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Expert tells Rangers support they are right to be afraid over £1.5m loan By Joh


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Expert tells Rangers support they are right to be afraid over £1.5m loan

By John Mcgarry

PUBLISHED: 23:26, 24 February 2014 | UPDATED: 23:26, 24 February 2014


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A leading insolvency expert has told Rangers fans they have every right to be concerned at the steps taken to plug a £1.5million hole in the club’s finances.

Rangers confirmed that they have secured a credit facility which will allow Laxey Partners and major shareholder Sandy Easdale to ease its cash worries with loans of £1m and £500,000 respectively.

The Isle of Man based hedge fund will get £150,000 in interest for its trouble — with the sum to be repaid in cash or shares before September.

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Trouble? Rangers have borrowed £1.5m from shareholders Sandy Easdale (left) and Laxey Partners

Easdale, who together with his brother James are seen as the powerbase at the club, is prepared to lend £500,000 ‘fee and interest free’.

Both arrangements are secured against assets Edmiston House and the Albion car park and are repayable by September 1, 2014.

Despite the club’s attempts to dress up the loan as being part of a wider business plan, the very need for it and, in the case of Laxey Partners the high interest rate charged, has set alarm bells ringing among the light blue legions.

And Allan McLeod, an insolvency practitioner with MLM Solutions, believes the development should be deeply troubling to fans of the Glasgow club.

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‘It seems to stack up in terms of the crisis loan which has been talked about at present,’ said McLeod. ‘A short-term funding gap in any business, without knowing what the long-term plan is, should be a concern for supporters.

‘It should be particularly concerning since security has been granted over two assets and because of the high interest rate attached.

‘If £1m is being loaned by Laxey and it’s repayable after six months, and they are getting £150,000 back — that’s a 15-per-cent interest rate, 30-per-cent APR, which is quite astonishing.

‘It raises a number of other questions as well, such as: Were other investors given the same opportunity to invest? Investors which would have had no interest cost attached to it?

‘I would certainly be concerned if I was a supporter.’

The funding gap — first alluded to last year by then finance director Brian Stockbridge — has been caused by a cash burn of around £1m a month that lead to a £14.4m loss in the year to last June.

In previous years, Rangers could have secured credit elsewhere, but no such facility is available these days due to the fact the company is just 21 months old.

However, McLeod insists the lack of a credit line isn’t the central issue.

‘It shouldn’t require credit lines really,’ he added.

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‘It went through an IPO and was reported to have raised £22m. The first question is: Where are the funds from the IPO?

‘Why, such a short time after Graham Wallace announced there was no cash-flow issue, has the company had to go and secure a loan? A loan which is backed by security and had a high interest rate attached to it?

‘There seems to be no long-term planning. We know the short-term planning, which is for a loan to plug a £1.5m cash gap, but what’s the longer-term cash requirements.

‘It’s all very well getting a loan but how is it going to be funded in future?’

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Repaid in around 6 months. That to me says the company are confident in being able to pay back such a large sum quite quickly.

If it was to be repaid over say 3 to 5 years then that would indicate the club has difficulty in meeting the repayments and needs more time to do so.

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I started working in a small insolvency firm in 1994, subsequently spent 5 years in the Corporate Recovery department of a Big 4 Accountancy Firm. I now work at mlm Solutions providing advice to Directors, Accountants, Solicitors, Lenders and many others in relation to business turnaround, debt restructuring and insolvency.

I have gained significant experience in trading businesses during insolvency, including the care sector, manufacturing, engineering, retail, leisure and football clubs. I am at my happiest when delivering commercial results to complex problems.

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Alistair is ....well being Alistair not being an expert.....

ALLY McCOIST today admitted he can understand why Rangers fans are alarmed at the £1.5million loan the cash-stricken club has been given by two investors.

