An analysis of the Bill MIller bid for RFC

ian1964 · April 21, 2012

Saturday, 21 April 2012 00:14

Bill Miller is Chairman of Miller Industries, a group of companies which builds tow trucks, recovery vehicles and transporters. In the year to 31 December 2011 it had Sales of $402m and profits after tax of $23m. It has a subsidiary named Boniface Engineering in Thetford, Norfolk, England. It is listed on the New York Stock Exchange; at today's closing share price it has a market capitalisation of $182m. at 31 December 2012 it had cash of $50m.

A: Bid or not yet?

1.Mr Miller's statement today refers to making a bid on Monday 23 April 2012. It does not describe a bid already made, acceptable to D&P or otherwise.

2.Mr Miller refers to "grandstanding" and "15 minutes of fame". His statement has the flavour of grandstanding throughout.

3.He calls himself one of "three qualified bidders". He has not yet bid. D&P have "made crystal clear" that only unqualified bids will be accepted for consideration before a preferred bidder is nominated. Mr Miller's bid is riddled with conditions.

4.He says "I have held a series of talks over the past week with officials from the SPL and SFA ..." He then states “My offer is contingent upon the regulatory bodies agreeing that the club will begin play in the 2012/13 season in the SPL and that they will do so without any loss of points and with all historic titles intact. I will not acquire the club unless I receive written assurances from both regulatory bodies to this effect." What verbal assurances has he received to make him believe that written assurances will be forthcoming? That is simply not deliverable by the Administrators. It ignores possible UEFA sanctions.

5.He says "I am acutely aware that the club will require working capital and this will be assessed in more detail in coming weeks as the due diligence progresses". How long does he expect due diligence to take? How much attention has he paid to information in the electronic data room?

B: CVA or something else?

1.It is on the matter of the CVA process that his lack of understanding ought to provoke real concern to D&P.

2.He simply does not understand what the process of exit from Administration by CVA entails. He may not even understand what a CVA is.

3.For his information, a CVA is a collective rehabilitation process where 75% of creditors voting can accept a proposal which sets an amount payable at which amounts due to them are settled, less than the full amount due. This vote binds all other creditors existing as at that date to accept this reduced settlement. It usually comprises a series of payments over a number of years, normally three to five years. It is proposed by a "Nominee", the nominated Supervisor, who becomes the Supervisor when the Arrangement has been approved.

4.Funding of this settlement usually comes from an amount made available by an incoming investor, plus amounts from the earnings in future years. Where prize money or television money arises through success in competitions, a proportion of this upside would normally go to into the pot of settlement funding.

5.He says " ... I have proposed a purchase of the club through a CVA from the beginning." This implies he has intended to set up a newco from the beginning; if so he should purchase from administration and leave the Administrators to liquidate the insolvent company. No need for the expense of a CVA!

6.He talks of an incubator company. He does not define what an incubator company is. He offers no examples of how this has worked in the past. He produces a paragraph of utter nonsense talking about D&P working to make the sick patient healthy through a CVA process that effectively works to radiate the toxicity of past administrations' sins ..." The most silly statement comes in the last sentence of the paragraph - "Once the CVA process has been completed and the patient is on the mend, the Administrators will return Rangers Football Club plc to me for a nominal sum." What? Administration ends with entry into a CVA. What does he mean "Return"? By what means will the incubated company be reunited with the "patient"? All nonsense.

7.He intends to bid Â£11.2m, the sum which includes the Â£500k non-refundable deposit. The assets of the Club per the Statement of Affairs within the Joint Administrators Report is Â£134m. The net asset surplus after paying all creditors, including full settlement of the Ticketus claim, apart from any liability arising from the 1st Tier Tribunal decision is Â£60m. His offer appears derisory in the face of these values.

8.What security will the creditors have in respect of future contributions to the CVA pot? A guarantee from Mr Miller secured over Mr Miller’s personal assets?

9.What security over pre-CVA assets will the creditors require so as to make recovery should the CVA fail?

10.What anti-embarrassment clause will the creditors seek to insert and rely on to ensure that part way through the CVA the assets are not simply sold on from the incubator at a substantial profit without them receiving all or any of the windfall?

C: Ticketus – how will they be treated?

1.His thinking is equally disordered over the Ticketus position. He boldly says "... I am the only bidder who has refused to entertain offers from Ticketus or engage in discussion with Craig Whyte." He later asserts "There is no way Ticketus would agree to a 'pence in the pound' settlement as has been suggested by others".

2.If he has not spoken to Ticketus, how does he know what Ticketus will accept?

3.If they will not accept 'pence in the pound' from where does he see payment in full? It cannot be from a CVA and it will not be from him. Again, all nonsense.

D: Operations in this limbo of incubation

1.What exactly does Mr Miller think he will acquire into the incubator company? How does Â£11.2m stack up with these acquired assets?

2.Which Rangers will be the Rangers licensed by SPL + SFA? The incubating one or the one in CVA?

3.Which Rangers will own the rights to the players’ contracts? Will they be transferred for a fee to the incubator, or allowed to expire at the end of their contract period?

4.Who will own the land and property assets of the club?

In summary

Mr Miller is proposing an unworkable solution, based on a complete misunderstanding of the insolvency legislation in play, and with no real understanding of the future funding required, all based on a derisory offer not yet made in writing. D&P should not entertain this, far less regard it as a “structure with potential. If it were not that his understanding is so glaringly deficient, it would look like he is dressing up a liquidation / newco scenario in bamboozling terms.

ian1964 · April 21, 2012

http://www.rangerssupporterstrust.co.uk/rstsite/latest-rst-news/450-an-analysis-of-the-bill-miller-bid-for-rfc

Shane · April 21, 2012

Think it's pretty clear my ideas are only welcome over on RM. Sorry I couldn't do more for over here, Frankie.

Leave you with this little taste of how the Trust treats supporters who don't toe the line:

Rangers Supporters ‏ @rangersfctrust

An analysis of the Bill MIller bid for RFChttp://www.rangerssupporterstrust.co.uk/rstsite/latest-rst-news/450-an-analysis- of-the-bill-miller-bid-for-RFC via @rangersfctrust