marko10 4 Posted April 29, 2010 Share Posted April 29, 2010 Sir David Murray effectively owns almost 92% of Rangers Analysis by Simon BainBEHIND the smoke and mirrors of the Rangers financial crisis, who is reallypulling the strings at Ibrox?It would normally be its owner. Of the 109 million shares issued by Rangers,almost 100 million are held by two subsidiaries of Murray InternationalHoldings, where Sir David Murray owns 63% and the Murray family in total 81%. SoSir David effectively owns almost 92% of Rangers.Dave King, director and potential buyer, has the only other sizeable stake ofthree million shares, held through Metlika Trading, a company registered in theBritish Virgin Islands.advertisementWhen Sir David stepped down as chairman two months ago, it was amove he had been flagging for three years. But after failing to find a buyer forhis shares, it meant that his successor, Alastair Johnston, though nominallyleading the board in financial and strategic decisions, would inevitably deferto Sir David or an eventual new major shareholder.Then, only six weeks after the change, there was a key change in boardpersonnel. Turnround specialist Donald Muir was appointed to the boards of bothRangers and the MIH subsidiary Premier Property Group - the business in SirDavid's empire suffering most impact from the downturn.The appointment must surely be at the behest of Sir David's bankers. LloydsBanking Group holds 11.5% of MIH, which by last year had racked up a debt ofover £773m to the bank.The scope for autonomy in the board, and even for day-to-day operationaldecisions made by the chief executive and affecting coach Walter Smith, had beenrestricted even further. A bank representative on a board signals a proactiveapproach by the bank to reducing debt - which stood at £21m by June last year,compared with a manageable £5m or so only a few years ago.Most borrowings are at a fixed rate above the inter-bank lending rate - but thebank will probably have increased the cost if Rangers has slipped up at all onthe repayment schedule. This is why it is so important to know whether Rangershave breached their banking covenants - the terms of their borrowing from thebank.Rangers' last full accounts showed a 50% rise in interest costs to over £1.4m.Meanwhile, half-year results in March showed Rangers had plunged to a £4m loss,largely because of a trebling of the wage bill in the successful 2007-08 seasonto £30m a year, and an early European exit last season.In Sir David Murray's empire, the football business contributed less than 10% ofturnover in the equally prosperous year 2007-8, though Rangers' £6.6m pre-taxprofit equated to a third of the £20.6m group profit. The downturn, however,along with the implosion of Bank of Scotland and its absorption by Lloyds, hascranked up the pressure on MIH to reduce debt by selling assets, stakes orbusinesses.The business plan apparently mooted by the bank, and rejected by the board,calls for a radical sale of player assets at Rangers. It reflects the tighteningsqueeze which began last January, when the club effectively put a "for sale"sign on all first-team players, and continued in March when an audit of theaccounts by PricewaterhouseCoopers prompted the £1m sale of Barry Ferguson andthe removal of 10 fringe players from the wage bill.Since March, when the broader stock market has climbed by as much as 50%,Rangers shares were down 11%. However, after Monday's statement that a sale ofSir David's shares may be in the offing, the mid-market price being quotedyesterday was up by 25% at 49.5p.The only alternative to further cuts is new equity investment, to replace someof the debt, from a new investor. But while the old Bank of Scotland may haveconsidered injecting some cash, perhaps as part of a property deal, the newLloyds is proving no fairy godmother to businesses across Scotland. The mergedbank is itself under pressure from the taxpayer, which owns 43%, to instigatepayback time. Link to post Share on other sites More sharing options...
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