David Maddock and Kop Faithful

[peterhague]

2 points:

1. i don't think there's any question of us going into administration, is there? i'm no lawyer, so possibly someone who is will correct me, but as far as i remember administration is gone into at the directors' request, in order to protect a company from its creditors. for it to be necessary, our creditors (overwhelmingly RBS) would have to be of a mind to apply for a winding-up order in order to recover their money, and THEN the club's directors would apply for administration to give us 'breathing space' for a period, protecting its assets while some firm of accountants try to keep us running.

since there's no indication that RBS would want to start the process of liquidation (reputationally damaging, not forgetting that for the time being they stand every chance of collecting mounting interest charges, ie profit), we're left with 2 possibilities. firstly, refinancing. secondly, and again i'm not 100% sure about this, they may have the power to repossess the club and sell it themselves.

2. the loans and interest payments to H&G are surely just bullshit aren't they? they're just clever accounting techniques, because H&G own the club and the debt, so they owe the money to themselves. i don't think there's any way they can insist on this money back from any new purchaser of the club.


let's say the club is valued at £400m on sale: this is the maximum anyone will pay for the shares. if the club owes £300m to the banks and £150m to H&G, then all that will happen is that either the club is not sold, or H&G have to write-off £50m of what they say they're owed by the club. what i'm trying to get at is that it's the shares of the club, representing the underlying business and assets, which determine what someone pays for it, not the club's debt.

 

[spider-Neil]

[quote author=peterhague link=topic=41733.msg1169405#msg1169405 date=1283520718]

2. the loans and interest payments to H&G are surely just bullshit aren't they? they're just clever accounting techniques, because H&G own the club and the debt, so they owe the money to themselves. i don't think there's any way they can insist on this money back from any new purchaser of the club.



[/quote]

they can, and would.

 

[peterhague]

[quote author=spider-neil link=topic=41733.msg1169406#msg1169406 date=1283520953]
[quote author=peterhague link=topic=41733.msg1169405#msg1169405 date=1283520718]

2. the loans and interest payments to H&G are surely just bullshit aren't they? they're just clever accounting techniques, because H&G own the club and the debt, so they owe the money to themselves. i don't think there's any way they can insist on this money back from any new purchaser of the club.



[/quote]

they can, and would.
[/quote]


how though? if they did, they would make the sale unattractive to the tune of £150m, which would knock £150m off their proceeds, which would knock £150m off their profit, so they wouldn't be any better off.

do you see what i mean? they'd lose in profit what they made in loan repayments.

 

[Sunny]

I don't believe the interest they pay to themselves can be held in any way against the club, unlike our other debts. I'd google the article but I can't be arsed

 

[spider-Neil]

I think it works like this;

if things went tits up then liverpool wouldn't be held liable for the G&H loan + interest.

however

if and when the club is sold the G&H loan + interest would almost certainly be added to the total of the sale.

 

[peterhague]

[quote author=spider-neil link=topic=41733.msg1169415#msg1169415 date=1283522016]
I think it works like this;

if things went tits up then liverpool wouldn't be held liable for the G&H loan + interest.

however

if and when the club is sold the G&H loan + interest would almost certainly be added to the total of the sale.
[/quote]


you mean new buyers would be forced to pay over and above what they think the club is worth? respectfully, that's bollocks.

 

[spider-Neil]

[quote author=peterhague link=topic=41733.msg1169416#msg1169416 date=1283522200]
[quote author=spider-neil link=topic=41733.msg1169415#msg1169415 date=1283522016]
I think it works like this;

if things went tits up then liverpool wouldn't be held liable for the G&H loan + interest.

however

if and when the club is sold the G&H loan + interest would almost certainly be added to the total of the sale.
[/quote]


you mean new buyers would be forced to pay over and above what they think the club is worth? respectfully, that's bollocks.
[/quote]

it isn't, the new owners would be taking on liverpool and ALL it's debts.

 

[peterhague]

you're still not following what i'm saying, which is that any debt a new owner takes on would be DEDUCTED from the purchase price rather than added on, and so therefore H&G would receive the same amount in the end.


let's continue with my earlier figures: new owner values club at £400m. debt to H&G is £150m. if the buyer pays £400m for shares AND £150m for debt, then they have paid £550m for the club they value at £400m: only a fucking moron would do this. in reality, if new owner had to repay debt of £150m, then they would simply knock this off the £400m they paid for shares: H&G would receive sales proceeds of £250m and debt repayment of £150m, being £400m in total.

the point is, the loans to the owners are bollocks because they have no prospect of seeing them repaid over and above whatever proceeds they realise for the club.

