Alistair Johnston flies into Scotland

[Frankie 8,182]

What Bluedell said!

[Super_Ally 0]

There was a period prior to the current facilty being agreed with the bank that it appeared that we may have to sell to meet the bank's requirements. However from what AJ has said, it seems that the bank did not get the directors to agree on the stringent cuts that were originally requested and a middle ground was negotiated, which resulted in the club now saying we do not need to sell.

 

I'm not convinced there is a contradiction - only that the situation has evolved.

 

Not that I doubt you, you always seem to know what you're talking about when it comes to finances, but do you have anything specific to back this up? For example something Johnston has said in the press that alludes to this being the case. Would feel more confident in that being the reality if there was some form of confirmation from the club.

 

However, based on the evidence of what has happened and been said (although not specific quotes i've seen pertaining to the above suggested compromise) it would be the most obvious explanation of the current circumstances.

[Frankie 8,182]

The chairman said as much at the AGM.

[craig 5,199]

I am sure that in his inaugural chairman's press interview he said that the club would not need to sell in January or maybe in a follow up interview as a result from a media question. Pretty sure he did actually state this though.

[Super_Ally 0]

It's hard to keep up with who said what and when so the timeline of these comments is hazy.

 

So initially Walter said we would have to sell in Jan?

 

Then Johnston came in and prior to his first statement or the AGM an extended facility with the bank had been agreed and hence the situation had changed?

 

With guys like wabash constantly stoking the fires with bs it's hard to follow what is going on.

[calscot 0]

What Bluedell said seems to completely sum up the situation from what I've read. It makes perfect sense.

[stewarty 1,877]

I remain sceptical about any developments until something is signed and formally announced...

[Bluedell 5,354]

Not that I doubt you, you always seem to know what you're talking about when it comes to finances, but do you have anything specific to back this up? For example something Johnston has said in the press that alludes to this being the case. Would feel more confident in that being the reality if there was some form of confirmation from the club.

 

However, based on the evidence of what has happened and been said (although not specific quotes i've seen pertaining to the above suggested compromise) it would be the most obvious explanation of the current circumstances.

 

What Frankie said!

[Cotter 0]

There was a period prior to the current facilty being agreed with the bank that it appeared that we may have to sell to meet the bank's requirements. However from what AJ has said, it seems that the bank did not get the directors to agree on the stringent cuts that were originally requested and a middle ground was negotiated, which resulted in the club now saying we do not need to sell.

 

I'm not convinced there is a contradiction - only that the situation has evolved.

 

Well thanks for clearing that up mate, albeit with educated assumptions. I have yet to see any statements pertaining to any "middle ground" and what that may constitute.

[Frankie 8,182]

Well thanks for clearing that up mate, albeit with educated assumptions. I have yet to see any statements pertaining to any "middle ground" and what that may constitute.

 

Here's a few quotes from PLUS (AJ's statement from the AGM):

 

http://www.plusmarketsgroup.com/PLUS_news_story.shtml?NewsID=1144061&ISIN=GB0007237380/GBX/PLUS-exn

 

Given the aforementioned economic circumstances about a year ago, David's well-intentioned, personal ambitions for the Club came into conflict with the business exigencies of his company. Given these extenuating circumstances and following on from the takeover of HBOS by Lloyds Bank, there was a particular focus on the credit facilities historically provided by HBOS. However, the specific debt to Rangers Football Club had been structured as a non-recourse credit facility which meant that the bank had to rely solely on the Club both as security for its debt and to pay the interest costs as well as fulfil the repayment terms.

 

My agenda was to lead a Rangers Board that became increasingly independent of the Murray Group, which of course still owns the vast majority of the equity in the Club. However, I felt that maintaining both the tangible and intrinsic value of Rangers by performance and image would serve the best interests of all parties with a vested financial interest in the Club's business. This was not an easy thing to do given the fact that Rangers Football Club, as I have said on several occasions, is not a business that is run by the Bank, but to the extent we rely on it for external financing, Lloyds is naturally a party to approval of the business plan which its credit facility fuels.

 

This did not stop us addressing some very thorny issues. For example, we agreed to discontinue all reimbursements to Murray Group for management services. Also, the Rangers Board denied Murray's request to increase its slate of Directors on this Board to four nominees as opposed to the two that heretofore had been in place. Therefore pursuant to David himself and Donald Wilson resigning from the Board, we voted the two replacement Murray nominees, Mike McGill and Donald Muir, on as new Directors. While the selection of Donald Muir

may have been somewhat controversial, given the fact that he had been an active liaison between Murray Group and Lloyds Bank with respect to other elements of the conglomerates business, it was not out of context that he became a designated non-executive Director of Rangers.

 

When I undertook my own due diligence with respect to the challenges that we would have in managing our relationship with the bank, the most immediate issue that we had to confront was renewing our committed credit facilities to give the Club the financial wherewithal to continue to operate its business. In turn this allowed our auditors to confirm the company as a going concern in their report. Any form of qualification in this regard would have caused us to be in breach of UEFA regulations which would have extinguished any European ambitions that we all have for the Club.

 

The process of reaching a resolution with respect to the extension of the bank's credit facility involved the merging of two distinctly different business plans, one promoted by Murray and acceptable to Lloyds Bank and the

other prepared by the Rangers Board and senior management team. As every businessman would know in dealing with banks, one has to present a "sustainable business plan" but the devil in this regard is the view one takes on the ambitions of the Club as compared to the objectives of the bank in protecting its credit exposure. As you would suspect, there was rigorous debate that ensued as to the ingredients that would be incorporated into the financial plan on which, given the circumstances, we all eventually agreed.

 

On the other hand, the bank agreed to make no demand, despite media speculation to the contrary, for Rangers to manage its business plan to allow for any expedited repayment of the Club's debt. In fact, as set out in our

financial statements at June 30 the bank has agreed that the Club's only obligation is to operate within a credit facility that reduces by �£1 million per year.

 

Any business plan no matter what the motivation for the integral provisions must make assumptions about the performance of the Club. We eventually reached a consensus on the fact that any quick requirement to pay off debt could cause the Club's value to collapse, and we needed a much more programmed outlook. There was no way we could continue to expect the continued commitment of our supporters if there was any sense that they were expending their hard earned money by following Rangers merely to pay back the bank.

 

As far as the bulk of the Rangers support is concerned, the relevant news is that the plan does not oblige us to sell any players in the January window and that if any players do depart, it will be at the volition of the Rangers

executive and management team. If the Rangers management team believes that we can beneficially trade players in January, we will have the freedom to do so provided we meet the constraints of the plan that we have agreed to adopt. On the other hand, our trading flexibility in the summer of 2010 will depend on SPL performance, European qualification, etc., through the end of this season.

 

In summary, we reached an agreement with the bank that extends through the end of 2010 with facilities at the same margin and at no additional cost and which allowed the auditors to provide a clean opinion on our financial statements.

 

In concluding my remarks about the bank, I should emphasize that they have repeatedly told us that Rangers' ambitions should be fuelled by equity, i.e. by ownership, and not by debt, i.e. the credit facility extended by Lloyds. No matter what scenario might develop prompting the possibility of the Club's majority ownership being disposed of by the Murray Group, the bank will have a vested interest in any such transaction. For my part, I am hopeful that Lloyds will continue to be collaborative and considerate in expediting a sale that will allow Rangers Football Club to move forward as an independent organization with access to equity funding rather than debt and thereby reassume control of its own financial destiny.