Another day, another crock in takeover land

[spangles 7]

More insightful reporting.

How close is a deal? So what is holding a deal up? But what about the redemption fee that is said to be stalling the deal? How serious is Whyte as a buyer? What is the state of play on the debt and why have Rangers financial figures been delayed? What about other concerns? What about the tax burden? What is the tax row about and what are the chances of Rangers facing a hefty bill? Is there any quick resolution to the tax wrangle? Is there a Doomsday Scenario? whyte knight playing the numbers game

Published on 29 Mar 2011

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.

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.

A bank source said reports that a £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.

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 last night 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.

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.

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.

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.

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.

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.

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 last night: “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.”

i T is the £18m 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 £18m pertains to a “guesstimate” of Rangers’ debt, the £33m is the price put on Craig Whyte’s takeover bid and the £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 last night.

Herald Sport spoke yesterday 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.

analysis As Rangers’ takeover talks continue, Hugh MacDonald speaks to sources close to the principal players in an attempt to understand the issues which could determine the club’s future.

No surprise there then, except that which surprises whytes people is clearly defined in the clunb accounts...

Borrowing Facilities

There is a term loan of £19,000,000 repayable over 19 years at a fixed rate above LIBOR which is the Group’s benchmark interest rate. The Bank of

Scotland plc has a floating charge and guarantees from each Group company on account of each other in respect of the loans and the overdraft. At 30

June 2010 the Group had a revolving credit facility of £15,000,000, which is reviewed annually in November.

Maybe Stevie Wonder done whytes DD.

[DarcheVinny 1,003]

after reading that im none the wiser!

[JM1872 3,776]

hmmmmm

[RANGERST1LLADIE 33]

The same as the other million threads on here. WE know nothin, pointless talkin about it over and over again. It'll happen when it happens so please let's talk about something else.

[Guardian 4,281]

At least the Whyte Indicator board has gone from "interested" through "very keen" and now up to "very, very positive."

I expect by the weekend we may even see "very, very, very positive"

The most important bit for me in this mornings report is Whyte reportedly not giving any deadlines. That could just be a legal issue or is he stalling ?

Can't take much more of this.

[MosesMcNeil 1,664]

The same as the other million threads on here. WE know nothin, pointless talkin about it over and over again. It'll happen when it happens so please let's talk about something else.

You’ll no doubt be stunned to learn that supporters of The Rangers are quite interested in this and likely to want to talk about it.

[spangles 7]

At least the Whyte Indicator board has gone from "interested" through "very keen" and now up to "very, very positive."

I expect by the weekend we may even see "very, very, very positive"

The most important bit for me in this mornings report is Whyte reportedly not giving any deadlines. That could just be a legal issue or is he stalling ?

Can't take much more of this.

Although the bold is a direct contradiction from yesterdays piss poor press reports, I read that as,

Despite our best gainsay efforts, we are still looking for a pot to piss in".

[Adoniram 1,919]

Well let's be blunt here.

After reading through countless articles based on hyperbole and guesswork here is my take on it.

Whyte has had due diligence done on the Rangers books. Nothing untoward has come up because if it had he would have walked away long before now.

To do due diligence one assumes you have to satisfy certain parties (i.e the owner) that you have the necessary funding in place before they will let you pour over sensitive information.

Lloyds have now issued a statement stating the £1m penalty clause is incorrect therefore another "stumbling block" has been removed.

We are also to believe that a deal has been reached in principle with Murray and Whyte according to various sources which again indicates Murray is happy with what he has been offered.

Therefore the only logical conclusion i can draw from this is that there is still an issue surrounding the HMRC investigation and that satisfactory guarantees have not been issued to put this to bed.

If Whyte has issued a deadline of this Thursday then i fail to see what is going to change in 3 days if the HMRC case is not being heard until May at the earliest.

On the face of it to me anyway it appears this deal has been dragged out as long as it has to increase the profile of Whyte and Ellis and to make it look like Murray and the Bank are doing all they can for the good of the club.

Nothing concrete has come out from any of the parties about this deal until today with Lloyds statement.

I think the sad thing for me is that this is the only piece of credible and factual information in this entire saga.

[GeneralCartmanLee 313]

Andrew Ellis carried out due diligence on the rangers books and didn't have funding in place.

[GOAT 30,449]

Another day, another thread.

[spangles 7]

Andrew Ellis carried out due diligence on the rangers books and didn't have funding in place.

