Is the time bomb really ticking?

[Frankie 8,665]

I think I'll suspend judgement on any of that until Spanner comments.

 

:devil:

 

Post of the day! :D

[spanner 0]

I think I'll suspend judgement on any of that until Spanner comments.

 

:devil:

 

You will have to confer with boss on that,

 

"Here’s the (vaguely) interesting bit. We owe Ã?£26m of our net debt to the bank and we have Ã?£35m facilities in place (Ã?£20m loan and Ã?£15m revolving credit facility, an overdraft in easy-speak). So we only had Ã?£9m of unused credit at 30 June."

 

Apparently we had �£9 million left of something we didn't have in place, so did we have a facility or did we not have a facility, or where did the unused �£9 million of credit come from. You guys are really starting to confuse me, probably yourselves as well I would think, but Boss is definitely on the ball, his articles are very good even I can understand them. Taking the dogs for a bit of a run before their races coming up, enjoy guys.

 

ETA. Gorbals Cumbie trap 3 Sunderland 10.00pm friday 20/11/2009, worth a bet but don't go daft.

Edited November 18, 2009 by spanner

[calscot 0]

The facility in the bank was due for renewal in November 2008. It was not renewed until some point between Sept-Nov 2009.

 

The clean audit report was only issued following that renewal, so for at least 8 months this year, the auditors were unable to issue a clean audit report.

 

But if that's the case, how did we find the money for the 2008 summer spending? Was it really that reckless? Or did SDM think his businesses could cover any disasters but has now found himself with a house of cards?

 

It seems that at any point during this, the bank could have withdrawn funding if they wished, and perhaps some of the reaction has not been over the top.

 

I think this point is a bit moot. I'm pretty sure the banks can call in our mortgages at any time but that does not mean we're all in immediate danger of becoming homeless.

 

The point I've tried to make is that while our board went over the score and made the banks pretty nervous and lacking any confidence in the business plan in situ, it wasn't so bad that they don't see the club as a going concern, that with a bit of prudence can continue trade and meet its financial commitments in the medium to long term.

 

This situation seems to me to be more of a verbal or maybe even written warning, rather than a sacking. Or a formal caution rather than a custodial sentence. Or a shot across the bows rather than a sinking etc, etc.

 

As a side point, at the Goram dinner last weekend, Iain King introduced Walter Smith, and while doing so said that the bank has been running the club for 10 months.

 

Metaphors, semantics and hyperbole in my opinion. The bank was certainly highly influencing the running of the club but not actuall running the club. Back seat driving rather than taking the wheel. If they were running the club we would have to be in administration.

 

Yes, we now have facilities to operate for another 13 months, but has the bank advised what they are going to do after that? Johnston has indicated that business plan allows for us buying no players either on January or next summer.

 

After that, the situation is reviewed and another business plan put in place. There may not be money for players right now but that could easily change. Say we sell Bougherra for �£7M and MacGregor for �£4.5M? We've already cut wage costs, made the bonuses more realistic, and have the CL money coming in. Finishing 3rd in the CL and having a good Europa run could increase our income by several millions. None of this may happen but if that's the case we'll be looking at the youth squad and Bosman's for a while.

 

The way I see it, the bank have forced a business plan to cover near to the worst case scenario - as our previous business plan probably spelt out a huge mess if that scenario was to be realised.

 

We have bought ourselves some time but it doesn't mean that during the 9+ months that we did not have banking facilities in place that we were not in severe danger.

 

I don't go for this. Technically it may be true, but it was NEVER in the banks interest to put Rangers to the sword. It doesn't even make the slightest bit of business sense. What they have done is use that leverage to help shore up their investments.

 

We're on probation, not facing the death penalty.

 

I'm sure all you say is technically true, but for me your conclusions seems to stress the worst that could happen, rather than the most likely. Acting in a business sense may be cold and calculating but that also means it makes more business sense to keep a club like Rangers going as you will make more money in the long term - and that's before factoring in the value of good or bad will.

 

Basically the board have been very naughty and so the bank has come in like a stern parent and laid down some ground rules as well as a bit more supervision. If the board start to behave, the club will continue to survive.

Edited November 18, 2009 by calscot

[Bluedell 5,679]

Gorbals Cumbie

 

Hmm. A gang with affiliations to a club in the east end of the city.

[Bluedell 5,679]

But if that's the case, how did we find the money for the 2008 summer spending? Was it really that reckless? Or did SDM think his businesses could cover any disasters but has now found himself with a house of cards?

 

Yes, it was that reckless. Short term thinking which has been his trrademark over the past 10 years.

 

 

 

I think this point is a bit moot. I'm pretty sure the banks can call in our mortgages at any time but that does not mean we're all in immediate danger of becoming homeless.

 

Most banks don't sit for 9 months contemplating whether they will renew or not though.

 

The point I've tried to make is that while our board went over the score and made the banks pretty nervous and lacking any confidence in the business plan in situ, it wasn't so bad that they don't see the club as a going concern, that with a bit of prudence can continue trade and meet its financial commitments in the medium to long term.

 

This situation seems to me to be more of a verbal or maybe even written warning, rather than a sacking. Or a formal caution rather than a custodial sentence. Or a shot across the bows rather than a sinking etc, etc.

 

I don't believe that they were necessarily going to put us into administration, however the threat was obviosly there if we didn't agree to board appointments etc. I do, however, believe that they were considering reducing the credit limit which may have forced us to sell players. They didn't for whatever reason, which is good news.

 

 

 

Metaphors, semantics and hyperbole in my opinion. The bank was certainly highly influencing the running of the club but not actuall running the club. Back seat driving rather than taking the wheel. If they were running the club we would have to be in administration.

