A sports nutrition company that Rangers bidder Bill Miller has a stake in has filed for bankruptcy.
Health Sport Inc, which specialises in "edible film strip" nutritional supplements, filed for Chapter 11 bankruptcy in September last year, which is similar to the UK insolvency process of administration.
The financial crisis at the firm came after the business failed to filed its annual accounts last year, months after it bought over a smaller business.
Mr Miller was named preferred bidder by Rangers administrators Duff and Phelps on Thursday after they accepted his "unconditional" £11.2m newco offer for the club. They are now following on their "reasonable amount" of due diligence on Mr Miller and claimed the takeover could be completed before the end of the SPL season on May 13.
Health Sport Inc, which is registered in tax haven state Delaware, filed for Chapter 11 protection at the Bankruptcy Court of Arizona last year. According to filings with the US Securities and Exchange Commission, the company "is hopeful that it will be able to arrange financing in the next six to 12 months which will allow it to emerge from bankruptcy with sufficient working capital to attain profitable operations".
According to filings with the Securities and Exchange Commission, Health Sport Inc, of which Mr Miller owns 10%, bought over an Arizona nutritional supplement ingredient firm six months before it went bust. Mr Miller does not have any position on the board of Health Sport, which recorded a £2.8m net loss for the 2010 financial year.
Mr Miller invested $1,000,000 (approximately £618,000 at current rates) in the original incarnation of Health Sport Inc in 2001, Team Sports Entertainment, the owner of the ill-fated Track Racing Auto Circuit (Trac) stock car racing league that the 65-year-old became chief executive of. When the venture was unveiled, Mr Miller said in a media release that it was "the most innovative concept ever introduced to motor sports".
After the 2003 collapse of the racing league, which was designed to rival Nascar, Mr Miller was sued for $50m (approximately £30.9m in current exchange rates) by a group of shareholders in the company, before the case was eventually settled out of court.
Jon Pritchett, chief executive officer of Club 9 Sports, was also named in the settled lawsuit. Mr Miller’s initial interest in Rangers was as part of a consortium led by Club 9 Sports, which had previously failed in attempts to take over Sheffield Wednesday and Tranmere Rovers.
Mr Pritchett claimed Club 9 is not "a party to" Mr Miller's offer for Rangers and described the preferred bidder as a "very private and not publicity-seeking" individual. However, according to a media statement at the time of Mr Miller’s involvement in the ill-fated Trac project, he was described as having previously served as "deputy mayor of the Olympic Village at the Centennial Olympic Games in Atlanta" in 1996.
Russ Chandler III, who was mayor of the Olympic Village in 1996 and was credited with bringing the games to the city, is listed as an independent director of Mr Miller’s tow-truck business, Miller Industries.
Both Trac and the Olympic appointment appear to be the only previous involvement Mr Miller has had in sporting ventures. He has no apparent connection with Rangers, Glasgow or football. His plan for the Ibrox club involves buying its assets for £11.2m, 'sheltering' them in a newco before using the cash to pay the administrators first, leaving the rest to be claimed by secured creditors and either fund a company voluntary arrangement (CVA) or liquidate it for unsecured creditors.
Mr Miller founded and developed tow-truck business Miller Industries, for which he had a basic annual salary of around £200,000 last year having refused a bonus. Both he and his 34-year-old son, Bill Miller II, have been selling off part of their common stock shares in the company in recent months. Between the end of March this year and last October, the Rangers preferred bidder made around $4.018m (approximately £2.48m) from selling his stake in Miller Industries.
The company has a British arm in Boniface Engineering Limited, based in Norwich, while Miller Industries had a net income of $23m (approximately £14.2m) last year, according to its annual report. The tow-truck firm was run at an operating cost of $342.5m (approximately £211.8m) for 2010-11.
Currently, four investment management companies own considerable stakes in Miller Industries including Dimensional Fund Advisors LP, of which film star and former Californian governor Arnold Schwarzenegger has previously declared an interest of more than $1m in. The three other financial firms with considerable stakes in Miller Industries are Black Rock Inc, Ameriprise Financial Inc and Hotchkis and Wiley Capital Management LLP, which owns more than 11% of common stock shares.
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