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EIS investors face losses under deal to cut Rangers’ debt

Over half of the money owed to Ticketus by Glasgow Rangers would be wiped out if the Blue Knights Consortium takes over the club.

A bid being prepared by the Blue Knights Consortium includes an agreement with Ticketus to wipe £17m off the debt it is owed by Rangers, according to the BBC.

The Blue Knights consortium plans to mount its bid for the club tomorrow ahead of this week’s deadline to submit proposals to the administrators.

The BBC reports that under the terms of the deal, which are yet to be finalised, Rangers would owe Ticketus around £10m. This would be paid back interest-free over seven years, with nothing repaid in the first two years.

Octopus Investments owns Ticketus, a London-based firm which provided Rangers with “working capital” in exchange for future season ticket sales, through its protected EIS.

In February, Glasgow Rangers’ administrators Duff & Phelps said it was unclear on the whereabouts of £24m advanced from Ticketus to the Rangers’ account.

It later clarified that £18m of £24m advanced had been accounted for and was used to pay off Rangers’ debt to Lloyds Banking Group when the club was taken over by current owner Craig Whyte last May.

Hargreaves Lansdown investment manager Ben Yearsley says: “If this deal goes ahead as the details have been given, I assume that investors have lost the majority of their money – especially as the balance of £10m is being paid back over seven years.”

Octopus managing director Paul Latham says: “The exact impact of the administration process on Ticketus unfortunately remains uncertain until the future of Rangers has been finalised, and at this stage the process is still underway so we cannot comment on the specifics of this investment.”

He adds:“Only our investors in the Octopus EIS have exposure to Ticketus and therefore Rangers. Ticketus forms a small part of the diversified EIS portfolio and we have a number of additional protections for our investors built into the EIS product that we would seek to deploy if necessary, this includes our deferred AMC.  We are communicating regularly with our clients on Ticketus and the situation at Rangers.”

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Guide: how to… communicate with your pension members

Effective communication of your pension scheme is a large part of getting auto-enrolment right. Delivering the same message to all employees is not necessarily the way to go. To assist you with the communication of your pension scheme, we have provided some key areas to think about, such as:

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. man on the moon 3rd April 2012 at 3:09 pm

    What a deal for the new owners only the £50m plus owed to HMRC to deal with now.

    Octopus were very confident in their position when I spoke with them.

    The greatest financial debacle in UK sport finally appears to be unwinding.

  2. r.e man on the moons comment

    1 main point most seem to forget, rangers havent lost the big tax case so dont owe 50m will be fun to see the heartbreak if rangers win the case

  3. What I don’t understand is, how can the administrators sell a club which is already owned by someone who doesn’t seem to want to sell it..??

  4. In my experience the administrators pretty much do whatever they like!

    Interesting to see the deferred AMC being mentioned because the literature I saw was that Octopus “Guaranteed” 3% per year for a time on ‘Secure EIS’ I asked them what would happen if they didn’t get 3% and they said that was not really possible because of the deal structure and credit protection.

    I pressed them further because if they had say £50M invested in the product then they would have to find £1.5M just for one year. Then they said they would refund the 3% AMC. I asked what happens the next year and they didn’t really know the answer.

    If it is that product then maybe the clients will be asking the same questions now.

  5. what a pavlova. One clever tax scheme bringing down another clever tax scheme. I think cephalopod has lost a tentacle or an “arm and a leg”

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