Thursday, 3 May 2012

So What Does Mr Miller's Bid Amount To For Rangers?

Duff and Phelps today announced that Bill Miller is the preferred bidder for Rangers FC.  In their statement published at 12.35, they confirm that under the terms of the deal, the business and assets of RFC are to be ‘sheltered’ in a newco while a CVA is agreed for the existing RFC.  These assets will be returned to Rangers FC “once the plc has been cleaned up”. 

Mr Miller has previously referred to an ‘incubator’ company.  We said in our blog on Monday that we thought this referred to the creation of a subsidiary of RFC by the administrators.  The business and assets of RFC would then be transferred to that subsidiary while the administrators tried to put a CVA in place for RFC plc.  Our reading of the administrators’ statement suggests that we are pretty much on the mark.

In this 2 phase deal, a newco will take forward the business and assets of the club, while the administrators negotiate and work through a CVA with the creditors of the PLC.   

The administrators’ statement has confirmed that the “barriers to a standalone CVA are now too high”.  Those barriers were the difficulty in securing a transfer of shares from Craig Whyte and in securing acceptance of a CVA by HMRC.  Until the outcome of the tax case is known, obtaining that acceptance was almost impossible.

The administrators have said in their statement that Mr Miller’s bid “creates the most suitable framework to deal with the issue of the majority shareholding in RFC plc”.  In other words, Mr Miller’s bid circumvents the need for any action to be taken to secure Craig Whyte’s shareholding (at least at this point).  By selling the business and assets of RFC, they have sidestepped the majority shareholder. 

However, if and when a CVA is agreed and the trade and assets of newco have to be ‘returned’ to Rangers FC plc, the issue will resurrect itself. 

They have also taken the pressure off as far as reaching agreement with HMRC is concerned but there remain significant barriers to securing their consent.

By going forward with the Miller bid, the Football Club can prepare for next season with some certainty about its financial position subject of course to the outcome of the appeal against SFA sanctions and the terms upon which the SPL will agree to its admission.  Mr Miller’s bid is now unconditional so it would seem that he is satisfied that he can live with whatever terms are imposed.  The Club can therefore be assured that it can start next season free of administration and that must be seen as good news for the fans.

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