On Air Now
19 January 2015, 08:22
The Rangers board say they will fight Dave King's attempt to force them out of the club using a shareholder vote - but admit they may have to mortgage off Ibrox in the meantime.
Former oldco director King has called a general meeting as he starts the process of removing chairman David Somers, chief executive Derek Llambias, finance director Barry Leach and director James Easdale from their positions of power - replacing them with himself, former Blue Knight Paul Murray and John Gilligan, the one-time managing director of Glasgow brewer Tennent's.
But in the first of two 7am statements to the Stock Exchange, the Gers board say they will ask King to withdraw his bid in order to save the cash-strapped club the expense of hosting the meeting, and if he does not they will recommend the South Africa-based businessman's motions are voted down.
If the meeting is to go ahead, it must take place between three and six weeks from Friday when the board were informed.
King now faces a race against time to build an anti-board coalition with enough shares to win a majority vote but can expect support from the likes of the Three Bears - wealthy fans Douglas Park, George Letham and George Taylor.
The two groups own around 34 per cent of the club between them - roughly the same portion as controlled by Mike Ashley and the Easdale brothers.
The statement said: "The company is currently verifying that the notice (issued by King) is properly constituted. If valid, the board intends to seek to have such notice withdrawn in order to avoid the cost and disruption of an ad hoc general meeting. The AIM rules require that all individuals appointed to the board of an AIM company are suitable to be a director of a UK public company.
"If the notice is valid and is not withdrawn, the directors intend to recommend that shareholders vote against the proposed resolutions. A circular will be sent to shareholders in accordance with the act, however in the meantime the directors will not be distracted from the more important matter of securing the future of the business. A further announcement will be made shortly.''
In their second statement, the directors conceded they may have to consider using Ibrox as security on a loan - but insisted any decision would not be "taken lightly''.
Any move to use the stadium or the Murray Park training ground as collateral will prove highly controversial.
Thousands of fans have already protested against that possibility before Friday night's abandoned clash with Hearts after it was revealed Mike Ashley was preparing to have his name added to the title deeds of both properties as part of a £10million loan arrangement.
The Three Bears have already announced they will increase their own loan offer of £5million - but will not ask for security on the stadium.
The second board statement said: "The board notes press speculation and shareholder concern in relation to an advanced notice for a charge over Ibrox stadium. The company continues to need funding, including urgent short-term financing.
"Over the past few weeks the company has held discussions with a number of parties with a view to finding a stable financial future for the business. The discussions, which have been wide ranging, including both stakeholders and third parties, are with a view to achieving the best possible terms for the business. Without the authority to issue equity on a non pre-emptive basis, the directors cannot issue shares in the timeframe required.
"At the current time the assets (other than Ibrox), cash flow and business of Rangers does not support a significant financing, on an open market commercial basis, to achieve the goals which the directors have set for the club.
"Accordingly the directors are pursuing bilateral discussions with two parties who are both stakeholders in Rangers. These discussions contemplate a significant amount of capital being available to the business on a long-term basis in order to enhance the squad which the directors believe is necessary. A consequence of funding to this level is that, in reality, it may be necessary to use Ibrox stadium as security; such a decision would not be taken lightly.
"No decision has been taken at the current time while discussions are being finalised in good faith. The advance notice does not mean that security will be given, and the directors are adamant that it will not unfairly advantage the party with whom it was agreed. The board will conclude a transaction, based on its merits, which it believes is in the best interests of shareholders as a whole in accordance with their fiduciary duty.''
The Rangers directors announced earlier this month that they require "urgent'' funding just to see the club through January, but they were forced to knock back US financier Robert Sarver's £20million takeover bid after admitting they could not get enough shareholder support to vote it through.
King will only have made his move if he is certain he can carry with him at least 51 per cent of the shareholders.
But even if they do sweep out the existing directors, they could still face problems with Ashley, who controls the Ibrox retail division at rates highly beneficial to his Sports Direct empire.