LONDON (Alliance News) - The battle for control of Rangers International Football Club PLC took another twist on Monday after the club said shareholder Dave King has called for a general meeting to remove the club's board and also that it is in talks with two shareholders over possible financing packages which may result in it having to use Ibrox Stadium as security, a move it has resisted in the past.
Dave King, a former a non-executive director of the club who holds a 14.6% stake, has issued a notice calling for a general meeting to be held to vote on the removal of the Glascow club's entire board. King, who bought the stake in the club earlier this month, is calling for the removal of Chairman David Somers, Chief Executive Derek Llambias, Finance Director Barry Leach and Non-Executive Director James Easdale.
Llambias and Leach are both long-time associates of Mike Ashley, the founder of Sports Direct International PLC and an influential shareholder in the club. Llambias is the former managing director of Newcastle United FC, which is also owned by Ashley, while Leach is the former finance director at Sports Direct.
Both appointments were seen as part of the push by Ashley to increase his influence over the club. Easdale and Somers are not considered direct proxies for Ashley, but both are considered to be in Ashley's corner. Easdale's brother, Sandy, controls around 26% of Rangers' shares.
King's notice calls for the directors to be replaced by himself, Paul Murray, another former club director, and John Gilligan, the former managing director of brewer Tennent's and a former vice-chairman of the Rangers Supporters Trust.
Rangers said it is currently in the process of verifying whether the notice issued by King is valid. Even if found to be valid, the club said it will seek to have the notice withdrawn "in order to avoid the cost and disruption of an ad hoc general meeting". Should it fail to have the notice withdrawn, the board is recommending shareholders vote against the proposals.
King could potentially face hurdles in securing approval from the Scottish Football Association for his proposed appointment to the board as he fails the SFA's Fit and Proper Person test on two counts.
The SFA rules preclude any director from being appointed to the board who has been "convicted in the last 10 years of (i) an offence liable to imprisonment of two years or over, (ii) corruption or (iii) fraud." In 2013, King plead guilty to 41 counts of tax fraud in South Africa and plea bargained on nearly 300 other charges, avoiding jail. The charges against King would have resulted in a jail term of more than two years had he not plea bargained and the rules also state a director cannot have been convicted of fraud.
King also fails the test on the clause that no board member may have been a "director of a club in membership of any National Association within the 5-year period preceding such club having undergone an insolvency event.". Both King and Paul Murray were director on the board of Rangers when the club collapsed into administration under the ownership of Craig Whyte in February 2012.
In addition to King's call, Rangers said it is currently in talks with two parties who are currently stakeholders, though it did not specify which shareholders are involved. Last week, it was reported Mike Ashley has offered up to GBP10 million in funding to shore up Rangers' finances, in return for Ibrox and the Murray Park training ground being used as security.
Last week, along with the rumours that Ashley had offered a loan, the BBC reported the Three Bears consortium, which holds a near-20% stake in the club, had also offered a loan to the club in return to security over Murray Park. It was understood this loan was around half the size of that offered by Ashley.
Rangers said Monday the discussions involve "a significant amount of capital being available to the business on a long-term basis in order to enhance the squad which the directors believe is necessary."
It said a consequence of it having to secure funding of this size is that it "may be necessary to use Ibrox stadium as security". Last year, the club had said it would not use its stadium as security for any financing deal, and the reports that Ashley had demanded this drew heavy criticism from fans and supporters' organisations.
Rangers said that, at present, the assets, cash flow and business of Rangers are not supportive of an open-market financing exercise which would be sufficient to provide the kind of financing the club needs, hence the need to consider using Ibrox as security against a financing package.
The likelihood of the loan from Ashley materialising, in return for the stadium and training ground security, was increased after it was reported the club has paved the way for these deals to be accepted by lodging advanced notices of security against both assets on behalf of Sports Direct. The notices mean only Sports Direct can be granted security on the properties for a period of 35 days, effectively meaning the club would not be able to meet the requirements of the Three Bears funding as the group also wants security over Murray Park, though not the Ibrox stadium.
The Three Bears, comprising Douglas Park, George Taylor and George Letham, have a stake of around 19.5% in the club. They are understood to have offered the club a loan of around GBP5 million, according to the BBC, and are seeking two seats on the Rangers board, along with security over Murray Park.
Rangers has little leverage to refuse any financing deal, having in recent weeks been forced to take a short-term loan from director Sandy Easdale and to sell midfielder Lewis Macleod in order to provide working capital and to pay player wages for January.
Ashley had already effectively gained control of Rangers last year after he provided the company with GBP3 million in loans to keep it afloat. The terms of the loans, provided through his MASH Holdings Ltd investment vehicle, gave Ashley the right to make two appointments to the board of the club and required Graham Wallace and Philip Nash, at the time the CEO and executive director, to step down, which they then did.
Ashley has already attempted to to increase his stake in Rangers to 29.9%, from its current level at just under 9%, but this was blocked by the Scottish Football Association on the basis that its rules preclude any existing owner of a football club being involved in the administration of another. Ashley is facing a disciplinary hearing before the SFA on January 27, but press reports prior to the rejection of his bid to up his stake indicated the SFA could give Ashley dispensation to take control of Rangers, leaving a formal takeover of the club on the table.
Ashley's position as the most likely suitor for the club was strengthened a week ago when Robert Sarver, the American financier and owner of NBA franchise the Phoenix Suns, withdrew his bid for the club. Sarver had two offers rebuffed by the board, which claimed it did not feel it would be able to secure sufficient shareholder support to back his proposals.
Rangers shares were up 5.3% to 24.75 pence on Monday afternoon.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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