 

[Sunny]

I'm agreeing with Peter here why would any buyer do the opposite ? It's not a debt on the club....it's on the owners themseleves - surely it's their problem alone?

 

[spider-Neil]

[quote author=Sunny link=topic=41733.msg1169446#msg1169446 date=1283526272]
I'm agreeing with Peter here why would any buyer do the opposite ? It's not a debt on the club....it's on the owners themseleves - surely it's their problem alone?
[/quote]

yes but the club OWE G&H. it's like that 10 million the club owed david moores (kuyt fee) moores for was that 10 mil when the club was sold.

 

[StevieM]

[quote author=Sunny link=topic=41733.msg1169446#msg1169446 date=1283526272]
I'm agreeing with Peter here why would any buyer do the opposite ? It's not a debt on the club....it's on the owners themseleves - surely it's their problem alone?
[/quote]

I see what you're getting at, but I think the money owed to G&H is on the club. They've owned the club money and therefore those loans are repayable. The difference is that the loans don't have to be repaid while G&H own the club.

I have a feeling that Abromovich "loaned" Chelsea stacks of cash, which would have been repayable had he sold on at any point. I think he actually wrote off the loans in the end.

Ross indicated that Randy Lerner had done much the same at Villa.

As far as I understand it, the 350m debt that's talked about includes the money G&H loaned to the holding company. The difference between the loans seems to be that the RBS loan is the one that has a deadline to repay it.

I'm sure I read somewhere that G&H's loans just keeps accuring interest and keeps getting bigger and bigger... but we aren't paying it down - when and if they sell that's one of the areas they'll no doubt make some money.

I wouldn't be surprised fi it's similar to the Glazer's debt at Man Utd

 

[spider-Neil]

[quote author=StevieM link=topic=41733.msg1169458#msg1169458 date=1283527503]
[quote author=Sunny link=topic=41733.msg1169446#msg1169446 date=1283526272]
I'm agreeing with Peter here why would any buyer do the opposite ? It's not a debt on the club....it's on the owners themseleves - surely it's their problem alone?
[/quote]

I see what you're getting at, but I think the money owed to G&H is on the club. They've owned the club money and therefore those loans are repayable. The difference is that the loans don't have to be repaid while G&H own the club.

I have a feeling that Abromovich "loaned" Chelsea stacks of cash, which would have been repayable had he sold on at any point. I think he actually wrote off the loans in the end.

Ross indicated that Randy Lerner had done much the same at Villa.

As far as I understand it, the 350m debt that's talked about includes the money G&H loaned to the holding company. The difference between the loans seems to be that the RBS loan is the one that has a deadline to repay it.

I'm sure I read somewhere that G&H's loans just keeps accuring interest and keeps getting bigger and bigger... but we aren't paying it down - when and if they sell that's one of the areas they'll no doubt make some money.

I wouldn't be surprised fi it's similar to the Glazer's debt at Man Utd
[/quote]

very well summed up, stevie.

 

[peterhague]

[quote author=StevieM link=topic=41733.msg1169458#msg1169458 date=1283527503]
[quote author=Sunny link=topic=41733.msg1169446#msg1169446 date=1283526272]
I'm agreeing with Peter here why would any buyer do the opposite ? It's not a debt on the club....it's on the owners themseleves - surely it's their problem alone?
[/quote]

I see what you're getting at, but I think the money owed to G&H is on the club. They've owned the club money and therefore those loans are repayable. The difference is that the loans don't have to be repaid while G&H own the club.
I have a feeling that Abromovich "loaned" Chelsea stacks of cash, which would have been repayable had he sold on at any point. I think he actually wrote off the loans in the end.

Ross indicated that Randy Lerner had done much the same at Villa.

As far as I understand it, the 350m debt that's talked about includes the money G&H loaned to the holding company. The difference between the loans seems to be that the RBS loan is the one that has a deadline to repay it.

