RANGERS have said now is not the time to pay back the £5 million loan to Mike Ashley's Sports Direct but have said they want to improve relations with the firm.

 

In a new statement over the general meeting showdown called for by Ashley to call in his £5 million loan and sanctioned by the Rangers board, the club say they do not consider that the repayment "is the best use of the company's resources".

The Rangers International Football club plc board had previously issued strong rhetoric about the meeting to be held at Ibrox on June 12, indicating it wanted to shift Mr Ashley's influence at the club.

It had previously said it wanted shareholders to support directors to ensure contractual arrangements between the club and Sports Direct are "renegotiated on a basis that is fair and reasonable for both parties and will delivery best value" to both parties.

It also said that to prevent any future dual ownership issues, they were also considering adopting a Scottish FA disciplinary rule forbidding any person with influence at the club to be involved in any capacity with another club without their consent. The board indicated that anyone breaching the rule would lose their shareholding voting rights.

It indicated that it wanted to reveal to shareholders at the meeting the extent of the Newcastle United owner's hold over Rangers's merchandising.

The Rangers board, in agreeing to the meeting, said they were to provide shareholders with a breakdown of the income received by Rangers Retail Limited since its incorporation and the payments made by RRL to the club.

The Herald revealed in February that from January 27, the Ashley, who is also Newcastle United owner has been the "ultimate controlling party" of Rangers Retail, which handles the club's merchandising and stores. Papers confirmed the switch has been made from the previous controllers, RIFC plc.

In a fresh statement, the board said it was concerned with the "continued and dramatic reduction in income generated by retail operations".

The board said: "The directors are aware that many supporters of the club will not purchase club merchandise from Sports Direct because they do not believe the current contractual arrangements between the club and Sports Direct adequately reward the club.

"The directors understand the strength of feeling on this issue and the adverse impact it has had on sales of merchandise. The directors are firmly of the view that the best interests of both the club and Sports Direct require them to engage with supporters and to restructure the existing contractual engagements in a manner which is clear, transparent and fully accountable to those who will be the purchasers of the club's merchandise. In that way, sales will be maximised and both the club and Sports Direct will benefit."

In what appeared to be an olive branch, the board added: "The directors very much want to improve relations with Sports Direct and have made that clear to Sports Direct's senior executives, however, this has to proceed on the basis of mutual understanding, respect and reward.

In the Directors' view, if matters continue as they stand, this will not be to the commercial advantage of either the club or Sports Direct."

Mr Ashley's resolution for a general meeting under section 303 of the Companies Act 2006 calls for a shareholder vote calls for the repayment of his £5 million loan within 10 days.

But the board said they had taken advice from senior Queen's Counsel on the terms of the resolution and been advised that it "would not, in any way, oblige the directors legally".

The director said they were therefore "puzzled" that Ashley's company Mash Holdings had "insisted" on Rangers incurring the expense of calling and holding the general meeting.

The board added: "The directors do not consider that this approach is in the best interests of the shareholders as a whole."

The board said the directors "do not consider that, at this time, the repayment of £5 million to Sports Direct is the best use of the company's resources".

The directors also said that they did not believe the transfer back to the club of Ashley's 26% interest in Rangers Retail, after the repayment of the loan, will "serve to resolve the issues" which the directors consider have to be addressed.

"There are a number of steps required to rebuild the company and the club and all of these require resource. The directors will keep these issues under continuous review and if, exercising their skill, care and judgement, the directors determine that it is desirable for the club to repay the facility and this will assist with the overall arrangements between the club, MASH and Sports Direct the directors will take appropriate action," the board said.

"Such a decision will, however, be based solely on what is in the best interests of the company and the club and will not be unduly influenced by the interests of a single shareholder.

"The MASH (loan) facility is just one element of a series of contracts which have been put in place between MASH, Sports Direct and related entities and the club. The directors believe that all of these arrangements require to be addressed collectively. It would be disadvantageous for the club and the company to be dealing with such arrangements piecemeal and on terms dictated by MASH."

Sports Direct have been approached for comment.