said is clearly club will welcome all contributions from fans. Every pound counts.Support essential in what has been a difficult and traumatic year for the club.

This contradicted Gilligan’s statement. Phil Mac has been highlighting the difficulties and trauma. Gilligan evidently takes issue with the details but as King confirms, not the overriding message.

We are led to believe that Douglas Park. George Taylor and George Letham have managed to cobble together the lion’s share of the £5m. I wonder how much our fourth bear, Ricki Neil, has contributed to the £5m?

No-one challenged King on the fact that he has not contributed one single penny to ‘The Rehabilitation of Rangers.‘ No-one challenged King on the expense of fighting legal battles due to his corporate malfeasance and stupidity.

Craig Houston made a pitch to fans to buy non SD goods. Craig Forsey of SD will be keeping a close eye on any transgressions of the IP until such time as the loan has been actually paid. An individual suggested creating a fat effigy of Ashley, to establish whether voodoo worked. There was praise for removing the ‘rats‘ from the boardroom. As this includes Mr Llambias and Mr Leach, it will do little to assuage the concerns of Mr Ashley.

I would not be surprised if Mike Ashley now redoubled his efforts to teach these shareholders an expensive lesson.



The Gift that keeps on giving

Today’s Annual General Meeting will be a tame affair. There will be no challenges to the re-election of the current board. Resolutions 1-9 will pass on a simple majority. Resolution ten will almost certainly be passed unless Ashley and the Easdales choose to oppose it. Irrespective of whether it passes, its scope has been stymied by legal action. Should King attempt to convert the £3.75m of soft loans to date into equity, Ashley will raise an injunction in court to arrest their shares heist.

There will be a vote to back the auditor’s report and a tacit backing of the company executives who prepared the report. In any other business with no overdraft facilities, a £7.5m loss would lead to a vote of no confidence in the board. However, no-one will raise an eyebrow at the onerous finance leases required to offset these losses.

Despite the abysmal financial results, no-one will question whether the business is a going concern.The company meets its day to day working capital requirements through existing cash facilities, shareholder loans
and finance leases. The latter handle long-term debts. The cash, after yesterday’s payroll run, is more or less exhausted.  £2.5m is required every month to put a team on the park. As the season ticket income has now been expended, an obvious question at today’s AGM would be how the shyster board have come to the conclusion that the business is a going concern. Can the board meet its financial obligations as they fall due?

There were a number of key assumptions in November’s financial report. The financial forecast identifies the need for £2.5m by way of debt or equity funding by the end of season 2015/2016. Should Rangers gain automatic promotion, the end of the season is only five months away. Any equity funding would be at the discretion of Mike Ashley, and given his disposition to King and Murray, if both are not removed as directors, he will raise injunctions to put an end to this avenue of funding. The following is a quote from November’s financial report:
“The Board of Directors has received undertakings from certain shareholders that they will provide financial support
to the Group and have satisfied themselves as to the validity of these undertakings and that the individuals have
the means and authority to provide such funding as and when it is required.”

Note the latter part of the statement in regard to ‘authority.‘ Therefore by certain shareholders they effectively mean Rangers First and The Rangers Supporters Trust, who will be combined to form Rangers First CIC. The latter which is supposed to be an independent arm’s length organisation has provided assurances to the board that they will loan them a minimum of £2.5m prior to any appointment to Rangers First CIC’s board.

The idea of elections to the CIC board is a sham. They have already been identified and shown a willingness to use the money in their care to give the board an unsecured loan. The board cannot even imply that equity will be transferred at a later date, as this would be in contravention of their undertaking to the court of session.

Any loans from Rangers First CIC will effectively be gifts. Those who believe that giving a career criminal a gift is a sound idea should not be leading any supporters share trust. The next time King flies first class to Johannesburg, I suggest one of the anointed executives of Rangers First CIC travel, in coach, to the career criminal’s adopted home. I would urge them to arrange an appointment with any retail bank ,point out that they plan to give King a gift of many millions, and whether they could vouch for him. After they had given the CIC emissary an account of the various alleged frauds King has engaged in. and managed to avoid imprisonment due to spending £50m in legal representation, our emissary may choose to visit Umgeni Water and ask how their pension fund was misappropriated by Greg Morris on behalf of King.

There is evidence of this board’s inability to raise money closer to home. No bank will offer them an overdraft. Therefore Rangers First CIC will be the bank to RIFC and unlike any other bank will keep giving with no security and no return. The following is a statement by the board to confirm my assertion:

“After making the enquiries referred to above, the Board of Directors believe that there is a reasonable expectation that the Group will at all times have adequate resources to continue in operational existence for the foreseeable future.” 

Rangers First CIC will be the gift that keeps on giving. The three bears have spent £8m to date. They have given King a loan of £2.5m – £4m. King is taking everyone for a ride and a large part of the £2.5m first tranche of the CIC gifts, will be spent keeping him out of prison.

When the Parks, Murray and Gilligan back their chairman’s re-election today, they will do so knowing that they have £2.5m -£4m invested in him. They will not be overly concerned about the costs of defending King on the 9th December. That’s Rangers First CIC’s problem.

