In advance of the shareholders meeting on Friday 12 June, the Rangers Directors have advised shareholders to vote against Mike Ashley’s resolution to force the instant payback of the £5m loan to Sports Direct.

However, they have asked that the shareholders support them in trying to bring about a fairer deal with the Newcastle United owner’s retail empire, something which they say would benefit both parties. At the moment they claim the terms of the retail arrangement mean a massive number of fans are boycotting the official club merchandise, with most of the profits ending up in Sports Direct/Mike Ashley’s pocket rather the the club’s.

However, the most interesting part of the club statement is one of the highlighted sections below. The Directors revealing they’d been cautioned against breaching confidentiality provisions with regards to Mike Ashley’s empire.

The statement also repeatedly refers to MASH (Mike Ashley’s grouping of personal shareholdings – including his shares in Rangers and his 100% ownership of NUFC) as well as Sports Direct.

The Rangers Board also refers to a ‘series of contracts’ involving Sports Direct, MASH and the football club, indicating a very tangled web between the parties – with the implication that little of it is to Rangers’ benefit.

The official club statement from the Rangers Directors:

Rangers International Football Club PLC (the “Company”) Directors’ recommendation to the Company’s shareholders on Ordinary Resolutions 1 and 2 to be put to the General Meeting of the Company on Friday 12th June 2015

Shareholders will be aware that MASH Holdings Limited (MASH) has requisitioned a General Meeting of the Company (GM) which is to take place at Ibrox Stadium at 10.30 a.m. on Friday 12 June 2015.

Two Resolutions will be put to the GM.

Ordinary Resolution 1 The first Resolution has been suggested by MASH. It seeks shareholders’ support for the principle that the Rangers Football Club Limited (Club), a subsidiary of the Company, is released from the Facility arrangements between the Club and Retail Limited (Sports Direct) through the Directors of the Company (Directors) resolving to procure the repayment in full of the loan of £5 million (Facility) owed by the Club to Sports Direct as soon as possible after the passing of this Resolution.

The Company has taken advice from Senior Queen’s Counsel on the terms of this Resolution and been advised that it would not, in any way, oblige the Directors legally. Given that is the case, the Directors are puzzled why MASH has insisted on the Company incurring the expense of calling and holding the GM. The Directors do not consider that this approach is in the best interests of the shareholders as a whole.

The Directors have asked MASH if it wants to be represented at the GM to explain its position. The Directors understand MASH is considering whether to send a statement to shareholders. MASH is the ultimate parent company of Sports Direct. It seems to the Directors that Sports Direct no longer wishes to make the Facility available to the Club and that MASH has put ordinary resolution 1 to the GM to assist Sports Direct in this regard. It is not clear to the Directors why this would be in the Company or its shareholders’ interests. MASH’s resolution does set out certain effects that would occur on the release of the securities granted pursuant to the Facility. These will occur whenever the Facility is repaid and the Directors do not consider that, at this time, the repayment of £5 million to Sports Direct is the best use of the Company’s resources.

The Directors are restricted in what they can say about Rangers Retail Limited (RRL) and have been cautioned about breaching confidentiality provisions.

The Directors do not believe the transfer back to the Club of a 26% interest in RRL will serve to resolve the issues which the Directors consider have to be addressed. There are a number of steps required to rebuild the Company and the Club and all of these require resource. The Directors will keep these issues under continuous review and if, exercising their skill, care and judgement, the Directors determine that it is desirable for the Club to repay the Facility and this will assist with the overall arrangements between the Club, MASH and Sports Direct the Directors will take appropriate action. Such a 2 decision will, however, be based solely on what is in the best interests of the Company and the Club and will not be unduly influenced by the interests of a single shareholder.

 The MASH facility is just one element of a series of contracts which have been put in place between MASH, Sports Direct and related entities and the Club. The Directors believe that all of these arrangements require to be addressed collectively. It would be disadvantageous for the Club and the Company to be dealing with such arrangements piecemeal and on terms dictated by MASH. The Directors accordingly recommend voting Against Resolution 1.

Ordinary Resolution 2 The second Resolution has been suggested by your Board.

It has been suggested because a meeting has been requisitioned and a Resolution tabled by MASH.

There is therefore no perceptible increase in costs to the Company in your Board also putting forward a Resolution to the GM. The Directors are concerned with the continued and dramatic reduction in income generated by retail operations.

The Directors are aware that many supporters of the Club will not purchase Club merchandise from Sports Direct because they do not believe the current contractual arrangements between the Club and Sports Direct adequately reward the Club. The Directors understand the strength of feeling on this issue and the adverse impact it has had on sales of merchandise.

The Directors are firmly of the view that the best interests of both the Club and Sports Direct require them to engage with supporters and to restructure the existing contractual engagements in a manner which is clear, transparent and fully accountable to those who will be the purchasers of the Club’s merchandise.

In that way, sales will be maximised and both the Club and Sports Direct will benefit. The Directors very much want to improve relations with Sports Direct and have made that clear to Sports Direct’s senior executives, however, this has to proceed on the basis of mutual understanding, respect and reward.

In the Director’s view, if matters continue as they stand, this will not be to the commercial advantage of either the Club or Sports Direct.

The Directors therefore ask shareholders to indicate their support for the Directors’ analysis of what will deliver best value for Sports Direct and the Club by voting For Resolution 2.