ian1964 10,613 Posted February 25, 2014 Share Posted February 25, 2014 Rangers chief answers the big questions over controversial £1.5m loan IN an exclusive Q&A session with the Ibrox chief executive, Record Sport’s chief sports writer Keith Jackson asks Wallace to explain what is really going on. RANGERS chief Graham Wallace was back in the firing line yesterday after confirming he has agreed £1.5million of loans to keep the club out of short-term financial distress. Fans reacted angrily as details emerged – with hedge fund outfit Laxey Partners set to rake in £150k for lending just £1m for less than six months. Here Record Sport’s chief sports writer Keith Jackson asks the Ibrox CEO to explain what is really going on. KJ: You do appreciate the fans will be hugely concerned you need to raise this £1.5million in the first place? They are repeatedly told there is no need for alarm but you must see why they would be so jittery. The need for this new money – just a year after raising £22m in IPO cash – doesn’t suggest the healthiest of financial positions, does it? GW: The money raised through the IPO has been spent in a variety of ways. But that’s in the past. I can’t respond in detail as to how those monies were used. What I can do is look at the business as we see it now and how we are going to move it forward. The need for a financial facility is no different for Rangers than for any normal business. We need time for people to see how the business is being operated and for people’s trust in Rangers as an organisation and trust in the credibility of those who are running it. KJ: But you are getting a hard time about this loan from elements of your own support. Many of them ask why Laxey and why the Easdales? Why were other shareholders not invited to loan the club their money? GW: The board looked at a long list of alternative sources of short-term funding. The club, through its adviser, thought this opportunity made the most sense. A third of the money is coming totally interest free. No costs, no interest and no cost to the club to service the facility. That’s the cheapest money you will ever get and if there is a long list of people wishing to support the club to that level then I’d like to talk to them. KJ: Haven’t you created a potential problem with other shareholders or would-be investors who might ask why they weren’t invited to make a similar loan? And I’m talking here specifically about Dave King. GW: The board has had a dialogue in recent weeks with Dave King. He has not been rebuffed by the board. He is not currently a shareholder. He has indicated he’d be an interested participant in a future equity raising at the appropriate point in time. Our shareholder base has also expressed willingness to invest in fresh equity. Dave King has not come to the club with an offer, other than an interest in participating in a future equity. KJ: Just to be clear, are you saying Dave King has not offered the club short-term funding? GW: He has not done that, no. Dave is not a shareholder and he has not made the club any offer of financial assistance. That’s not a criticism of Dave King. I have not met him but as a board we have had some dialogue to try to understand his intentions because there has been a lot of talk about his interest in investing. There has been no other proposal made by him at all. KJ: At the time of the agm, the board said there were a bunch of investors lining up to plough money into the club. So were they there at all if ultimately this money has had to come from the Easdales and Laxey? GW: The board did consider a range of alternatives from a mix of shareholders and other sources. It was an extensive process and the facility received the support and sign-off of the company’s NOMAD as an appropriate facility and one which was arrived at in the right way. KJ: How difficult would the financial situation have become without this investment? GW: Football is a very cyclical business, with big incomes generated early in the summer which progressively run down. So this is not a crisis move. It’s not a last-gasp policy. We have some fairly significant income streams that will arise in the summer. So this is just a short-term facility. We have no bank debt, no overdraft and a balance sheet which is probably the envy of a lot of football clubs but yet consistently everybody talks about us being in a crisis. KJ: If there’s no crisis then the financial situation will not impact on Ally McCoist’s budget then? GW: People laugh when we talk about putting in place a medium-term strategy but when you are signing a player on a long-term contract it’s a significant financial obligation. So we need a clear idea of what the financial outlook looks like. We are looking at this summer’s window and beyond, over the next 24 months. But it’s too premature to say right now what the outcome of that will be. KJ: Will his budget have to come down this summer or not? GW: Player costs are not surprisingly the biggest aspect of the business. We’ll look at what we need on the football side and what ongoing costs are. We’ll do it in a very considered way. There will be no knee-jerk reactions. Fans will expect us to take a medium to long-term view. KJ: The trust of these supporters is crucial to the club’s financial position. Do they trust you? GW: I have said the club needs to engage to a greater extent with the supporters and I mean it. But people require a period of time to form a view on what is being done. I don’t expect them to instantly accept what we say. All I ask is for a reasonable period of time to get the business refocused and to demonstrate that we are listening to them. We have to show that we are doing things for the right reasons – for the greater good of this club. KJ: You’re bang on there, given the behaviour of some individuals around this club in the last few years. You have to be seen to be acting in Rangers’ best interests. GW: That’s right and I can say from the time I have been here people are 100 per cent focused on doing the right thing for Rangers. It does take time to demonstrate that. We’ll be judged on our success and on our ability to do things in the right way. When you hear external comment about the club teetering on the verge of administration or whatever, some of it is quite irresponsible. There is no way this business was ever going to go into administration again because the fundamentals are too strong. Some of these stories will quite naturally have alarmed supporters given what they have come through. But hopefully, in time, the supporters will recognise that the board and myself are doing the right things for their club. KJ: But then they see Laxey picking up £150k for giving you a secured loan, doesn’t that smack of the previous regime and people with their noses in the trough? GW: I can understand why people might look at it this way. The other way to look at it is it’s no different from any other commercial organisation which would make loan capital available to a business. There is a level of return that they would expect for their money. The cost we’ve agreed with Laxey is deemed appropriate in the market. I don’t think there should be any concerns about the level of commerciality on that. http://www.dailyrecord.co.uk/sport/football/football-news/graham-wallace-qa-rangers-chief-3181015 0 Quote Link to post Share on other sites More sharing options...
