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Interesting change from business journalist as opposed to the normal sports variety


Business analysis: investors must provide ending to sorry soap opera at Rangers


Ian McConnell

Group Business Editor

Friday 23 August 2013

INSTITUTIONAL investors do not, as a rule, like drama in the boardroom, especially when it is occurring at a company that has only just floated.


Given that the goings-on at Rangers would be enough to make the scriptwriter for a South American soap opera think he was losing the plot, it is hardly surprising that some investors in the football club are appalled and desperate to see an end to the current chapter.


The Rangers script has been a rip-roaring read. However, for investors who bought into the club at its flotation last December, it has been a tale of woe in terms of Rangers' share-price performance.


Malcolm Murray, who met institutional investors and helped persuade them to participate in the flotation given his City credentials, stepped down as chairman only months later, in May.


The word was that other directors had moved against him and that Charles Green, who led the purchase of Rangers' assets from insolvency last summer, had played a part in Mr Murray's departure, an exit which understandably worried some institutional investors who had viewed him as their voice on the board.


Mr Green had resigned as chief executive by then, strenuously denying any wrongdoing amid allegations of links with former Rangers owner Craig Whyte in the run-up to last summer's deal, but stayed on the board until May 31.


The plot took a further twist on August 2, when Rangers announced to the market that Mr Green had been appointed as a consultant, then only hours later revealed investors were seeking a general meeting to vote on a radical boardroom shake-up.


Then, on August 5, fans' favourite Walter Smith quit as chairman. He urged supporters to back the campaign for boardroom change.


Engineering entrepreneur Jim McColl , who is leading the campaign for change, asserts that he did not want to find himself on the front line of what must be one of the most bizarre battles he has fought.


Mr Green, whose consultancy agreement was terminated by Rangers this week, perhaps demonstrated best, albeit inadvertently, why change is so desperately needed.


When the McColl camp requisitioned a meeting, to consider resolutions to remove Rangers chief executive Craig Mather, and fellow directors Brian Stockbridge and Bryan Smart from the board and appoint Frank Blin and Paul Murray as directors, Mr Green's response was jaw-dropping, even by his standards.


He declared Mr McColl had until August 9 to put £14m into stockbroker Daniel Stewart's client account. Mr Green said he and his "consortium" would then sell Mr McColl 20 million shares, thus giving him a 28% stake.


This response ignored entirely the issue at hand, corporate governance, focusing instead on money.


In terms of how not to go about things in the wake of a flotation, Rangers is an object lesson.


For a time, it looked as if Mr Green might really take Rangers forward. He stabilised the situation after buying the assets, brought in Newcastle United owner Mike Ashley as a shareholder, and set an ambitious timescale for flotation and achieved this.


Mr McColl, who had issued dire warnings in June last year about what Mr Green might do to the club, was even moved at one stage to praise what had been achieved.


But the protracted soap opera that has unfolded through the spring and summer has forced Mr McColl to step up, reluctantly, on behalf of disgruntled investors. Shares in Rangers, which were floated at 70p last December and hit a high of 93p on January 2, are now languishing at 43p.


Mr Blin, the former head of big four accountant PricewaterhouseCoopers in Scotland, is a heavyweight on the corporate scene. Paul Murray was a director of Rangers, in its past life, but exited after Craig Whyte took control.


Rangers' board said this week it had an "open mind" about adding Mr Blin to its board. It claimed the other proposed resolutions were not in the best interests of shareholders.


But there must be a wholesale shift in the balance of power. Impressive as he is, it is unlikely Mr Blin can exert much influence by joining the board, in the absence of other changes.


Rangers has the big advantage of being free of the huge debts which burden some football clubs, albeit as a consequence of recent painful events. It has a one-time chance to really make a go of things as an Alternative Investment Market-listed company.


Recent events have alarmed some institutional investors. But it does not have to be this way. Look at the way Celtic has been run in recent years by chief executive Peter Lawwell and an array of directors who have held very senior positions elsewhere.


Mr McColl fears institutions will walk away from Rangers, and the club will not be able in future to raise the funds it needs as it aims to return to the bigger stage. It would be far better for Rangers to raise money from a broad range of investors, and take the personalities out of the equation.


Radical boardroom change is essential if confidence is to be restored, and time is running out.


It is not a matter of depositing money in a bank account. Nor should the McColl camp be fobbed off with some compromise which does not bring real change. Having come this far, it should push on and get things sorted out once and for all.



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Meh, they always do. That's their sad lookout. If we ever get anyone on the board who supported the legal entity, perhaps they can deal with cretinous Tims.


Interesting take on the IPO in that this dude seems to think it was at least as much Malcolm Murray as it was Charles who got the IPO money from the City types.

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