by account deleted by request » Thu Dec 20, 2007 5:33 am
Liverpool owners' staying power in question
By David Bond, Chief Sports Reporter
Last Updated: 1:07am GMT 20/12/2007
Having cleared the air with manager Rafael Benitez in the aftermath of the Anfield defeat by arch rivals Manchester United on Sunday, Liverpool's owners Tom Hicks and George Gillett Jr are hoping the conclusion of a £350 million refinancing deal this week will draw a line under a difficult period for the club.
Tensions with the Spaniard over transfer spending, stuttering form in the Premier League and Europe and problems with the new stadium at Stanley Park have made December a month to forget.
But, even with the new loans from the Royal Bank of Scotland and investment bank Wachovia set to be confirmed in the next two days, uncertainty continues to cling to the American-owned club.
Hicks and Gillett had planned to not only refinance £298m of borrowings arranged with RBS at the time of their February takeover, but had hoped to raise all the money they needed to cover the £300m move from Anfield to their new "world class" stadium at Stanley Park.
Those plans have now been shelved until 2009, another victim of the global credit crunch.
Hicks and Gillett insist the delay is no problem. They point out that staggered funding of major stadium projects is commonplace in the United States, with banks more comfortable about lending large sums of money once they know lucrative contracts with naming rights sponsors and executive box holders are in place.
But that won't stop Liverpool fans from worrying about the prospect of being left with nothing more than an expensive hole in the ground in 18 months' time.
Already Hicks and Gillett have ordered a scaling back of the project after the designs by Dallas firm HKS, architects for the American Airlines Centre, home to Hicks's Dallas Stars Ice Hockey team, came in £50m over budget.
The mix-up led to a new firm, Manchester based AFL, being brought in this week to draw up a rival, slimmed down version of the stadium. The two architects are now working head to head to come up with a final version which will be chosen on January 9.
Once the design is selected, the club will go back to Liverpool City Council for new planning consent. If all goes well Hicks and Gillett plan to start work in the summer and remain confident the whole scheme can be completed by 2011.
The initial £60 m for the first phase of work on the Stanley Park project will come as part of the funding package set to be agreed before Christmas with RBS and Wachovia. The rest of the 18-month, £350m loan, will refinance borrowings used mainly to pay for the £220m takeover and to repay £25m of credit notes used to help fund the £26m purchase of Fernando Torres and the £11.5m signing of Ryan Babel.
The difference this time is that the loans are no longer just secured against the American assets of Hicks and Gillett.
Under the terms of the new financing at least £175m is to be guaranteed on the club and its parent company Kop Football Ltd.
The rest is being underwritten by Hicks and Gillett, who are putting in £20m in cash each along with £75m in letters of credit and £60m of personal guarantees, increasing the owners' obligations from £115m to £175m.
It is understood an earlier scheme to borrow £375m was rejected by senior club directors because it placed even more debt on the club's books. But, despite revising the agreement, Liverpool are still likely to face £30m annual interest repayments from 2008.
Amid so much financial uncertainty, there has been speculation that the relationship between Hicks and Gillett has broken down. There has also been talk that Hicks was preparing to sell his 50 per cent stake.
In fact Inside Sport can reveal that last month Hicks held tentative talks with Dubai International Capital, the investment company of Sheikh Mohammed bin Rashid Al Maktoum, about selling them a 15% stake in the club for £150m.
Under the terms of the proposed deal, Hicks and Gillett would each sell DIC 7.5 per cent, diluting their holdings to 42.5 per cent and giving DIC a minority, non-voting, stake in the company.
However, despite remaining keen to acquire the club, DIC turned the offer down, believing the £1billion valuation of the club to be unrealistic. Having been rejected by Liverpool at the start of the year, they remain keen to do a deal, but only if the takeover has the backing of the fans.
The fact Hicks was prepared to discuss selling a small stake in the club will have given DIC hope they can finally get their hands on the club. It will also set alarm bells ringing among supporters who fear the Americans are only interested in making a quick buck.
But Hicks has told friends that he has no interest in selling out to DIC and was only looking for an injection of cash. He remains convinced England's top four clubs will rocket in value over the next 10 years, fuelled by the growth of media and internet rights.
Failure to raise the money for the new stadium in 2009, however, may leave Hicks and Gillett with no choice to cut their losses and end Liverpool's American adventure.
Time for G&H to move over and let the big boys play