EIS investors face losses under deal to cut Rangers’ debt

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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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