LONDON (Alliance News) - Rangers International Football Club PLC Friday announced an open offer of up to 19.9 million new ordinary shares at a price of 20 pence each to raised up to GBP3.97 million before expenses, in order to fund the club's re-building.
Rangers said the price represents a 22% discount on its closing price of 25.5 pence Thursday. Shares were trading down 4.2% at 24.44p Friday morning.
Scotland's most successful football club on the pitch is trying to draw a line under a tumultuous period in which it went into administration, was relegated from the top division, and faced a boardroom battle over the future direction of the company.
It went into administration under the weight of a large debt burden and as the tax man claimed back money it said was owed for a large number of years due to undisclosed payments made to players.
Rangers is looking to raise between GBP20 million and GBP30 million as part of its efforts to return the club to "top of the domestic game within three seasons, and to thereafter be competitive in UEFA competition," meaning playing in Europe.
In February, it secured two short-term credit facilities for a total of GBP1.3 million. These are due for repayment on September 1, and Rangers said it intends to repay the loans in part from the proceeds of the open offer.
If the level of subscription is less than 15 million new shares, the offer will not proceed, Rangers said. It said that if this happens, it will be unable to pay its creditors as debts fall due, meaning it will immediately have to seek emergency financing.
The open offer of shares is not underwritten, it said.
Assuming full subscription for the open offer, it said it still will require additional external funding in the latter half of the current financial year to meet working capital requirements. At the minimum level of subscription, it will require additional working capital towards the end of the current calendar year, the company said.
This funding could be sourced from lines of credit or other forms of short-term finance, or as a component of a further equity raise, Rangers said.
Rangers is competing in the Scottish Championship, the second tier of the Scottish Professional Football League. The club had been relegated to the fourth tier but has since been promoted.
It has increased most of its season ticket and match-day prices for the 2014/15 season by between 15% and 25%, it said, and has sold around 23,000 season tickets.
The company said that if it continues to progress to the top flight of Scottish football it can benefit from increased ticket prices, prize monies from European competition and new commercial partnerships.
Rangers said trading since its interim results has been in line with expectations. It had an unaudited cash balance of GBP4.26 million as at June 30.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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