Friday, 3 April 2015

Rangers' delisting: what it means


Yesterday’s confirmation of Rangers’ delisting from the LSE was inevitable from the moment on March 6th where Dave King, newly elected by the shareholders, stated that it was his personal preference:

“In a perfect world, my personal preference for the rebuilding of Rangers my choice would be not listed. But it is listed. And I’m going to say that unfortunately it’s listed.” – Dave King, March 6, 2015

We knew it was the man’s first choice not to be listed, something backed up in recent days by Paul Murray, the interim chairman.

Now that delisting has taken place, Rangers are officially off the stock exchange and no longer a Public Limited Company. So, ultimately, what does this mean for Rangers, the shareholders, and the fans?

There are negative and positive aspects to this move, so this entry is going to critique both and it is up to the reader to make up their mind how they feel.

Beginning with a positive, it saves Rangers money. Being listed saves an overhead, where not only does the company no longer have to pay a NOMAD, but the actual costs of being on the LSE themselves are gone. No more having to wait for clearance from a suit in London before a company change is approved. No more having to gain their approval to actually action a change. A private non-listed company now has power to implement change without getting permission from anyone, which saves time and money.

A negative is this also means no regulation. Being on the LSE requires strict adherence to its rules, to stock market requirements and legislation. Now Rangers are not on the AIM there is infinitely less accountability – in short, there is no one to answer to, no one to verify the legitimacy of your company’s action. And this means, to put it bluntly, a company can more or less do what it wants without any repercussion.

Back to the positives, and less dirty laundry is made public. For the past few years every single part of Rangers’ corporate governance has been played out in the public eye and LSE for the Club’s detractors to chew on. Many might argue that helped enable change, but at the same time it gave newspapers and the media a field day, checking to see the latest negative AIM announcement to use for a headline. How often would we see an LSE announcement about another loan, and then the gory headlines? Loans are not desirable, nor are any of the other nasty goings-on which fans have suffered, but it will make a change for newspapers not to have an easy negative headline to make about Rangers.

But on the negative side, obviously, no transparency. Rangers fans had a way of seeing what was going on, and it indirectly enabled change to eventually take place. That is now gone – there will be no guaranteed way of receiving accurate information about boardroom events beyond trusting the word of the directors if they choose to make something public. In short, Rangers fans basically have their eyes closed now and the occasional openings could well see illusions.

And another negative is the shareholders, especially the investment firms/hedge funds who supported King now find the sea has changed. With not being listed, their shares cannot be traded with the same ease they were before. They do not lose their value, or much of it, but now all shareholders, if they wish to sell, need to find a buyer themselves, manually. They cannot just employ a broker who takes a cut. It makes it harder for shareholders, and there can be no doubt the majority of the large ones would not have supported this move. That may even include the Three Bears.

But in more of a positive angle, it does give Rangers more power over its shares. Share value has fluctuated crazily on the LSE for the past few years, and now that they are no longer publicly tradable their value and volatility is slightly more stable. That gives the board and shareholders slightly more control that the shares are not going to bottom out in a few hours thanks to a borderline unrelated event on the other side of the world.

Rangers have announced a DSPP (Direct Stock Purchase Plan) to be implemented by Tuesday and other AIMs to be sought out over the next few weeks, including ISDX on which Arsenal trade, so time will tell where this will all take us.

As stated at the start, this is just a guide of the good and bad. Readers can make their own judgements as to whether the delist is overall a good or bad thing.


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