CLUB OWNERSHIP

Andrew Ellis has held talks with Donald Muir and with Sir David Murray and has provided proof of funds. However, the Chairman indicated that the Board has, as yet, received no firm details of the Ellis proposals or indeed had any discussion with him. Any proposed buyer has to negotiate a purchase price with the seller and, if a bid is made, it will be reviewed by the Independent Panel (made up of five of the current Directors) who will assess the bid against a set of parameters and criteria then make a recommendation to shareholders. The panel cannot block a bid as such and with Sir David Murray being the majority shareholder, he effectively holds the call on any bid. Whilst there has been speculation about other interested parties, there has been no formal approaches other than Andrew Ellis.

http://tinyurl.com/47q292a

[CanadianBacon 2,088]

Andrew Ellis carried out due diligence on the rangers books and didn't have funding in place.

He has previous:

November 1998 Corporate Resolve plc (Whyte) announced the unilateral cash offer to be made for the shares (35p) in Focus Dynamics.

It's a complicated and long-winded story (told elsewhere ) but the deal fell on its arse after a takeover panel had identified that Corporate Resolve plc (Whyte) hadn't a pot to piss in.

As stated - he has previous.

FOOTNOTE:

As for Andrew Ellis forming part of this bid ( ) it is claimed The Boy David, even allowing for his unfailing courtesy ( ) called it as he saw it his the second meeting with Ellis way back then (remember that drawn out saga) by saying, “Get this dud out of the building”.

This plot thickens.

[spangles 7]

He has previous:

November 1998 Corporate Resolve plc (Whyte) announced the unilateral cash offer to be made for the shares (35p) in Focus Dynamics.

It's a complicated and long-winded story (told elsewhere ) but the deal fell on its arse after a takeover panel had identified that Corporate Resolve plc (Whyte) hadn't a pot to piss in.

As stated - he has previous.

FOOTNOTE:

As for Andrew Ellis forming part of this bid ( ) it is claimed The Boy David, even allowing for his unfailing courtesy ( ) called it as he saw it his the second meeting with Ellis way back then (remember that drawn out saga) by saying, “Get this dud out of the building”.

This plot thickens.

You can't beat a nice thick plotted dream George.

[Guardian 4,281]

Latest stuff says the delay isn't that the bank are demanding an exit fee, which they denied anyway, but some kind of shortfall payment to cover the difference in the loan being based above the LIBOR banking rate.

It appears Lloyds didn't lie but were a bit economical with the truth.

Either way, that doesn't seem much of a stumbling block as it can't be much in the grand scheme of things.

[RANGERST1LLADIE 33]

You’ll no doubt be stunned to learn that supporters of The Rangers are quite interested in this and likely to want to talk about it.

So why start another thread when we already have multiple threads regarding this subject?

[Redwhiteandblue 3,330]

Well let's be blunt here.

After reading through countless articles based on hyperbole and guesswork here is my take on it.

Whyte has had due diligence done on the Rangers books. Nothing untoward has come up because if it had he would have walked away long before now.

To do due diligence one assumes you have to satisfy certain parties (i.e the owner) that you have the necessary funding in place before they will let you pour over sensitive information.

Lloyds have now issued a statement stating the £1m penalty clause is incorrect therefore another "stumbling block" has been removed.

We are also to believe that a deal has been reached in principle with Murray and Whyte according to various sources which again indicates Murray is happy with what he has been offered.

Therefore the only logical conclusion i can draw from this is that there is still an issue surrounding the HMRC investigation and that satisfactory guarantees have not been issued to put this to bed.

If Whyte has issued a deadline of this Thursday then i fail to see what is going to change in 3 days if the HMRC case is not being heard until May at the earliest.

On the face of it to me anyway it appears this deal has been dragged out as long as it has to increase the profile of Whyte and Ellis and to make it look like Murray and the Bank are doing all they can for the good of the club.

Nothing concrete has come out from any of the parties about this deal until today with Lloyds statement.

I think the sad thing for me is that this is the only piece of credible and factual information in this entire saga.

Could also be something to do with Ellis, but it probably is the tax case. Wish someone would just come out with the truth, I know they cant but I still wish. Was quite optimistic about this deal, but I'm not too sure now. Fingers crossed.

[MosesMcNeil 1,664]

So why start another thread when we already have multiple threads regarding this subject?

Perhaps someone feels they have something unique or interesting to add to the debate. Rocket science...

[nvager 498]

We are all still in the dark - including the Press.

Until a bid is made I am of the thought that nothing is going to happen. I am not convinced that Whyte has the cash frankly. Hope I am wrong.