MatthewLindsay.jpg

Matthew Lindsay Sports Journalist

Tuesday 25/02/2014

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Ally McCoist 'can understand' the scepticism among Rangers fans over the 1.5m loan deal

The Ibrox club confirmed to the AIM Stock Exchange yesterday that a deal had been struck with shareholders Sandy Easdale and Laxey Partners.

But the fact that Edmiston House and the Albion car park has been used as security for the cash injection has angered some supporters.

And there has been a further fans' backlash after it emerged Isle of Man-based hedge fund Laxey Partners stand to make a £150,000 profit from the deal.

McCoist is not surprised that supporters are alarmed by the development. He said: "I understand the fans' concerns 100% after what's happened over the last two years. I can totally sympathise with that. I was told on Friday that this was part of the plan and all that has happened is that they have named the two shareholders who have given us the loan.

"If that's part of the plan, that's fine. I can't argue with that."

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Repaid in around 6 months. That to me says the company are confident in being able to pay back such a large sum quite quickly.

If it was to be repaid over say 3 to 5 years then that would indicate the club has difficulty in meeting the repayments and needs more time to do so.

It will be season ticket money that we can't then spend on other running costs.

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£1.5m loans for Rangers are 'part of the plan'

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James Easdale (left) and Sandy Easdale (centre) take their places in alongside Rangers chief executive Graham Wallace

MARTIN HANNAN

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Rangers' decision to borrow £1.5 million in short-term loans from two of the club's biggest shareholders was pre-planned as part of the financial and organisational restructuring of the Ibrox club, according to chief executive Graham Wallace.

The Rangers Football Club Limited yesterday confirmed to the stock exchange that director Sandy Easdale and single biggest shareholder Laxey Partners were lending the club £500,000 and £1 million respectively for 'working capital'.

Both sums are secured against the Edmiston House and Albion car park facilities near to Ibrox. The loans are repayable by 1 September, and while Easdale will not make a single penny, Laxey Partners, the Isle of Man-based hedge fund who are the club's single-biggest shareholder with an 11.64 per cent stake, could make a £150,000 profit on their part of the deal.

The club's Nominated Adviser (NOMAD), Daniel Stewart and Company plc, has approved the Laxey deal as "fair and reasonable" but fans groups last night questioned the Laxey loan in particular.

Speaking after the announcement, Wallace said fans should not be concerned about the borrowing, which he said was "always part of the plan".

The Scotsman can reveal that the restructuring which is already under way will see Rangers' mid-year financial results, due out late next month, show a massive improvement on last year's £14 million loss in just 13 months.

Ibrox sources can neither confirm or deny the mid-year figures, but The Scotsman understands that the losses, which were running at £1 million per month, have been significantly reduced.

While not commenting on the forthcoming results, Wallace was nevertheless bullish about the club's future on and off the field and he launched his fiercest criticism yet of those who are predicting that Rangers will go into administration again, branding them "irresponsible" and pointing out that there is no need for administration as the club has no debt – the overriding factor in bringing about administrations. "We have no bank debt, we have no overdraft, and we have a debt-free balance sheet which would be the envy of most clubs," said Wallace, "yet we keep getting drawn back in to the question 'is Rangers in crisis' which seems to me to be rather unique.

"There is no prospect of this business going into administration. I have staked my personal reputation on it. I do get frustrated with the constant use of the word administration, because what it can tend to do is potentially spook the wider fan base.

"When you look at what has happened at the club over the past couple of years, you could understand why certain segments of the fan base could be concerned when they read in the newspapers or hear comment from the media about a second administration.

"To my mind, sometimes there is a sense of irresponsibility when people start to use that word."

The chief executive is only too aware that the short-term loans by Easdale and Laxey Partners need to be repaid by September, and in effect it is 'tide me over' money until the season-ticket income starts to roll in once Rangers secure their inevitable League 1 title. They play Stranraer at Stair Park tonight, looking to extend their 21-point gap at the top of the table.

