Scottish Football, Sevco

World Class Investment Opportunities


Good Evening.

Anyone who has the misfortune to follow The Clumpany on Twitter will know that I was royally entertained by Dave King and friends at the RIFC Annual General Meeting this morning.

RIFC is of course the Holding Company of the Engine Room Subsidiary which operates the ‘club’. And the ‘club’ doesn’t actually exist but still manages to act as useful People-pleasing trophy-acquiring abstract construct. 

I hope that’s clear. Because it was the ‘club’ which was the main focus of the speeches and questions at the AGM. In particular what it would take for it to catch Celtic and regain its ‘rightful’ place at the top of Scottish football. 

The spectacle of a four-year-old football ‘club’ talking about a ‘rightful place’ at the top of Scottish football is about as laughable as a toddler turning up in Stockholm, stamping its feet  and demanding to be awarded the Nobel Prize fo Physics which is ‘rightfully’ theirs. 

It sends the Wibble-o-meter off the scale.

But I digress…

The point I wanted to Clump about was the image of ‘Sevco the business proposition’ which has been put across this week. Both in the newspapers and (whether unwittingly or not) at the AGM itself. I am not for a moment suggesting that any of the remarks to which I draw attention should be a guide to Sevco’s actual plans, or influence your investment decisions. 

But what I am trying to do is highlight some rather bewildering things that made me scratch my ethereal head….

Earlier this week, the Retweet-sensitive Keith Jackson produced this epic front page ‘scoop’ 


I wrote about the piece in this blog:

Mike Ashley And The Massive Coincidence

And I was left wondering “if someone signs a contract or lease with Sevco which either they or the press don’t like,  are they likely to end up on the front page of the newspapers prior to any legal proceedings over points of grievance being pursued or concluded?”. 

Hmmm.

Next up was this piece from Gary Ralston, which was also in the Daily Record:

Rangers will move one step closer to ousting the Mike Ashley and Easdale alliance at their AGM

It was of course about the AGM’s Resolution 11, which sought permission for the disapplication of pre-emption rights, paving the way to a possible issue of new shares in RIFC. Such a move would convert some or all existing director loans into equity, bring some new money into something other than the ‘club’ (which can’t undertake financial transactions…😉), and dilute existing shareholdings if their holders do not participate.

It was lovely to see Gary taking about Sevco in such detailed fashion having ‘lost his relationship’ with them a few months ago at the hand of Stewart Regan. [Yes I AM still laughing at that!]

Here is the key relevant extract from his piece 

“Significantly, however, if Resolution 11 is passed they will hold control over the direction of the allotment of any future shares.

You don’t need to be Gordon Gekko to know they won’t be knocking on the doors of McGill’s Buses or Sports Direct asking if they want to maintain their current level of interest in Rangers International.”

“Rangers are keen to reduce the boardroom influence of Ashley and the Easdales by half, not least as their percentage powerbase gives little flexibility when it comes to key votes.

Resolution 11 is a prime example, with the margin for error so slim it was defeated at last year’s agm by just one per cent.”

“In any case, Rangers have the security of Resolution 10, which requires only 50 per cent of all votes cast to give the go ahead for a new shares issues before the end of 2017.

However, under its terms, it would only be open to existing shareholders, giving Ashley and the Easdales the chance to maintain their current level of stock.”

My initial (and continuing) thought about the article was “if you are a shareholder and the media or Sevco don’t like the cut of your jib, or your habit of not agreeing with their perspective, could you end up splashed all over the papers in stories about plans to erode the level of your shareholding, whether you like it or not?”

I found that thought quite troubling.

And then there are some of the remarks made in today’s AGM itself, as reported by the various media attendees.

Firstly, this cracker:


What?!?

What might a potential investor make of that? Shouldn’t a business plan have a page marked ‘funding plan’ at its very heart? Surely without a funding plan it isn’t much of a business plan at all? 

And what of this funding plan? Well apparently they aren’t going to be reckless and expose themselves:


Now that’s all well and good, however:


Deficit funding, eh?


Isn’t that a curious thing for a potential investor to mull over? Restraint, but spending money they don’t generate for an indeterminate period in pursuit of success.

You can only wonder what the business and funding plans actually are! And whether anyone has thought about accepting a few harsh realities and trying to live with Sevco’s means. Even though those means may be limited by the terms of the retail deal in which they are a partner.

Yes I really did just suggest ‘living within their means’…

I could go on and ponder how that approach to spending might square with UEFA’s Financial Fair Play provisions should Sevco ever qualify for Europe. Because if the business and funding plans foresee revenues being generated by European competition, Sevco ought to be absolutely sure that they won’t be locked out through overspending. However, I will leave that question for The Scottish Football Monitor and others to address!

Finally, we come to this rather remarkable observation on corporate governance:  

If I were a potential investor I might raise an ethereal eyebrow at the spectacle of the Chairman of a public company suggesting that there are no truly independent directors on its board. Because non-executive directors (NEDs) are meant to be there to challenge the board as necessary and to look out for the interests of shareholders. 

And as if that wasn’t enough, David Low, – who knows a thing or two about takeovers and investments in Glasgow-based football outfits – pointed out this morning that RIFC has no executive directors at all.

A potential investor in RIFC might reflect that if it still had a listing and NOMAD it would have little choice but to have a more conventionally-constituted board.

Oh well…

So, there we have it. Clearly appearances can be deceptive, and it may well be that none of the things I have mentioned above might be a genuine cause for investor concern. But they would certainly make you stop and think if you had a few spare millions and were feeling inclined to plough them into a Petrofac-winning football-themed operation.

Wouldn’t they?

I will end this piece with the final act of the AGM:

Isn’t that an absolute belter? 

It could be suggested that right there in less than 140 characters is a great summary of the AGM, Sevco, and it’s destiny to fail in highly comedic circumstances.

But The Clumpnay would never do such a thing.

#KeepOnClumping

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