Tuesday 3 March 2015 18:10, UK
What does Dave King's potential takeover mean for Rangers? Financial Expert Ken Pattullo from Begbies Traynor answers this and other questions surrounding the Ibrox club.
What is a NOMAD and what is their importance to Rangers in their current situation?
“A NOMAD is simply an abbreviation for a nominated advisor. Rangers is a public company and what that means is its shares can be traded amongst the public. Every public company has to have a nominated advisor and Rangers has one, and their nominated advisor is WH Ireland.“
Rangers International FC PLC have had four different NOMADS in two years, since the “new company” was formed in 2012. If the current NOMAD resigns this week will AIM stock exchange allow the new board to appoint a new NOMAD at all? And if they don’t does what does that mean – could AIM take control and appoint someone?
"The AIM will allow the new board to appoint a new NOMAD. The NOMAD must already be approved by the London Stock Exchange; alternatively if a firm (other than Rangers) wishes to become a NOMAD, then it must apply to the London Stock Exchange to be approved by the London Stock Exchange. The time required for approval by the London Stock Exchange follows no fixed time period or is not bound between particular limits.
Mike Ashley’s Sports Direct company are currently benefactors of Rangers, having leant them £13 million in the past few months. Should Dave King prevail in the EGM on March 6th, Sports Direct becomes a creditor; will they expect their money back immediately?
“Sports Direct is already a creditor; they don’t become one just by virtue of Dave King taking control. They have already leant them the money, they are owed the money back. It will depend on the conditions of the contract whether or not they are entitled to demand it back immediately. Also whether or they actually want it back. I suspect Mike Ashley would probably like to have the money still leant to Rangers. If Dave King claims control, whether or not he can then come along and insist on repaying the money, I have no knowledge of what the interest rate is at the moment but I suspect it’s quite significant, so I suspect Dave King if he has the £10 million spare might quite like to repay the money to Mike Ashley.”
Will Dave King pass the SFA’s Fit and Proper Person Test?
“I think that’s really a matter for the SFA. Having said that you have to look back the some of the people who have passed the Fit and Proper Person’s Test previously. Vladimir Romanov, Craig Whyte himself. These are people, who with hindsight, the SFA might perhaps of regarded as not fit and proper people. Whether or not they now apply a stricter test or whether they look at it more rigorously that they have in the past is a difficult question.
"Dave King obviously has a number of convictions in South Africa for tax related matters. Whether or not the SFA regards that sufficient to disqualify him from passing the Fit and Proper Person’s Test is another matter. He obviously is a shareholder; the FPPT would prevent him from becoming a director or a significant shareholder. If the SFA decide he can’t be a director, that doesn’t necessarily prevent him from owning shares, although the SFA might take umbrage at that.”
Following James Easedale’s and David Somers' resignations, there were reports that Derek Llambias and Barry Leach were set to follow suit. If this was the case the club, with no board, will no longer be listed on the AIM. If the shares are suspended does Mike Ashley collect the properties that are secured on the loans?
“If the shares are suspended, that really has no impact at all on whether Mike Ashley can claim the properties back. He will have security over the properties in the same way as most people that own a house will have a mortgage. If you don’t pay the mortgage, the mortgage company can come along and repossess the house. That doesn’t mean they can turn up the day after you fail to make one payment. There are various legal hurdles they have to go through so it could be several months between you stopping paying the mortgage on your house and the secure lender being able to repossess it and it will be exactly the same with Rangers and with Mike Ashley. That really has nothing to do with the shares being suspended or not.
