Desperate Sevco fear being plunged into crisis by the repayment of the £5m loan owed to Sports Direct.
After three months in charge the new board haven’t been able to come up with a way of raising £5m or of terminating the contracts with Mike Ashley’s Sports Direct.
With a share issue as likely as a run in the Champions League the company has been forced into adding three £1.5m loans to stay afloat till the end of the season.
Having come under a constant flow of bad news stories Mr Ashley has called a General Meeting to get the £5m repaid and to expose the real reasons for the company being removed from the Alternative Market.
Nine days ahead of the planned General Meeting the board of directors have issued a statement outlining their fears over repaying the loan.
If Ashley doesn’t get his way he’ll have to go to court to get his £5m ring-fenced which will blow a massive hole in the transfer war-chest for the next manager..
Tonight’s company statement read: “It seems to the Directors that Sports Direct no longer wishes to make the Facility available to the Club and that MASH has put ordinary resolution 1 to the GM to assist Sports Direct in this regard.
“It is not clear to the Directors why this would be in the Company or its shareholders’ interests. MASH’s resolution does set out certain effects that would occur on the release of the securities granted pursuant to the Facility.
“These will occur whenever the Facility is repaid and 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 are restricted in what they can say about Rangers Retail Limited (RRL) and have been cautioned about breaching confidentiality provisions. The Directors do not believe the transfer back to the Club of a 26% interest in RRL will serve to resolve the issues which the Directors consider have to be addressed.”
Going into greater detail: “The Directors are concerned with the continued and dramatic reduction in income generated by retail operations. 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.”
With a legally binding contract that has a seven year notice period there is little that Sevco can do to break the chains with Sports Direct which has kept the club afloat.
Failure to repay the £5m loan will lead to only one conclusion, Mr Ashley generally gets his way and can’t be seen backing down in this public showdown.
