From the Times:
Banks press Tom Hicks and George Gillett on Liverpool debt
Lenders demand co-owners increase their efforts to find fresh sources of capital and reduce the club’s liabilities
Tom Hicks and George Gillett Jr, the owners of Liverpool, have been issued with an ultimatum by the club’s bankers to attract investors to reduce the club’s debt or to sell up.
A statement released on behalf of Hicks and Gillett yesterday provided official confirmation for the first time that a search for new funds is under way, with Rothschild and Bank of America Merrill Lynch, the investment banks, leading the search.
City sources believe the announcement is an indication of the pressure that the Americans, who bought Liverpool in February 2007, are under to reduce the club’s exposure to debt. An equity raise — a quest to find minority shareholders to inject finance into the club in return for a stake — is a clear signal that the days of Hicks and Gillett as dual owners are numbered, although speculation that a Saudi Arabian prince is on the verge of concluding a deal to secure a half-share have been dismissed.
“The owners have jointly retained Bank of America Merrill Lynch and Rothschild to evaluate the possibility of new investors injecting equity into Liverpool Football Club,†a spokesperson for Hicks and Gillett confirmed. “However, the process is at an early stage, there is no agreement with any party and reports to the contrary are wholly inaccurate.â€
Hicks and Gillett secured a deal in July to refinance their debts with Royal Bank of Scotland and Wachovia, but the agreement was struck only on the condition that they provided £60 million in equity to reduce Liverpool’s outstanding liabilities from £310 million to £250 million, after fears expressed by the club’s accountant, KPMG, of their ability to continue as a going concern given such large-scale exposure to debt.
However, rather than cementing their position as owners, the deal was designed to allow Hicks and Gillett more time to sell the club. It is understood both banks are reluctant to extend the loans again unless the club reduce their debt before next summer.
Claims that Prince Faisal bin Fahd bin Abdullah al-Saud, of Saudi Arabia, is about to strike a deal in which he would assume a 50 per cent stake in Liverpool were dismissed, with senior club officials having been taken by surprise by reports that an agreement was in place and that due diligence is under way, neither of which is true.
Gillett, in particular, though, is stepping up his efforts to recruit investors who would allow him to retain a partial stake in the club at the least. His meeting with Prince Faisal at Anfield last Saturday was accompanied by a raft of publicity.
In statements emanating from the Middle East, a spokesman on behalf of Prince Faisal has since claimed that a significant investment deal was imminent, but, as reported in The Times on Monday, this is not the case, with the only accord being one that will further Gillett’s interests in Nascar, the North American motor-racing sport.
