by Ciggy » Sun Oct 10, 2010 11:07 pm
The Financial Times.
Contest for Liverpool FC kicks off
By Roger Blitz and Anousha Sakoui
Published: October 10 2010 20:00 | Last updated: October 10 2010 20:00
There are few certainties regarding the bitter struggle over Liverpool Football Club but perhaps one is that Tom Hicks, the US co-owner reviled by fans, is not going to cede control without a fight.
“Everybody is going to fight here,” says one observer of the troubled 44-month ownership of Liverpool by Mr Hicks and co-owner George Gillett. “Is he mounting an aggressive legal strategy? Of course he is.”
the past week was tumultuous for one of the world’s most recognised sporting franchises, the coming one promises to be even stormier.
Martin Broughton, the club’s chairman, having seen his proposed sale of Liverpool to John W Henry’s New England Sports Ventures for £300m roundly rejected by the owners, is now pressing for the deal to be validated in the High Court. Legal teams for both sides will be contesting fundamental tenets of corporate law – who really owns Liverpool, in whose interests are the directors of a company there to serve and what are the rights of lenders when directors are at odds.
Given Mr Gillett’s apparently weaker financial position, Mr Hicks is the dominant force confronting Mr Broughton and his fellow board members Christian Purslow, Liverpool managing director, and Ian Ayre, the commercial director.
Watching on the touchlines are the interested parties – Royal Bank of Scotland and Wachovia, who loaned Mr Hicks and Mr Gillett £280m and whose loan technically falls due on Friday; NESV, owners of the Boston Red Sox; an Asian consortium that made an offer for Liverpool similar to NESV but narrowly lost out; the Premier League; and Liverpool’s army of fans.
But all parties must be prepared for an inconclusive outcome.
Observers say the Hicks legal camp is likely to demand disclosure of documents on issues such as the board’s refusal on more than one occasion to sanction the owners’ refinancing proposals. If the judgment is definitive, whoever loses is likely to appeal.
There is also the possibility that the lenders, of which RBS is the biggest, will call in the loan to Kop Holdings, the Hicks-Gillett investment vehicle for Liverpool, and put the club into a prepacked administration, with the administrator sanctioning the banks’ shares sale to a new owner.
It is an outcome none of the parties relishes, not least because the Premier League has indicated the club would incur a nine-point penalty for breaching insolvency rules. It has emerged that NESV see this as a “deal-breaker”.
People close to the situation say they believe that even if the legal arguments drag on, there are other options to be exhausted before administration would occur. “I’m not contemplating administration and nobody should be,” says Mr Purslow.
One scenario sees the loan going into default on Friday but the banks not having to call in their loans. Some restructuring experts speculate that in the event of default the lenders to Kop Holdings could have the right to sell the club without the need for administration.
But in the background of any legal dispute is the prospect of an out-of-court settlement. The legal pro-cess may go on for some time, other legal actions may be filed. Rulings and opinions will strengthen or weaken the two sides.
At the heart of the Hicks camp’s strategy, says one observer, is to get a settlement that more closely reflects the owners’ valuation of Liverpool, and their contention that the club is “a profitable and very valuable institution”.
A £300m sale would clear Liverpool’s debts, but would also wipe out the owners’ loan to the club of £140m. Every successful legal argument won by Mr Hicks will strengthen his chances of seeing some of that money back. The question would then be one for Mr Henry: would he be prepared to raise his price and pay upwards of £400m to Mr Hicks to end the legal process, or would he walk away? The match has only just kicked off.
There is no-one anywhere in the world at any stage who is any bigger or any better than this football club.
Kenny Dalglish 1/2/2011
REST IN PEACE PHIL, YOU WILL NEVER BE FORGOTTEN.
off Scousers if you dock 9 points because Tom Hicks is a 
by A.B. » Sun Jan 14, 2007 1:47 am