Bluedell 5,465 Posted February 25, 2014 Share Posted February 25, 2014 If 40 fans went to the Bank of Scotland and borrowed £25,000 for a year and then passed the costs onto Rangers, the total cost to Rangers would be £66,550. The cost of borrowing from Laxey for only 6 months is £150,000, and that is fully secured and therefore of no risk. Explain to me why the Laxey loan is "appropriate to the market"? 0 Quote Link to post Share on other sites More sharing options...
BlueMazza 0 Posted February 25, 2014 Share Posted February 25, 2014 I haven't read any futher than this: GW: The money raised through the IPO has been spent in a variety of ways. But that’s in the past. I can’t respond in detail as to how those monies were used. What I can do is look at thebusiness as we see it now and how we are going to move it forward. The need for a financial facility is no different for Rangers than for any normal business. Say what now? 0 Quote Link to post Share on other sites More sharing options...
calscot 0 Posted February 25, 2014 Share Posted February 25, 2014 I'm starting to see Wallace's skill set for earning his huge wage. Like the way I see a lot of top management jobs, it's all about being able to bullshit and lie to everyone while sounding like you're saying something that actually means something, but which laymen wouldn't really understand or be able to argue with. It's about over-complicating things with business babble that sounds very highfalutin but is just disguising the real facts. It used to be known as smoke and mirrors. Oh yeah, second skill is to have a completely brass neck, even under pressure. 0 Quote Link to post Share on other sites More sharing options...
calscot 0 Posted February 25, 2014 Share Posted February 25, 2014 I still think we only need this loan for three months and so the effective APR is more like 60% (without adding compound interest). When you add in the supposed interest free 500k (if it is ever borrowed which I see as unlikely as it doesn't make sense as they would be losing money), then maybe it's 40%. You can see that Wallace keeps trying to focus on that part of it which just makes him look like a weasel. I did look up Wonga for a comparison and amazingly their representative APR is 5853%! You really have to be pretty thick to go for that. Maybe Wallace sees us all as that thick and so expects 10-15% for a few months should be pretty reasonable in comparison. I've got to say again that I think the 500k free facility is just a front. Either we're not going to use it or it must at least be in some instant access account where it's earning interest till we actually need to spend it. It's just there to deflect from the real loan with the real sting. The fact that the 15% is a fixed fee means that we can't even borrow as we need, starting with the free facility to reduce the interest. I realise that large amounts of money can't just be moved around to enable the lender to calculate daily interest like our bank accounts but even staging the loan over the next three months could be a more efficient way of borrowing as we shouldn't need all of the money immediately. I also think the six month aspect is more bullshit to make the interest not look as bad as it already looks. We should need the money till payday, which is in a few months. It's not like we should need to spend it all at once and have more money coming in a few months later. In a business sense this is like Ally finishing halfway down League One. I don't think I could coach the team better than Ally but I do think I could go to a board meeting and tell them when they are being clueless. But then they aren't really are they? It's all about lining each others pockets rather than running the club in a proper fashion. 0 Quote Link to post Share on other sites More sharing options...
andy steel 0 Posted February 25, 2014 Share Posted February 25, 2014 Plenty of 'Q', but not much by way of 'A'. 0 Quote Link to post Share on other sites More sharing options...
andy steel 0 Posted February 25, 2014 Share Posted February 25, 2014 I haven't read any futher than this: Say what now? Bang on, BM. Graham: 'You're going to have to let us prove we're not mucking you about.' Fan (me, anyway): 'That sounds fair enough - you've been quietly studying the books for a few months now. I'd like to know, first, what has happened to all the money we raised?' Graham. 'That’s in the past. I can’t respond in detail as to how those monies were used. ' Fan: Well, that's me sold. I will now follow you with no worries at all about being treated like a dense cash cow. Cheers, Graham! 0 Quote Link to post Share on other sites More sharing options...
Ser Barristan Selmy 222 Posted February 25, 2014 Share Posted February 25, 2014 If I was Dave King I wouldn't be providing 'short term funding' either. No chance. 0 Quote Link to post Share on other sites More sharing options...
BrahimHemdani 1 Posted February 25, 2014 Share Posted February 25, 2014 I've got to say again that I think the 500k free facility is just a front. Either we're not going to use it or it must at least be in some instant access account where it's earning interest till we actually need to spend it. It's just there to deflect from the real loan with the real sting. The fact that the 15% is a fixed fee means that we can't even borrow as we need, starting with the free facility to reduce the interest. As it's a facility only, I expect the money will rest wherever Easdale has it stashed away naturally earning interest for him until such time as we need to draw it down. What would have been nice would be if the announcement had spelled out, or KJ had asked, which money would be used first; but then the answer to that is probably obvious. 0 Quote Link to post Share on other sites More sharing options...
Bluedell 5,465 Posted February 25, 2014 Share Posted February 25, 2014 What would have been nice would be if the announcement had spelled out, or KJ had asked, which money would be used first; but then the answer to that is probably obvious. It doesn't matter what money is used first. Laxey get their arrangement fee and Easdale isn't due anything. If King came along and gave a £5m interest free loan it wouldn't save us any money. Laxey are still due their cash. 0 Quote Link to post Share on other sites More sharing options...
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