As was eminently predictable, Rangers’ chairman and largest shareholder Dave King was yesterday given by Scotland’s highest court what is in effect a final warning that he must risk almost £11 million and buy out the other shareholders of the club’s controlling entity, Rangers International Football Club PLC.
If he does not do so, King will face a contempt of court hearing at the behest of the Takeover Panel, which is relentlessly pursing him, which could see him fined or even jailed – emphasise could, as King faced a similar contempt hearing in London on a different matter and beat that.
What is very clear, and which was stated in no uncertain terms by Lord Bannatyne in the Court of Session yesterday is that King simply has to make the share offer. He could appeal the court’s decision, but legal experts say it would be a complete waste of time and money as the Takeover Panel’s case against him is watertight.
So how did King get to here and what does this mean for Rangers? In his takeover of Ibrox, through his company New Oasis Assets Ltd King bought 14.75% of the PLC’s shares at roughly the same time – late December 2014 and early January 2015 – as George Letham, George Taylor and Douglas Park bought 16.32% of the shares. Added to Taylor’s existing shares it meant that King and the Three Bears, as they are known, possessed 34.05% of Rangers’ issued share capital.
Under City rules enforced by the Takeover Panel, the four men were declared to have acted ‘in concert’ and had acquired more than the statutory 30% holding that triggers an automatic share offer. Thus King, as leader of the ‘concert party’ had to make a personal offer to buy out all the other shareholders in the PLC – the price was set at 20p per share, meaning King had to find £10.75m for the share offer.
He has fought against making the offer for many months, and now King’s problem is quite simple – he has money, possibly lots of it, tied up in trusts and other businesses in South Africa, but for various reasons, possibly not unconnected with the major tax case he lost in that country, he appears unable to get the South African authorities’ approval for transferring the £11m, which he says is “ring fenced in a lawyer’s trust” to the UK.
King maintains he has no accounts here, that he needs time to get “exchange control approval” to transfer funds out of South Africa and there is “no end in sight” to the current impasse with the Takeover Panel.
Lord Bannatyne was brusque: “It is a matter of complete disinterest to the panel how he makes the offer.” In other words, get the money and make the offer or else...
King has a serious point to make – how is he going to persuade other shareholders to take 20p per share when as of yesterday they were listed on a trading platform at 27.5p per share, a notional loss of 7.5p per share. It remains to be seen who will accept his offer.
The implications for Rangers are staggering either way. If King can complete the offer and it is accepted, he will have total ownership and control of Rangers. If not, the Ibrox club is heading for chaos, and the first casualty may be the £6m share offer that was going to help finance the club’s on-field recovery.
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