Rangers’ delisting: what it means

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

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.

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.