Are Lloyds trying to sell Rangers.. or wind them down?

[kevinthomson8 0]

hurry up ffs whyte

[ian1964 10,409]

It is the �£18million question, or should that be �£33m or even �£50m?

 

The huge discrepancy over the sums involved acts as a telling indication of the lack of specifics in the public domain over the bid for Rangers Football Club.

 

The Ã?£18m pertains to a “guesstimate” of Rangers’ debt, the Ã?£33m is the price put on Craig Whyte’s takeover bid and the Ã?£50m is the feared cost if the club loses its battle with the tax authorities.

 

The sums are, of course, inexact. The certainty is that the rumbling noises from both the Lloyds Banking Group and from sources close to Whyte are signalling the endgame in the Scottish businessman’s bid for the club.

 

But will Whyte walk away disgruntled or disillusioned this week? Or will there be a concrete offer for the shares?

 

Whyte has spent four months and hundreds of thousands of pounds on his move to take over 75% of Sir David Murray’s shareholding, with Andrew Ellis, a property developer, becoming a 25% partner.

 

Yet the outcome is no clearer, with sources close to Whyte and to the Lloyds Banking Group unable to state definitively how close the deal may be to fruition.

 

There have been reports that a �£1m exit fee demanded by Lloyds for early resolution of the debt is a stumbling block.

 

There have also been reports of the size of the club’s potential tax bill scaring off Whyte and any other prospective buyers. Both these assertions were denied today.

 

SportTimes spoke to sources close to the principals in the takeover in an effort to determine both the issues and the chances of success of the bid.

 

 

 

How close is a deal?

 

The Whyte camp have said agreement has been reached with Murray and, therefore, no problems are envisioned with the Rangers board.

 

Lloyds Banking Group insist no direct contact has been made between them and Whyte, though discussions have been held with members of his team. Whyte is said to be still “very, very positive” that a deal can be concluded. He will not put a timescale on the talks but, after his months of effort, he is in no mood to walk away. Lloyds also say they are keen to conclude any deal for the benefit of the club.

 

 

 

So what is holding a deal up?

 

No formal offer as yet for the shares. This would have to be announced to the Plus stock market so, by its very nature, events could move suddenly.

 

 

 

But what about the redemption fee that is said to be stalling the deal?

 

A bank source said reports that a Ã?£1m fee, or indeed any redemption or exit fee, was being demanded were “without foundation”.

 

One banking source said: “This is not like a mortgage when, if you pay it back early, the lender is due a fee. The bank would just be glad to have the debt paid back without asking for a charge.”

 

Sources close to Whyte are “surprised” at this statement. The truth is the money that has proved to be the stumbling block is the cash shortfall supplied by Rangers hedging the terms of the loan to a high Libor rate, that is the rate at which banks lend money to each other. That rate has slumped, leaving the club with a shortfall. The bank insists this is now part of the debt.

 

 

 

How serious is Whyte as a buyer?

 

Serious enough that he has devoted four months of his time to assembling an offer and dealing with issues that have not become any less complex with the passing of time.

 

The bank has said they have had no direct discussions with Whyte but this means little. The bank has a close relationship with Murray, the other principal in the deal. Sceptics have screamed “show me the money” at Whyte, but his viability as a buyer can only be assessed if, and when, he makes a formal offer.

 

His associates were attesting with some justification that Whyte’s tenacity in persisting through due diligence and tough negotiations was testimony to his will. The money, they say, is there, even if the deal is not yet finalised.

 

 

 

What is the state of play on the debt and why have Rangers’ financial figures been delayed?

 

The Rangers debt has been reduced dramatically. The bank knows this as the figures have been seen by the Ibrox board.

 

The club have until Thursday to release their half-yearly figures; expect very good figures. This is a double-edged sword for the board.

 

The substantial slashing of the debt will encourage some supporters to insist that investment is made in the team for next season, with an increased transfer budget and an improved provision for salaries. However, the board knows this will not be allowed by the bank.

 

The bank’s view is believed to be that more money should not be loaned to an institution that owes money in loans.

 

 

 

What about other concerns?

 

Whyte has an appreciation of what is needed.

 

He has spoken to Walter Smith about the requirements of a squad where five players are on loan and could leave in the summer.

 

With the retiral of captain David Weir and contracts nearing an end on others, there is an obvious need for both a viable budget and early negotiations.

 

The Whyte camp has made a provision for expenditure on players and is also aware of the work that needs to be done at Ibrox. Estimates for this vary between �£5m to �£12m.

 

However, the stadium is seen as an upgrading project that could be undertaken over a period of years.

 

 

 

What about the tax burden?

 

This is the great unknown. Whyte initially believed negotiations would have been completed after a resolution in the case between HMRC and Rangers. The case now looks likely to be heard next month, with a judgment unlikely before July or August.

 

Whyte’s position seems to be that the matter is an issue for the incumbent ownership. It would certainly be extraordinary for someone to buy any company with an unknown potential debt that could be in the tens of millions.

 

 

 

What is the tax row about and what are the chances of Rangers facing a hefty bill?

 

It concerns an Employee Benefits Trust that began at Rangers in 2001. The annual reports show that a total of �£47m was contributed by the club to this fund to recompense players.

 

If found liable, Rangers could face a heavy bill, the precise amount varies according to which accountant one consults.

 

A ballpark figure of �£30m for lost tax and lost interest has been touted.

 

There could also be a “punitive” addition by the tribunal. However, Rangers are defending the charges robustly and are optimistic of victory. So are the tax authorities.

 

 

 

Is there any quick resolution to the tax wrangle?

 

There could be a negotiated settlement. This is unlikely. It would take Rangers to concede, but the club proclaim innocence. It would also require the tax authorities to adopt a conciliatory attitude. The indications are that the Inland Revenue is not about to take a step back on this.

 

 

 

Is there a Doomsday Scenario?

 

Yes. If Whyte walks away and Rangers are hit with a huge tax bill plus fine, then the club will be in the sort of trouble that makes this week’s wrangling look like a spot of local difficulty.

 

As one financier said: “There is not a queue standing behind Whyte. He is the only game in town at the moment and, if he goes, then the alarm bells will ring.

 

“Administration would be more than just a scary word.”

 

 

http://www.eveningtimes.co.uk/sport/editor-s-picks/q-a-what-the-fans-want-to-know-about-craig-whyte-s-rangers-takeover-bid-1.1093372