Resolution 11 fails by <1%

pete · November 24, 2016

Having a share issue is probably the only way the board can gather any serious cash. It would seem to me it is extremely important Res.11 gets passed. As far as I know it was beaten by 1.2% last year. I am not a shareholder but seriously think the board need the option to walk down that road.

That will be a very tense vote for the club.

the gunslinger · November 24, 2016

Yeah with everything green did to us while in power this is our only source to make up the revenue.

chilledbear · November 24, 2016

The chairman and his directors are seeking to dilute the influence of Mike Ashley and James and Sandy Easdale through the adoption of a special resolution, number 11 on the notice of the agm.

In short, the current board need 75 per cent of all votes cast to push through a proposal that will give them the right to hold a rights issue within the next 12 months.

Significantly, however, if Resolution 11 is passed they will hold control over the direction of the allotment of any future shares.

You don’t need to be Gordon Gekko to know they won’t be knocking on the doors of McGill’s Buses or Sports Direct asking if they want to maintain their current level of interest in Rangers International.

There are approximately 81 million Rangers shares currently in issue, trading at around 28 pence, and the Ashley-Easdale alliance accounts for around 16 per cent.

If Resolution 11 is passed, Rangers have 12 months to go to market with a new issue. It is likely to be the offer of another 81 million that, at around 25 pence a share, could raise £20 million.

Up to £14 million of that is already accounted for in shareholder loans from the likes of King and the Three Bears - Douglas Park, George Letham and George Taylor - who are likely to convert at least some of the debt to equity.

Rangers are keen to reduce the boardroom influence of Ashley and the Easdales by half, not least as their percentage powerbase gives little flexibility when it comes to key votes.

Resolution 11 is a prime example, with the margin for error so slim it was defeated at last year’s agm by just one per cent.

Around 10 per cent of Rangers shares, held by the shadowy Blue Pitch and Margarita Holdings, are currently disallowed.

In recent times Rangers have enjoyed one of the highest shareholder engagements in British business, but still around 10 per cent of fans are gripped by apathy when it comes to voting.

In total, that knocks approximately 16 million shares out of the pot - and with Ashley and the Easdales then in control of 20 per cent of the remaining 65 million, it leaves them with just five per cent to find to defeat the resolution.

The Rangers board were caught by surprise last year when River and Mercantile, who own just over five per cent of the company, voted in favour of Dave King and Co when they were expected to side with Ashley.

If they continue to back the current board, the position of minority shareholders becomes even more vital, which is why there has been vigorous lobbying for support behind the scenes by Rangers directors in recent weeks.

In any case, Rangers have the security of Resolution 10, which requires only 50 per cent of all votes cast to give the go ahead for a new shares issues before the end of 2017.

However, under its terms, it would only be open to existing shareholders, giving Ashley and the Easdales the chance to maintain their current level of stock.

In the last two years, Rangers have relied on every penny of investment from the current board to keep them in business - they’ll have pumped in £3.75 million this season alone in loans to keep the doors open.

Much of that money has gone towards servicing historic debts, inherited from the discredited former regime, and the club are inching closer to break even with future estimates of season-by-season top ups currently running at £1 million.

Rangers are nowhere near ready to approach the market at large with a major share issue and even if Resolution 11 is successful new stock is likely to be offered to Ibrox fans primarily.

Rangers will only ever be attractive to institutional investors once the controversies around their commercial relationship with Ashley and ongoing legal issues involving former directors are resolved, which could be several years in the future.

Until then, they will continue to rely on shareholders with Rangers sympathies to underpin the entire operation on Edmiston Drive.

In the coming seasons, King and his fellow investors may feel the need to loan further sums if the pace of change on the pitch remains sluggish.

The pressure is on Warburton, not just to deliver a meaningful challenge to Celtic - the reigning champs look increasingly out of sight - but Europa League group stage football that might boost the bottom line.

The dream double for Rangers going forward? Resolution 11 off the park and a more resolute 11 on it.