27th Jan 2015 08:28
LONDON (Alliance News) - Rangers International Football Club PLC Tuesday said it has entered into an agreement with Sports Direct International PLC under which the retailer will provide the company with a credit facility of up to GBP10 million, a deal that means Sports Direct founder Mike Ashley will no longer have a direct loan to the club.
Rangers said the directors of the club have considered a number of options to secure its funding, but said the deal with Sports Direct represents the "optimum combination of quantum and duration of funding, allowing the company time to arrange permanent capital which can be used for strengthening the playing squad."
The facility will be split into two tranches, Rangers said, with GBP5 million to be made available immediately to cover working capital and to repay the loans provided by MASH Holdings Ltd, Ashley's investment vehicle, in October.
The second GBP5 million tranche will be used by the club, if required, for working capital purposes and is subject to due diligence by Sports Direct before any drawdown can be made.
Ashley is interested in acquiring the struggling Scottish football club, but has so far been prevented from doing so due to Scottish Football Association rules that preclude any existing owner of a football club being involved in the administration of another. Ashley is already owner of Newcastle United FC.
Rangers said the first tranche of funding has been secured by a floating charge over the club's assets and fixed charges on its Murray Park training ground, Edmiston House, Albion Car Park sites and its registered trademarks. The club noted none of the security for the loan covers Ibrox Stadium.
Under the first tranche, the club will transfer 26% of the share capital of its Rangers Retail Ltd business, a joint venture with Sports Direct, to the retailer for the duration of the facility, to be transferred back once all outstanding sums under the loan are repaid.
Rangers has also agreed that from the 2017/18 facility, for the duration of the loan facility, any future shirt sponsorship proceeds will go to Rangers Retail Ltd.
"The board has sought for some time to establish a long term funding solution for the company in order to create a platform of stability to build for the future. This facility begins this process and we very much hope that it will be augmented with further permanent capital in due course," said David Somers, Chairman of Rangers.
Rangers shares were up 7.1% to 30.00 pence on Tuesday morning, one of the best performers in the AIM All-Share.
By Sam Unsted; [email protected]; @SamUAtAlliance
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