by account deleted by request » Tue Jan 29, 2008 8:24 am
Hicks admission casts doubt on Benitez plans
By David Bond
Last Updated: 1:58am GMT 29/01/2008
Liverpool's American owners have admitted for the first time that the football club will have to finance around £30 million in annual interest payments on new loans taken out to pay for their takeover of Anfield last February.
Despite announcing last Friday that only £105m of a new £350m refinancing package was at "club-level", a spokesman for co-chairman
Tom Hicks admitted last night that the club would also be responsible for servicing the remaining £245m, which had been placed on the balance sheet of Liverpool's parent company Kop Football (Holdings) Ltd.
A spokesman from Financial Dynamics, the City PR company which represents Hicks, said: "The holding company debt is supported by the assets it acquired and should there ever be any shortfall in cash flow at the club or anywhere else in Kop in any given year, Kop's ownership, under the terms of the financing package, is prepared to fund whatever is required.
"The debt is being handled exactly as it is handled at the vast majority of professional sports teams."
The admission is significant because Liverpool's chief executive Rick Parry and former chairman David Moores, who remains a director, have resisted attempts by Hicks and his co-owner George Gillett Jr to transfer the £220m cost of last February's takeover on to the club's books.
They voted against the proposal at a board meeting last autumn and their continued opposition to the move was one of the key factors in slowing the new £350m deal with Royal Bank of Scotland and Wachovia, finally announced last week.
Under the terms of the new deal, Kop Football said £105m would be placed on the club, including £60m for the start of work on a new 71,000-seat stadium at Stanley Park and a further £45m to cover other club debts, including money for past and future player acquisitions.
The remaining £245m was split into two tranches; £60m of so-called existing debt which the Americans say they inherited at the time of their takeover, and £185m, which they say relates to the cost of acquiring their shares in the club.
Liverpool sources say they remain comfortable with the £8m-a-year interest fees which are likely to accompany the £105m club debt.
But Hicks's admission last night that the whole debt would have to be serviced by the "asset", namely Liverpool Football Club, appeared to confirm that cash flows from Anfield would have to cover the whole interest cost, likely to be in the region of £30m at current market interest rates of eight per cent.
There are fears among club insiders and fans that the annual interest costs will wipe out Liverpool's operating profits, which are expected to be in the region of £30m for the financial year ended June 2007, applying a further brake on manager Rafa Benitez's plans in the transfer market.