I'm sure I read somewhere that G&H's loans just keeps accuring interest and keeps getting bigger and bigger... but we aren't paying it down - when and if they sell that's one of the areas they'll no doubt make some money.

I wouldn't be surprised fi it's similar to the Glazer's debt at Man Utd
[/quote]

but what i've tried to demonstrate is that it's irrelevant whether the club owes money to its owners because the club and its owners are one and the same thing. just think about it logically: how would you expect the loans to be settled? if the club repaid them, then the club would reduce its assets by the value of the loan, which would reduce the club's value by the amount of the loan, which would reduce the sales proceeds by the value of the loan, so in the end the amount of money returning to H&G by virtue of sales proceeds and loan repayment would be exactly the same as if they'd never taken repayment of the loan in the first place.

 

[rebel23]

we are technically bankrupt with refinancing putting off the inevitable collapse unless we find a 'red' knight to ride to the rescue and save us

I guarantee the cancers will find some shady hedge fund and borrow the money at extortionate rates to try and hang on for another year or even six months but this will again be very damaging to the club and the team. At some point you have to say enough is enough and sooner or later if the yanks hang on the players will get more frustrated and the best ones almost will certainly leave

the banks and the yanks are rolling the dice, hoping we have a good season and get some CL money but even if we do it doesn't improve our position much and it might mean the yanks can hang on for a bit longer which is disastrous long term


any potential buyer should just wait for the inevitable collapse, be it this year or next year and buy the club from the creditors with perhaps even a discount on the debt i.e 80-90% of the debt because for them its better to get something back than nothing

 

[HC]

All doom and gloom,eh?

What happened to all six of these serious bidders that were being batted around no more less than a month ago - Each and everyone of them has been turned away or pulled out?


I don't really understand this but what's stopping the bank from not allowing the yanks to re-finance and subsequently putting the club on the brink to then only bring in their buyer who can pick up the club, debt and a substantially lower figure than the yanks would have ever accepted?

 

[rebel23]

Anyone serious should just wait for the collapse, like buying a repossessed home at auction that is LFC's fate .

 

[Rosco]

[quote author=peterhague link=topic=41733.msg1169405#msg1169405 date=1283520718]
2 points:

1. i don't think there's any question of us going into administration, is there? i'm no lawyer, so possibly someone who is will correct me, but as far as i remember administration is gone into at the directors' request, in order to protect a company from its creditors. for it to be necessary, our creditors (overwhelmingly RBS) would have to be of a mind to apply for a winding-up order in order to recover their money, and THEN the club's directors would apply for administration to give us 'breathing space' for a period, protecting its assets while some firm of accountants try to keep us running.

since there's no indication that RBS would want to start the process of liquidation (reputationally damaging, not forgetting that for the time being they stand every chance of collecting mounting interest charges, ie profit), we're left with 2 possibilities. firstly, refinancing. secondly, and again i'm not 100% sure about this, they may have the power to repossess the club and sell it themselves.


[/quote]

My understanding of the above is the same as yours.

 

[Rosco]

[quote author=Molbystwin link=topic=41733.msg1169241#msg1169241 date=1283502307]
[quote author=Rosco link=topic=41733.msg1169234#msg1169234 date=1283497406]
[quote author=rebel23 link=topic=41733.msg1169223#msg1169223 date=1283495373]
the CL money argument is nonsense, since the cancers took over the PL rights money has doubled, possibly trippled with the new overseas agreement. even if we had CL money it wouldnt make much of a difference to transfer funds under G&H (it didnt last year). Benitez made this point once, saying last season it didnt matter if we qualified for the CL for the transfer budget.

The fact is the interest payments are crippling the club and we would have to not only have CL money but be the bestest team ever, have a stadium double the size etc. to meet them i.e it's impossible and won't happen, it can't happen (ticket price increases is small beer), we face certain bankruptcy

it's economics of the mad house and some of us have pointed this out since they took over whereas people like Rosco have defended the financial position of the club as we were able to once afford to sign Robbie Keane so all must be well

[/quote]


I don't think I'm defending the financial position of the club, I'm looking at it and seeing that we're in trouble regardless of the owners.

As for your contribution as ever it's all over the place and full of falsehoods.

We received 52m in revenue under the Media heading in the accounts (including TV revenue) in the year the Yanks took over, last year it was at 74m.

52 x 2 = 74 ?

