£11m American dream, but can it be the answer to Rangers nightmare?

Senior News Reporter

Friday 4 May 2012

IT has been called the "emotional" bid for Rangers, one that binds the passions of the fans to their 140-year-old football club.

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Alison Campsie

But by trying to win the hearts of supporters, American trucking tycoon Bill Miller may struggle to eradicate Craig Whyte, Ibrox's biggest nemesis, from the shadows of the ground completely.

Mr Miller's preferred £11.2 million bid will create two clear channels for business to resume at Rangers by effectively separating the good parts of the club, namely the players, Ibrox Stadium, the Murray Park training ground and membership of the Scottish Premier League, from the bad debt and other liabilities.

The latter includes the existing bill of £4m over unpaid tax and PAYE during Whyte's tenure, and the possibility of a further bill of £75m, including interest and penalties, if Rangers lose the so-called big tax case brought by HM Revenue & Customs (HMRC).The good assets will go into a "specially created" newco, providing a clean slate from which Rangers can once again start making money from football.Running parallel will be the existing toxic Rangers Football Club Plc, which will continue to shelter the tax case and other complex issues, including the near-£30m damages claim against Whyte's lawyers Collyer Bristow.Once these issues are resolved, Rangers Plc will then go through its own "cleaning" process of a Company Voluntary Arrangement (CVA) to secure any financial return possible for other creditors of the club. What makes Mr Miller's deal unique is that once the newco is performing well and Rangers has been swept of its substantial liabilities, the fresh business will be brought under the roof of the cleaned-up Plc.For Mr Miller, despite the loss of entry to European football for three years caused by the formation of the newco, the hope is Rangers will then become the powerhouse it once was.Some claim Mr Miller's proposal is effectively liquidation but administrators Duff & Phelps insist that is not the case. By retaining Rangers Plc, the name and the history remains.Scott Kerr, business recovery partner at Semple Fraser, said: "I see it as an emotional attachment to the original club. It doesn't add anything to the structure of the new business, it is really just an emotional add, one which is unnecessary for the preservation of the business."Whyte remains the major shareholder in the club with an 85% stake. Once Rangers go through the CVA his shares will be worth almost zero, but if a successful newco is fed back in to the shell of the Plc their value will multiply.Mr Miller has made a virtue of the fact he will not co-operate with Whyte, but some claim this is unrealistic. Paul Clark, of Duff & Phelps, said: "There is no obligation to put a newco back into the Plc, I don't see that as a condition of sale, but if Mr Miller does that, Craig Whyte will want to have control. However, we know that the SFA has said that Craig Whyte can have no involvement in Scottish football so it would seem there is some sort of condition attached (to retaining Rangers Plc)."There has to be a level of co-operation with Craig Whyte over the sale of his shares."Donald McNaught, business recovery and insolvency director at Johnston Carmichael, said the "hive down" model proposed was now rare in business despite being popular 20 years ago for companies that had made large losses.He raised the prospect that the "underlying reason" for Rangers Football Club Plc being retained was a condition imposed by the football authorities. Mr McNaught added: "It is almost being retained to avoid the term liquidation. The old company, Rangers Football Club, will serve no further useful purpose so perhaps it is a condition imposed on the bidder by the footballing authorities to return assets to the original 'vehicle'. "It does beg the question of how they will deal with Craig Whyte's shares though."

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£11m American dream, but can it be the answer to Rangers nightmare?

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