brockstoker

Boss and Bluedell on one side versus new poster Broken Stocker on the other. Who will be eliminated from the RM house? You decide. Thanks. I am. And me. Ma heid's burlin'. Last word from me. In the UK you don't acquire the mortgage with the house which is why I used the Scandinavian analogy where you do. Ask someone about the Enterprise Value of a company. Anyway enough of this from me. It's been an exciting first day in the RM House. Perhaps I'll come back and play another day!

1. Muddying the waters with irrelevant stuff about "some Scandinavian countries" is a new one. Posters will understand that if you buy a house for £79k you are valuing the house at £79k. And whether or not you need to take out a mortgage for £21k is irrelevant to the fact that you valued the house at £79k. You have doubled counted the debt and your only response is to refer to some weird Scandinavian house purchase system. 2. It seems you have now accepted that (about) one third of any shortfall will not hit the MIH shareholders' funds. This is the first time that you have conceded that you don't understand enough about minority interests to be making the financial assertion that you did: "unless someone values RFC at £100m MIH will have to write off the difference". Please re-read that assertion and admit you were wrong. Your lack of understanding might be good enough for elsewhere - but RM deserves better. 1. I'm not muddying the waters. I'm making a clear analogy - Blue dell accepts it for the house. You buy the house and acquire the debt with it - you don't take out a mortgage. I still contend that RFC is the same. When businesses change hands for £1, it doesn't mean that either buyer or seller value them at £1 - it's because they think that the value of the assets is equal to the debts. Have you never heard of the concept of Enterprise Value? 2. the (unquantified) difference. I've never stated what I thought it was, because then I would have to guess what someone would pay. If someone pays less than £79m for the shares of RFC (which I still contend would mean that they would have to put a value on the club of £100m) then MIH will have something to write off. You seem to disagree with the bit in brackets but presumably not the rest. Or maybe you will. Not good enough for RM? I didn't see the No Riff Raff sign on the way in, old boy!

So Broken Stocker is indeed a stalker. Surprised at your appearance given the financial maulings you have taken in years gone by. But welcome all the same. Your comment above is simply wrong for the reasons in my first post. Wrong to the tune of about £47m. And this board deserves better than your half baked financial misunderstandings. 1. The £21m debt IS already included in the £79m net assets consolidated. Have a look at the accounts (page 14): http://www.plusmarketsgroup.com/cgi-bin/re...rangers2008.pdf If you still refuse to accept you are wrong I will type out the balance sheet for you. For goodness sake, if this is the basic error you made, heaven knows how you are going to understand the next point. 2. Your reply did not even mention the minority interests. Is that because you don't understand them? The minority interests at January 2008 represented about one third of Rangers. See MIH's balance sheet - I think the total minority interests were about £47m from memory, some of that re other MIH subsids. So only about two thirds of the value of Rangers is included in MIH's shareholder funds. So only two thirds of any shortfall in value will hit MIH's shareholders' funds. This point at least I won't blame you for not understanding - it is exceptionally complicated - but I am right. So your assertion that "unless someone values RFC at £100m MIH will have to write off the difference" is wrong for the above two fundamental mistakes. (I won't complicate you further with your smaller mistake about goodwill.) Rangers isn't in the MIH shareholders' funds for anything like £100m and I defy you to prove otherwise. Hope to have the opportunity to tear apart your financial analyses in the future. Until we meet again. 1. In some Scandinavian countries, you can buy a house with the mortgage attached to it. If you pay the owner £79,000 for his house which has a £21,000 mortgage on it, then you are effectively valuing it at £100,000. You pay £79m to all the shareholders of RFC, and you end up with club plus the £21m owing to the banks. Unless you think the club is worth £100m you wouldn't buy it. Unless someone values the club at £100m then no shareholder will get their share of the £79m. 2. As you say, only two thirds of the shortfall will hit MIH shareholders funds; I didn't disagree with that. I didn't even attempt to quantify it. I do seem to remember minority interests from my O Level accounting, but all I assert is that there will be a shortfall - a point you seem to agree with. Financial maulings? Your recollection on that seems as coloured as your recollection of my MIH is doomed articles. And as for the stalker accusation, I only joined this board to comment on your constructive criticisms. Someone emailed them to me, otherwise I wouldn't have known you were still around. Pip pip!

Hello Boss! Nice to hear from you again. I've annotated your response Poor Broken Stocker. He’s only about £47m out with his numbers Nowhere do I quantify the loss. I stand by the assertion that unless someone values RFC at £100m MIH will have to write off the difference. As you point out it's well nigh impossible to work out just how much of the stock is held directly by MIH. Even for Broken, that’s some sort of record. Like many stockbrokers and analysts he has plenty experience in commenting on consolidated accounts. But not in understanding them, and certainly not in the mechanics behind them. Your faith in my abilities is touching. As you've never met me in any professional capacity that's quite a leap of faith on your part. The only material of mine you've read has been written with the non-financial reader in mind. I'm happy to sacrifice technical correctness, for layman's understandability. But before the numbers, there is another point to make. He has completely failed to address the fact that the supposed ‘conflict of interest’ which may have caused SDM to stand down has subsisted since at least the share issue in 2004. At that time, it was in Rangers’ interests to be sold to a new owner for £1, but clearly not in the interests of Murray International Holdings. Why then pen an article which suggests that a ‘conflict of interest’ that has been there for nearly 5 years is now a probable cause of SDM’s resignation? Perhaps because Broken had decided on his conclusion first and then tried to come up with some facts to fit. The implication of the title, with or without a question mark, is simply wrong. That ‘conflict of interest’ did not cause SDM’s resignation. There are times when a potential conflict of interest does not matter. Given the increasing financial pressure both companies are coming under I would suggest that we have reached a point where it does matter. On to the numbers. “Bottom line is that unless someone values RFC around £100m - £79m plus the debt - then MIH will have to write off the difference.” Oh dear. Sadly Broken has double counted Rangers’ debt. It is already included in the £79m net asset value of Rangers that was consolidated last year. So he is already out by £21m which was last years debt figure. (As an aside, don’t be surprised if our net debt in the soon to be published accounts to 30 June 2009 is north of £30m.) Not double counting. If I bought Rangers at book value of £79m (last year) I would also have to take on the debt of £21m, therefore I would have to value the club at £100m. You're surely familiar with the term Enterprise Value? The next problem with his numbers might only be understood by the most nerdy of beancounters amongst us. You’ll probably need to take my word on this one; he has completely missed the point that there are substantial minority interests in Rangers. The last time I looked, SDM actually beneficially owned closer to 60%-65% of Rangers (I can’t recall the exact figure and it would take me a few hours to work out the current position) even though he ‘controlled’ over 90%. These minority interests, Dave King amongst them, are obviously already excluded from the shareholders funds in the MIH balance sheet. This means that any amount by which the sale proceeds fall short of the net asset value of Rangers is attributable about one third to the minorities. So Broken’s error here puts his number out by about one third of the £79m net assets of Rangers (i.e. £26m). I've not quantified the actual loss to MIH. I stand by what I said; buy Rangers at less that £79m and MIH will take a hit to its balance sheet. Finally, his comment: "Every year when the MIH accounts come out, the Celtc-minded always come up with "He's doomed" articles." You've got to laugh. Broken Stocker has himself been doing that for years. Seriously, you couldn't make it up. You just have! I defy you to find any article that I have written saying MIH is doomed. I can assure you I've never written one. But hey, why let the truth get in the way of few cheap shots. So two fundamental errors of £21m and £26m. No and No And a title and conclusion that make no sense. Maybe not to you! Better luck next time. Et tu Brute!