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Mr Green's prospectus to possible investors


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1 European Cup Winners‘ Cup Winners 1972; Runners-up 1961, 1967 1 UEFA Cup final - Runners-up 2008 54 Scottish League Championships – a world record 1891, 1899, 1900, 1901, 1902, 1911, 1912, 1913, 1918, 1920, 1921, 1923, 1924, 1925, 1927, 1928, 1929, 1930, 1931, 1933, 1934, 1935, 1937, 1939, 1947, 1949, 1950, 1953, 1956, 1957, 1959, 1961, 1963, 1964, 1975, 1976, 1978, 1987, 1989, 1990, 1991, 1992, 1993, 1994, 1995, 1996, 1997, 1999, 2000, 2003, 2005, 2009, 2010, 2011 33 Scottish Cup Wins 1894, 1897, 1898, 1903, 1928, 1930, 1932, 1934, 1935, 1936, 1948, 1949, 1950, 1953, 1960, 1962, 1963, 1964, 1966, 1973, 1976, 1978, 1979, 1981, 1992, 1993, 1996, 1999, 2000, 2002, 2003, 2008, 2009 27 Scottish League Cup Wins 1946, 1948, 1960, 1961, 1963, 1964, 1970, 1975, 1977, 1978, 1981, 1983, 1984, 1986, 1987, 1988, 1990, 1992, 1993, 1996, 1998, 2001, 2002, 2004, 2007, 2009, 2010

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Brand Reach 530m potential TV audience

-Saturated media coverage in both broadcasting and written press - £6m media value to the sponsor

-Over 10m cumulative domestic audience

-Old Firm Derbies generated over 6.1m viewers in season 10/11

-6th largest club website in the UK – Man Utd, Chelsea, Liverpool, Arsenal and Premierleague.com

-Rangers own the online media rights and broadcast games overseas

-Worldwide soccer schools in 14 countries, with 1.5m attendees per season

-275,000 community attendees per year, 6,500 per week

-Rangers matches broadcast in over 100 countries by 50 channels worldwide

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Overseas Strategy –

Building on Rangers Global Appeal

Rangers Football Club is a Scottish Club which has an influence that stretches across the Globe. Strategy is focused on

-Regions with significant existing brand presence – North America & Oceania

-Regions with high growth potential – Asia, Middle East & Far East 4 key strategic levers

-Football

-Social Responsibility

-Media

-Fans

 

Current Situation

- 13 May 2012: Charles Green agrees exclusivity

-Rangers FC avoids liquidation via CVA subject to creditor’s approving £8.5m offer

- Main benefits: - Players contracts remain in place - Other significant sanctions avoided, such as a 3 year ban from Europe - History and tradition of the club is maintained - Personal up front commitments from consortium, £8.5m required to fund CVA - Raising up to £30m to fund working capital and development - Funding to be in place by May 24th

-Charles Green draws together first class management team and Board

- Complementary investment team appointed to help direct the Club’s strategic growth

 

 

 

Current Balance Sheet

- All creditors to be wiped clear on consideration of £8.5m save for £3m being owed to other football clubs - Brought forward tax losses of £40m to remain in place subject to HMRC approval - A Property portfolio of £113,303,174 (source: Rangers plc 2011 accounts) - Season ticket advances due by the end of 2012 of £15m - Player book value £8.8m (source: as above) - On a £30m fund raise a net £20m will be surplus cash on balance sheet

 

3 Year Historic P&L

£’000s

2011

2010

2009

Turnover

57.183

56,287

39,704

Net Operating Expenses

(47,525)

(43,856)

(48,231)

Trading profit/(loss)

9,658

12,431

(8,527)

Amortisation of Player Registrations

(8,412)

(7,339)

(8,798)

Operating Profit/(loss)

1,246

5,092

(17,325)

Gain on Disposal of Player Registration

4,202

512

6,171

Profit/(loss) before interest and taxation

2,178

5,604

(11,733)

Profit/(loss) for the Year

76

4,209

(12,651)

Basic and diluted EPS (p)

0.07

3.87

(11.63)

 

 

Key Operational Changes to be Made by New Management

- Use industry contacts to ensure playing squad is improved - Enhance shirt advertising contract - Enhance general advertising contracts - Improve RFC image and commerciality within Asia and Far East - Greater financial control and corporate governance

 

 

Investment Case

- First Class management team in place with proven track record - Positive balance sheet with surplus cash - Predictable revenues and costs - Underdeveloped IP, especially in Asia - Potential enhancement to commercial contracts -Replica strips - Advertising - Stadium branding - Potential of cornerstone investors (outside board) to help unlock squad replenishment opportunities - Broad, quality core shareholder base to build value - Liquidity in shares to return with Aim listing in Q3 / Q4 - Rangers FC is a trophy asset with tremendous legacy and brand loyalty - Fans are behind deal structure – a reinforced sense of belonging - Favourable odds of European football

 

 

Timetable

- 1st Closing: 24th May - 2nd Closing: 1st June

-3rd Closing: 6th June

- 4th Closing: 6th July - The intention is to float on AIM Q3/Q4 2012

 

 

Specific Deal Structure

- New investors invited to participate at a pre new money valuation of £10,000,000 in Sevco 5088 Limited

- Investors will secure an 85% shareholding of Rangers Football Club plc and a waiver of a secured debenture over the club’s property assets

- Remaining 15% shareholders comprising 26,000 shareholders/fans will receive a warrant to subscribe for shares on a pro rata basis with the new holding company.

- Founding investors who put up the first £10,000,000 will receive 10,000,000 additional shares at a value of £1 per share on a pro rata basis effectively doubling their contributions

- Charles Green being incentivised by 10% of the enlarged share capital of the holding company post completion

-Sevco will function as the holding company and Rangers plc will be the operating company going forward

 

 

Alternative Deal Structure

- In the very unlikely event a CVA is not agreed by creditors, the holding company will buy the same assets from Rangers plc for £5.5m - Rangers would potentially be precluded from European competition for up to 3 years

-Advantages to alternative scenario:

- Salaries could be reduced by c. £7m as there would be less requirement to retain star players

-Anticipated pre tax profits of £2m every year for the next 3 years

- Less pressure on working capital

 

 

Summary

- A fresh start for Rangers FC - Management to unlock full potential of RFC - Fans onside, supportive and enfranchised - Significant investment upside from clear commercial strategy - In the event CVA is not agreed, alternative plan in place to keep the club running

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