Reaction to fast moving events

“Yet another ‘iron-clad’ certainty brushed aside….only the AGM to go and now they have a free run of the club….and by what I can gather…they can do whatever they want and neither billions nor law can stop them…..again I ask the question. Is it us who are wrong and those going about their business with impunity are in the right all along?
I ask it because you have to believe the law of the land is correct and for all the cases outstanding against them….not one has the consequence to stop them in their tracks as far as I can gather. Not sure where that leaves us, the less than blinkered fans of the club….or where it leaves Mike Ashley and MASH…..Glib & Gummy Bears are now odds on favourites to run the club as and how they please ….and no one can do a fuckin thing about it…….unless there is something lurking…even King sentenced for Contempt wont halt what they are doing….it may be his way out of all this standing down as chairman blaming Big Bad Mike….easy sloppy shouldered exit. But even with him gone….its as you were and the remaining BoD have a free run…..time to assess options all round I feel.”

Gordo wrote the preceding text and as it is the most compelling comment on the fast moving events, I have decided to include it as a foreword to this article. In the course of the last few days we have had two Court of Session trials and a judgment.There has been so much legal activity that I had to correct an earlier draft of my previous article. There has been a tsunami of litigation and by my estimation there are four other live court proceedings, notwithstanding an appeal of Lord Doherty’s judgment.

King is not out of the woods yet.I don’t anticipate him facing the Contempt of Court charges on the 9th December, but counsel engaged by Rangers will lead to more litigation costs. On this occasion costs will not be capped if he is found guilty. A warrant could be issued for his arrest, but this would not deter him from  being chairman. He would continue to run the show from Johannesburg. He is going nowhere unless he is paid off or forced off the board by a Parks cull.

King and Murray have to be removed to appease Ashley.Their excoriating statements to the press and their encouragement to those (SOS) who lead boycotts of SD business has not gone unnoticed. Ashley is in control of our club. King is just passing through.

King’s plan to carve up the club has been thwarted by Ashley. A soft loan by Rangers First CIC will not be underwritten by a promisory note of an equity swap at a later date. If you look at the Hearts model, Anne Budge’s loan of £2.5m is being paid off by the fans via their direct debit scheme, but this model has not been introduced at Rangers as the King concert party were planning to profit by enhancing their equity holdings.

The £3.75m of loans to date will not be converted into equity.So how much more will Douglas Park, George Taylor and George Letham loan to the club with no guarantee of a conversion to equity, with no guarantee of a return?

By the close season of 2016, a board consisting of  Graeme Park and two appointees of Sports Direct could be in place. Ashley has a plan. If this were not the case he would have called in the receivers months ago.



Compromise Agreement

“JJ you were convinced Green would win, is the outcome a surprise or will you have to read the rationale first before you can comment?”

I have been challenged, in much less than the respectful words of the preceding text, in regard to my belief that Green’s compromise agreement would have been impervious to legal scrutiny.

There was a rumour circulating yesterday that a decision had been made and that Green had prevailed. Evidently there was only truth in the first part of this rumour. I would be surprised if DAC Beachcroft, the solicitors representing King, choose not to appeal this decision.

I am not surprised.I am astonished. Green is a skilled operator who sold the fantasy of promotion to The English Premiership to those gullible enough to believe his lies at Sheffield United. He polished this old chestnut at Ibrox when he stated that he would not leave until the Champions League Anthem was being played. He left both clubs with indecent haste when the IPO were fully subscribed.

Green stated publicly that he had stitched up Craig Whyte (and Aidan Earley) aided and abetted by Imran Ahmad. He referred to this as a ‘switcheroo.’  This imprudent statement may have contributed to the reasoning behind Lord Doherty’s judgment.

However, Charles Green has not been convicted of any charges. Lord Doherty has been sensitive to this by ‘sealing‘ the order until the conclusion of the criminal trial. Lord Doherty’s judgment states that criminal activity is not within the ambit of his compromise agreement. It is not within the ambit of an insurer’s indemnity, but Green at this point in time is presumed innocent.

It therefore follows that if Green is acquitted and is innocent of all charges, the costs of his defence will not be met by his former employers. As we have learned with the HMRC final appeal to the Court of Session, the appellate inner court could be petitioned.

I’m delighted that Rangers have dodged this bullet, but it may be only a temporary reprieve.

Green’s Legal Costs

“Charles Alexander Green v Rangers International Football Club plc

Charles Green, the former chief executive of Rangers International Football Club plc who claimed that the company were contractually obliged to pay the costs of his defence to criminal proceedings brought against him, has had his action dismissed by a judge in the Court of Session.

On 26 November 2015, following the legal debate which was heard on 12 November 2015, Lord Doherty dismissed the action brought by Mr Green (“the pursuer”) against Rangers International Football Club plc (“the defender”).

In the action the pursuer founded upon clause 8.3 of the “Without Prejudice Compromise Agreement” which had been concluded between the pursuer (“the Employee”) and the defender (“the Company”) in April 2013.

Clause 8.3 provided: “The Company will pay any reasonable professional (including, without limitation, legal and accounting) costs and expenses properly incurred by the Employee after the date of this Agreement which arise from having to defend, or appear in, any administrative, regulatory, judicial or quasi-judicial proceedings by a third party as a result of his having been Chief Executive of The Rangers Football Club or the Company.”

The pursuer argued that the clause obliged the defender to pay the reasonable professional costs and expenses of the pursuer defending the criminal proceedings which have been brought against him.

However, Lord Doherty decided that clause 8.3 does not oblige the defender to pay the costs of the pursuer defending the criminal proceedings which have been brought against him. He concluded that on a proper construction of the clause those criminal proceedings do not fall within its ambit.

A written Opinion containing the reasons for his decision has been issued to parties.

In view of the orders in terms of s.4(2) of the Contempt of Court Act 1981 made by the High Court of Justiciary on 16 October 2015 and by Lord Doherty on 12 November 2015 it is not proposed that the Opinion be published until the criminal proceedings against the pursuer and his co-accused have been concluded.”