It didn’t take long for King to respond to today’s ruling by the City of London Takeover Panel. He did so in a long-winded rant that was as detached from reality, self-aggrandising and mournful as any we’ve seen from him yet. It was also a helpless plea for mercy.
Let’s put it in hard numbers.
If every single shareholder was to accept the buy-out offer it would cost him somewhere in the region of £14 million. It won’t happen like that. You have to assume that his three mates will keep their shares, although it would certainly offer them a cast-iron way to get off the board and remove themselves from further obligations to carry the debts. But let’s assume that they’ll maintain the status quo and play one last bad hand.
That leaves a good 70% of the rest outstanding.
Who might be tempted to sell?
Well the Easdale’s own 26% and King has already moved to legally ban them from using the votes associated with those shares. If King had to find the cash for those it would cost him around £3.5 million. Ashley owns 8%, probably worth another £1 million plus.
There are other shareholders who own blocks worth £1 million or over.
Just because fans probably won’t sell it doesn’t mean they won’t.
20p per share is below the current market value … well below it.
But the current market value will drop, like a rock, on the back of this announcement. Those shares are virtually worthless, and those organisations might well wonder what the point in keeping them is. Many of them have probably only hung on this long because they couldn’t find buyers.
Now, here’s King … legally obligated to take them off their hands.
In addition, the potential for trouble-making is huge here.
If Ashley and others put together a wee “concert party” of their own, they could, conceivably, present King with a bill of around £6 million. It is my understanding that King would find that impossible to raise without tipping SARS and others to holdings he’d rather not disclose. Getting their permission to spend the money would be difficult in itself, and this verdict will already have rung alarm bells with their international trading office.
The London Stock Exchange has found King the legal owner of a major shareholding in the club. It is clear from the verdict that he tried to pretend that those shares were not his and that he had no controlling interest over them.
If he was lying to the LSE, why would we believe that lie was simply an effort to deflect from their investigation?
King’s shareholding doesn’t amount to 30% on its own.
He could have freely admitted to owning those shares whilst continuing to deny that he was working “in concert” with Letham and the others … why the need for the additional layer of obfuscation? I repeat, King’s defence wasn’t simply that he was not acting alongside those guys, but that he owned no shares in the club at all.
I’m inclined to wonder if that was an effort to conceal the ownership of those shares from SARS more than it was an attempt to hide them from the Takeover Panel.
Which is to say nothing of what version of this story he told the SFA.
We’ll leave that for another day.
Does King have access to millions in cold, hard cash? Possibly.
Does he access to legally held, in his own name, millions in cold hard cash?
We can speculate, but if Ashley and the Easdale’s decide to test that by accepting the offer … well not only is he going to have to find the money but he’s going to have declare its origin to the government over there. If he has to liquidate other assets to do it he’s also going to have to pay tax on those and a hefty chunk of money under their Exchange Control laws in order to get it out of the country.
If Ashely and the Easdale’s formally accept King’s offer and he can’t find the money, they will have demonstrated, once and for all, the truth about his “financial status” and removed any last notion that he is either able or willing to take the club forward.
They will have definitively proved him a liar on even the most basic promises he made to the fans, and that will render his position at the club untenable, even without an SFA investigation into his conduct. People at Hampden and at Ibrox have to be sweating over this possibility.
On top of that, he and the club are facing litigation on multiple fronts. King’s evidence in those cases, particularly in those involving Warburton and his backroom team, will be crucial with no documented evidence of their “resignations” anywhere to be had. Their lawyers have been presented with an open goal in this verdict, which has shown King up for the mendacious sod we always knew he was, and capable of anything.
If this comes down to he and his board (his “concert party” co-conspirators) versus those men, on the value of “their word” then I would suggest this verdict has done incalculable damage to the club’s chances of winning those cases, and all this is to say nothing for the club’s chances of being able to get re-listed on the Stock Market enabling a future share issue … and on what basis they might have to offer those shares.
And then there are the dire consequences – including a possible UK directorship ban – should he simply refuse to play ball.
Some experts are already speculating that just the chance that large numbers of shareholders might decide to sell makes making the offer itself impossible. It’s not clear whether LSE regulations would require King to produce “proof of funds” in the event he has to buy them all.
It’s a legal minefield and he’s wandered right into it with his big clown feet.
Don’t rule out him resigning over this.
He might very well have no choice.
This one is a headache on multiple fronts.
The damage it could do extends far beyond whether King has to pay £14 million or whether the bill is much smaller, and more manageable, than that.
It offers his enemies inside and outside Ibrox an extraordinary opportunity to make not mischief but mayhem. It might prove hard to resist for some; Ashley will certainly weigh it up and the long and short term consequences of it.
This is more than a one-day story.
It’s going to run and run and run.