Court told King money tied up in trusts

Daily Record - - FRONT PAGE - ALAN McEWEN

RANGERS chair­man Dave King doesn’t have the cash to fund an £11mil­lion buy­out of club share­hold­ers, a judge heard yes­ter­day.

The 62-year-old ty­coon’s as­sets are tied up in off­shore fam­ily trusts, so he can’t per­son­ally stump up the “free

funds” to make such an of­fer, the Court of Ses­sion in Ed­in­burgh heard.

King has been hit by le­gal ac­tion from the Takeover Panel af­ter they ac­cused him of breach­ing rules over his ac­qui­si­tion of the Ibrox club in 2015.

The fi­nan­cial watch­dogs ruled he had worked “in con­sort” with a trio of busi­ness­men – the so-called Three Bears – to take con­trol of Rangers by ac­quir­ing a com­bined 34 per cent stake.

That breached the 30 per cent bar­rier that trig­gers a manda­tory buy­out of­fer ac­cord­ing to UK rules.

The panel took King to court af­ter he flouted their de­mand that he of­fers 20p a share to pur­chase the re­main­ing stake. Many of th­ese shares are owned by sup­port­ers.

Lord David­son of Glen Clova QC, rep­re­sent­ing King, said a judge’s or­der to force his client to set out a share pay­out was “point­less” and “a waste of re­sources”, adding: “He does not hap­pen to have the £10million to £12mil­lion needed.”

Lord David­son said King would be com­pelled to send out “cu­ri­ous” let­ters to share­hold­ers telling them he’d “been or­dered to make an of­fer but doesn’t have the money to pay them”.

The South Africa-based busi­ness­man could then face a con­tempt charge and a crim­i­nal con­vic­tion for vi­o­lat­ing any court-im­posed di­rec­tive, he added.

Dis­cussing his client’s lack of di­rect con­trol over fam­ily money, Lord David­son said: “Mr King is not the trust. The trust is an­other per­son.

“The ben­e­fi­ciary can’t or­der the trust to do what­ever he wants. They are not re­spon­sive to the whims of Mr King.”

The hear­ing was told King in­structed the buy­ing of 14.75 per cent of Rangers shares on De­cem­ber 31, 2014, through New Oa­sis As­set Man­age­ment Ltd (Noal), based in the Bri­tish Virgin Islands. The pur­chase was made two days later.

To­gether with shares ac­quired by the Three Bears, it gave them a com­bined 34.05 per cent of Rangers’ share cap­i­tal.

The panel said Noal are wholly owned by Sov­er­eign Trustee In­ter­na­tional Lim­ited, the trus­tees of the Glen­coe In­vest­ment Trust, which was es­tab­lished to ben­e­fit King, his wife and chil­dren.

The money to pay for Rangers shares came from Glen­coe and they were held by Noal, the judge was told.

The court heard King de­nied be­ing in con­tact with Ge­orge Letham – one of the Three Bears along with Ge­orge Tay­lor and Dou­glas Park – about buy­ing up shares.

But the panel un­earthed a Hog­manay 2014 email sent to King by Letham warn­ing him about the threat of hav­ing to make a “manda­tory of­fer” if they ac­quired more then 30 per cent.

Com­ment­ing on King’s de­nial, ad­vo­cate James McNeill QC, act­ing for the Takeover Panel, said: “This state­ment is very dif­fi­cult to square with a gen­uine ef­fort to re­call what hap­pened.”

Judge Lord Ban­natyne asked whether it was “ab­so­lutely rea­son­able” that King should have to make the share of­fer as he’d been warned about the buy­out thresh­old by Letham.

Lord David­son replied the email didn’t demon­strate King had an “un­der­stand­ing” of the rules, adding: “Not ev­ery­one nec­es­sar­ily has a grip over the takeover code.”

Some en­trepreneurs drove ahead in deals, he said, and “let the lawyers sort out the de­tails”.

The court heard Letham de­nied to the panel dur­ing a phone in­ter­view that he’d had any com­mu­ni­ca­tion with King about the share buys.

When shown his mes­sage to King, Letham al­legedly told in­ves­ti­ga­tors that it was “the one email that re­ally sur­prised me”.

King has de­nied act­ing in con­sort with the Three Bears.

This email was ev­i­dence of con­sort, McNeill said.

The hear­ing was told King de­nied ever own­ing shares in Rangers.

McNeill said King was be­ing “some­what disin­gen­u­ous” when he told them: “I am not and never have been a share­holder in Rangers.”

King main­tains the stake in Rangers is held by Noal.

The court heard he told the panel be­fore their of­fi­cial hear­ing on the mat­ter that he’d “never been a di­rec­tor of Noal, had no le­gal ca­pac­ity to rep­re­sent them and in the cir­cum­stances was in no po­si­tion to ad­vance their in­ter­ests”.

But the panel, who launched their in­ves­ti­ga­tion in early 2015, said they found ev­i­dence King was able to con­trol Noal vot­ing rights.

McNeill cited an­other Hog­manay 2014 email, this time from King to a di­rec­tor of Sov­er­eign, as ev­i­dence of his con­trol over Noal.

The email said “we now need to get an ac­count opened on be­half of Noal” with fi­nan­cial ser­vices spe­cial­ists Can­tor Fitzger­ald to al­low the share deal to pro­ceed.

McNeill added the Rangers web­site had listed King, his wife and chil­dren as par­ties in­ter­ested in Noal shares.

The Takeover Panel said King’s ar­gu­ment that he is un­able to rep­re­sent Noal was only made in Oc­to­ber 2016. McNeill said that was “at odds” with his pre­vi­ous be­hav­iour.

He added the Rangers chair­man didn’t turn up for the panel’s of­fi­cial hear­ing, so he “avoided any ques­tions on the sub­ject”.

McNeill in­sisted King never of­fered “any ev­i­dence that Noal ex­er­cised any ac­tion in­de­pen­dent of him”.

And he’d had “am­ple op­por­tu­nity” to pro­vide doc­u­ments prov­ing there was no con­sort with the Three Bears but hadn’t done so.

The panel said they had “no doubt” King con­trolled Noal vot­ing rights and said he was able to re­move mem­bers of the Rangers board to ef­fect a “change of con­trol” in early 2015.

Un­der takeover rules, share­hold­ers with a 30 per cent stake in a busi­ness must make a “speedy of­fer” to buy the other shares at the high­est price they’ve been listed at dur­ing the past year.

That fig­ure was 20p in the case of Rangers. The court heard the club have about 5500 share­hold­ers and shares are now worth 27p.

McNeill said it was “un­likely” many share­hold­ers would take up the share pur­chase of­fer.

He noted “de­mand for Rangers’ shares ex­ceeds sup­ply” and the club’s board could make a rec­om­men­da­tion that share­hold­ers turn down the deal.

McNeill said the Takeover Panel ac­knowl­edged the share buys by King and the Three Bears took place dur­ing “chaotic cir­cum­stances” for the club, and “peo­ple were act­ing in what they thought was the best in­ter­ests for Rangers”.

He added it was “very rare” for the panel to take such le­gal ac­tion.

But share­hold­ers who have “oth­er­wise been dis­en­fran­chised” should be “pro­tected by giv­ing them a chance to re­spond to an of­fer”.

The hear­ing con­tin­ues.

DE­NIAL King says he wasn’t in con­tact with the Three Bears about buy­ing up shares. Pic: Teresa Geissler WEALTH King made his money in South Africa, where this wine es­tate used to be among his as­sets be­fore it was seized by the tax­man

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