Wallace explained: "It is a short-term facility that we will use as required over the next three to four months, and the important message is that this has always been anticipated in the business plan that I inherited and which we are working our way through.

"There was always a need for some short-term funding. The quantum of it was to be determined, and we were looking for the best way to source it. This is not a last-minute crisis panic move, this is just consistent with what I would regard as doing business in the right way. Football clubs are very cyclical in terms of their revenue generation and at the rate at which they spend money.

"Typically this period at the end of the financial year tends to be the time when you are looking forward to income coming in, and not just talking about season ticket income, as we have significant inflows from commercial partnership deals and from our retail business joint venture. So really all we are doing is putting in place a facility that gives us a little bit of financial headroom."

Promising that everyone at Ibrox was working hard "to get the fundamentals sorted out", Wallace was adamant that borrowing from major shareholders was preferable to approaching banks for the same loan facilities.

"We see it as a really positive step for the club," said Wallace, "as they are demonstrating their support for the board and the management."

Last night the Rangers Supporters Association, Assembly and Trust issued a statement saying they had been contacted by a number of supporters, who are also current shareholders, indicating they would have provided a secured loan of £1.5m on more favourable terms than the combined Laxey Partners and Easdale loans.

"The terms of the Laxey loan in particular seem unduly onerous," stated the three groups. "We are concerned that not all shareholders are being treated equally. Fans and shareholders both deserve an explanation as to why other shareholders were not approached to provide this loan. The three groups call on Rangers, or the NOMAD Daniel Stewart, to clarify the matter. Either in public or through a direct meeting with fan representatives. We have contacted both companies with our concerns."

Meanwhile, Wallace is midway through the 120 days he asked for in order to examine the club from top to bottom and then change what is necessary to safeguard and improve Rangers' future. The club's forthcoming results will show if he is true to his word about Rangers changing for the better.

Bit in bold. Don't know what to believe

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Maybe it's just me

What's more worrying a loan to bridge a working capital short fall, short term

Or not having it and facing administration mk2?

I know I'd be more worried/concerned at the latter

I wonder if the rag in question had to look very long to find a doommonger expert

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This 'expert' seems to be promoting fan ownership on his twitter. He's tweeted an article from the Gherald about it. I wonder if that has 'informed' his opinion?

f2f3d6fec56b2ce51a65def5e92ea003_bigger.jpegAllan McLeod@allanmcleod_mlm Feb 20

First steps in new Ibrox fan ownership drive | Herald Scotland http://www.heraldscotland.com/sport/football/first-steps-in-new-ibrox-fan-ownership-drive.23486406 via @hsnewsbreak

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This 'expert' seems to be promoting fan ownership on his twitter. He's tweeted an article from the Gherald about it. I wonder if that has 'informed' his opinion?

f2f3d6fec56b2ce51a65def5e92ea003_bigger.jpegAllan McLeod@allanmcleod_mlm Feb 20

First steps in new Ibrox fan ownership drive | Herald Scotland http://www.heraldscotland.com/sport/football/first-steps-in-new-ibrox-fan-ownership-drive.23486406 via @hsnewsbreak

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There's a surprise a journo pushing an agenda instead of being impartial

What chance do we ever have of normality and stability when we've got these cancers

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This 'expert' seems to be promoting fan ownership on his twitter. He's tweeted an article from the Gherald about it. I wonder if that has 'informed' his opinion?

f2f3d6fec56b2ce51a65def5e92ea003_bigger.jpegAllan McLeod@allanmcleod_mlm Feb 20

First steps in new Ibrox fan ownership drive | Herald Scotland http://www.heraldscotland.com/sport/football/first-steps-in-new-ibrox-fan-ownership-drive.23486406 via @hsnewsbreak

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he follows the RM twitter page too, hope he's a poster on here
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Claims that Laxey Partners want a 'high interest rate' for a 'risky investment'... Would the Easdales not be doing the same in which case then?

No risk at all in this, the loan is fully secured with the Albion car park and Edminston house.

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