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More questions than answers . . .

Tomorrow, the shareholders in Rangers International Football Club will meet at Ibrox for the annual meeting.

The battle for control at Ibrox continues ...
The battle for control at Ibrox continues ...

It could be a heated occasion, with two sets of directors seeking election and fans having protested in recent weeks against the current board. It is also an opportunity for shareholders to ask about how the club has been run since the initial public offering of shares last December. So what will happen, who are the key figures, and what does it all mean?

Why is this agm so significant?

Essentially, control of the club. The five current directors - chairman David Somers, James Easdale, Norman Crighton, chief executive Graham Wallace and finance director Brian Stockbridge - are up for re-election, while four nominees - Paul Murray, Malcolm Murray, Alex Wilson and Scott Murdoch - are seeking places on the board. Both groups are backed by different shareholder blocks and it has become something of a conflict. The vote at the agm is a democratic process, after which those elected can say they hold a mandate from the shareholders.

How did it come to this?

The IPO raised £22m, and there have been two sets of season ticket sales, but most of that money has been spent. Charles Green's reign as chief executive became increasingly troubled, and he eventually stood down. Green had initially denied any associations with Craig Whyte, the club's former owner, but then admitted stringing Whyte along while pursuing a Company Voluntary Arrangement to take Rangers Football Club plc out of administration, which needed Whyte's shares.

When that was rejected by the creditors, and RFC plc went into liquidation, the consortium led by Green bought the business and assets, but this transaction was completed by Sevco Scotland rather than Sevco 5088, which is the company Whyte claims to have been involved in.

Green's departure followed that of Imran Ahmad, the commercial director, while Malcolm Murray also had to step down as chairman. Several other directors also left. It has been a chaotic period, with the board having been served by three different chairmen and three different nominated advisors, who manage the company's listing on the Alternative Investment Market. That kind of instability is unusual. At the same time, former Rangers director Paul Murray has challenged from the outside, raising his concerns about the way the club was run. After an extraordinary general meeting seeking boardroom changes was shelved, the culmination is tomorrow's agm.

What do the fans make of it all?

The Rangers support has never been wholly united, other than when the club went into administration and there was rallying round to aid the institution. Some fans back the board, but, at the last game at Ibrox, a 3-0 win over Ayr United, saw a red card protest involved the majority of those in the stadium. Fault lines exist within the support, but it is clear that there is widespread disgruntlement.

So what will the result of the agm vote be?

That depends on who you canvass. The board's supporters insist that they already have enough backing to survive. Sandy Easdale, who is chairman of the football club board, holds the voting rights for more than 26% of the shareholders. They are also backed by Laxey Partners, the largest single shareholder with more than 11%, and Mike Ashley, who owns more than 4% and whose Sports Direct company has a retail agreement with Rangers.

According to reports, Artemis Investment also back the board with their 8.42% stake. This alone would provide the directors with enough votes to survive. However, the supporters of the nominees claim that Artemis have taken a compromise stance, so it is unclear if they are backing all of the directors and voting against all of the nominees, or backing only some of the directors but also supporting some of the nominees, or any other combination of votes.

There are so many shareholders, and such disparate views, that it could boil down to those directors who Artemis support surviving and those nominees they support having a chance of being elected. For the latter to happen, there would need to be a significant turnout of fan shareholders. They hold around 12%, but is difficult to predict how many will participate.

Can you not be more specific?

A prediction is simply that, a considered guess at the outcome. Given the block held by the board's confirmed supporters and the acknowledgement that it is better equipped following the appointments of Somers, Crighton and Wallace, the current directors are likely to be re-elected. It is still possible for some of the nominees to succeed, but they are not in as strong a position, and dependent on supporter turnout. Only large amounts of shares changing hands today would alter the outcome.

The vote will signal the end of hostilities then?

That, of course, depends in many ways on the outcome. Paul Murray, for instance, has said that he will step away from the fray if he loses the vote. Will fans who have protested accept the current board remaining in place? How would members of the current board react to nominees who have been campaigning against them being elected as directors? The landscape is uncertain. At the same time, a board containing a mix of directors could start afresh, or the current board, once re-elected, could work to earn the trust of the fan base. Decisions made post-agm will be crucial, and some believe a moratorium of two months would provide perspective.

Surely the vote will be heeded by the shareholders?

Yes, it will, but the result is important. Some of the institutions have backed the nominees and sought change in the boardroom. Will they retain their shareholding if defeated? The investments are comparatively small compared to the funds they manage, so can quickly be written off.

Some shares may become available post-agm, or at least some shareholders may be more willing to listen to offers. The share price has fallen steadily following a brief rise post-IPO (the launch price was 70p), and now appears to have floored at 35p. Some believe the true value, taking into account the finances, is closer to 25p.

Rangers aren't in financial difficulties, though, are they?

No, there is enough capital, but either costs will need to be cut or revenues raised to deliver a sustainable business. The issue the directors face is developing a strategy to ensure that the team will be competitive on its return to the top flight, which could be in 18 months. It was a strategic decision to maintain the second highest wage budget in the country, since the approach was to sign players of top-flight pedigree to ensure that Rangers returned up the leagues as quickly as possible and were able to compete in the cup competitions and attract supporters.

The team will need further investment ahead of returning to the top flight if it is to challenge Celtic, though, and that money needs to be generated from somewhere. Both sides have indicated that they are confident of investment backing.

And what about Dave King?

After trying to negotiate a compromise ahead of the agm, King accepted that it wouldn't be possible and returned to South Africa. His position has been to let the agm deliver a result and see what the landscape is like thereafter. He remains committed to providing funding, and wants his money to go directly into the club rather than to shareholders. However, the board and the shareholders need to agree to allow him to underwrite a fresh share issue. He may need to intervene himself in the market.

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