Where do you draw the line? "Highly influencing" sound like it could be running the club for all intents and purposes.

 

 

 

 

After that, the situation is reviewed and another business plan put in place. There may not be money for players right now but that could easily change. Say we sell Bougherra for �£7M and MacGregor for �£4.5M? We've already cut wage costs, made the bonuses more realistic, and have the CL money coming in. Finishing 3rd in the CL and having a good Europa run could increase our income by several millions. None of this may happen but if that's the case we'll be looking at the youth squad and Bosman's for a while.

 

 

Perhaps. Perhaps not. Interestingly enough Johnston made no comment about reinvesting transfer proceeds. Deliberate? Who knows. Probably a question for the AGM.

 

 

 

I don't go for this. Technically it may be true, but it was NEVER in the banks interest to put Rangers to the sword. It doesn't even make the slightest bit of business sense. What they have done is use that leverage to help shore up their investments.

 

We're on probation, not facing the death penalty.

 

I'm sure all you say is technically true, but for me your conclusions seems to stress the worst that could happen, rather than the most likely. Acting in a business sense may be cold and calculating but that also means it makes more business sense to keep a club like Rangers going as you will make more money in the long term - and that's before factoring in the value of good or bad will.

 

Basically the board have been very naughty and so the bank has come in like a stern parent and laid down some ground rules as well as a bit more supervision. If the board start to behave, the club will continue to survive.

 

As I've said above, I wasn't meaning administration.

 

You say that it makes more business sense to keep a club like Rangers going as they will make more money. If they are looking at Rangers as inherently loss making, then it could be argued that it makes more sense for them to try and realise their cash now by the sale of players rather than allow us to continue potentially not qualify for the CL next season and face more losses.

 

It could be that the issue of goodwill is more important than strict, cold business sense.

 

It's obviously all speculation, but it's not that clear cut either way.

[spanner 0]

Hmm. A gang with affiliations to a club in the east end of the city.

 

I have definitely heard it all now, maybe you should visit the Pig & Whistle in McNeil street and air your suspicions. :box:

[rbr 1,268]

On a wee side note , one of my best friends is a commercial surveyor who specializes in freelance work , he prefers it that way it means he can piss off to the golf whenever he wants , anyway this guy has no interest in footbal what so ever ,so whats the deal , well this morning whilst out walking the dogs he starts telling me how business is absolutely terrible now that HBOS and LLoyds have started playing hard ball with everyone , the have put the guy who built Silverburn into Liquidation as they have called in his loans and this is what I found interesting they have forced Murray to sell the buildiing he bought beside the Old Albany hotel which Murray had refurbished and which has already been fully let on a 5 year lease , as well as forcing him to sell a plot he owns at the top of Buchanan street which is seen as the last prime spots of real estate on Buchanan street .

 

Just goes to prove Murray really must be in the grubber , the building in question is going for �£ 70 million , yet if left to ride out the recession would be worth easily �£90 million , his words not mine

[craig 5,199]

Have to say I am in BD's camp on this one.

 

All the inherent signals are there that things are not as rosy as one would suggest. Whilst calscot makes valid points in rebuttal to BD the reality is that some of the things which have happened have given rise to the notion that we could be in trouble.

 

The bank sitting on the renewal of the credit facility, for instance, is not something you would expect - that seems to me like the bank were sitting waiting from January to see what happened in regards to CL qualification - has all the trademarks of them not committing themselves to extend the facility in case we never made it so that their facility was pulled and, quite possibly, loans called in. It isnt normal business for that to be the case, not for 9 months anyway. That said though it COULD be argued that part of the problem is the banking crisis and that if/when that goes away then it will be easier to extend those credit facilities. Personally though I would rather we were looking to get the debt down to close to zero so we have little to no reliance on it.

 

With regards to RFC being a going concern that is indeed true in the somewhat short-term. For an audit firm to sign off a clean audit report as a going concern they need to be comfortable that the company will be in existence till they next sign off on the accounts - but that only means a year. Some will say there is no hurry in all of this but do we really want to get that close to the next financial statements to realise that they wont be signed off as a going concern ? Then we would see a firesale....

 

If Rangers are in so much trouble that they might not be able to pay back its hefty loans it is quite conceivable that Lloyds would do a cost-benefit analysis and determine that putting the club into administration, selling off its best players to realise its 20-30 million debts would be more beneficial to them than seeing Rangers continue in business because, as BD says, who is to say that there are not more losses around the corner and if RFC dont have the money to support those who would have to as the biggest interested party as a creditor ? Yep, Lloyds.

 

I have seen instances where people have clocked up a few million in debt (was to RBS) and because they were a "Lord" the bank saw it as being too much bad PR to call in the debt as it was obvious this person would lose everything and if they made him bankrupt they would have had a PR disaster on their hands. It was a PR effort and not a business effort. However, when the debts continued to escalate the bank effectively took over the running of his businesses and if they hadnt been able to turn things around there was no doubt that they would have bankrupted him because they have to protect themselves and, importantly, their shareholders. Not an RFC extent example but similar.

 

As BD says both sides of this are currently speculating because we are not armed with full information but there is every bit as much validity to both sides of this. I would just personally hate for us to take a wait-and-see approach to find out that armageddon was upon us.

 

a fine piece of writing though cal

[rbr 1,268]

As our Chairman said , no one wants to play poker with Rangers as the stakes

[spanner 0]

The words of Boss, "So we only had �£9m of unused credit at 30 June."

 

So again where did this �£9m of unused credit originate from, if the bank had blanked us for 9 months as is claimed here.