Spidey you should know better at this stage.
[/quote]

So thats a 42% revenue increase and yet debt is increasing faster than ever? To just sit calmly by and suggest that the owners are somehow innocent victims left with us as a poison chalice of a club beyond their control is disingenuous Ros and it does give the impression of tacit suppot. We are in Trouble and it is getting worse despite a 42% revenue increase!! Whose fault is that if it isnt the owners fault?

You seem to have the figures to hand so just out of interest by how many percent has the wage bill increased? And Spidey is right, whatever criticism justified or otherwise that can be thrown at Benitez to suggest that it is CL which was paying for acquisition doesnt quite add up does it? Benitez had a fine record in Europe and yet the season before being fired, when we finished second and in the CL yet again no net investment, to disastrous effect morale wise and season wise.

Where does the responsibility lie exactly, with the players wages as you suggested earlier?? So when our star striker comes out in the press and states that we need to change owners pronto should we not just turn round and say Actually nando its your fault we are in this mess....

And you've got the front to accuse another poster of being all over the place...


[/quote]

The wage bill has risen by 50%.

You're reading way too much into my posts, all I've said is that the people who think all our problems begin and end with the owners and interest payments could be in a for a rude awakening.

 

[Judge Jules]

[quote author=Hardcastle link=topic=41733.msg1169519#msg1169519 date=1283534319]
All doom and gloom,eh?

What happened to all six of these serious bidders that were being batted around no more less than a month ago - Each and everyone of them has been turned away or pulled out?


I don't really understand this but what's stopping the bank from not allowing the yanks to re-finance and subsequently putting the club on the brink to then only bring in their buyer who can pick up the club, debt and a substantially lower figure than the yanks would have ever accepted?
[/quote]

If there's an agreement in place between RBS and the owners which runs out in October there may well be nothing RBS can do until then. If at that point the owners haven't kept their part of the bargain RBS could well be entitled to act as you describe, but there have been mentions in the press of a threat of legal action from the owners, in their capacity as shareholders, if the bank does foreclose in that way. RBS' decision on what to do next would then depend on a very hard-headed calculation of the pros and cons - do they risk losing (even if they think the possibility is remote) and a consequent hefty legal bill, or do they think that risk is worth taking so they can FINALLY get their money back?

 

[Portly]

I don't see that the owners would have a cat's chance in Hell of suing RBS. The loan agreement will contain about 20 pages of events of default, of which failure to pay the interest on the due date will be number one. Then there will be another 20 pages detailing what RBS are entitled to do if one of those events of default takes place, and foreclosing on the assets will be number one! :🙂

 

[Judge Jules]

Unusually for you, old pal, you've missed an important point. I did say that, if this happened, H and G would probably be acting in their capacity as shareholders. To explain further, this would be on the grounds that RBS' action didn't properly safeguard their interests in that capacity. I would hope that they'd have only a remote chance of success given the way they've handled (or, rather, failed to handle) things but, as you know, there are no certainties where litigation is concerned.

 

[Portly]

I really don't see it, Jules. H & G's acquisition of LFC followed a standard type of leveraged buyout for private equity-type companies. Although they set up a shell company as a vehicle for the transaction, as the shareholders they will be fully pinned-down to the terms of the loan agreement. If it were legally possible or them to disassociate themselves from it and claim that RBS had not acted in their interests, this would already have happened thousands of times in other situations and the banks would have changed the way this type of transaction was organised to protect themselves.

IMHO

😉

 

[Judge Jules]

As an accountant you'll know much more about the financial detail than I do, so you may well be right overall. Believe me, I hope you are.

I do just wonder about the precedent argument though. Is it really the case that thousands of such agreements come to a premature end with borrowers defaulting? Besides, my worry would be that an action by H and G could be based not on their disassociating themselves from the loan agreement but on duties owed to them by RBS by virtue of that same agreement, though again I would hope that their own record would count heavily against them.

 

[jason]

[quote author=Portly link=topic=41733.msg1169813#msg1169813 date=1283600452]
I really don't see it, Jules. H & G's acquisition of LFC followed a standard type of leveraged buyout for private equity-type companies. Although they set up a shell company as a vehicle for the transaction, as the shareholders they will be fully pinned-down to the terms of the loan agreement. If it were legally possible or them to disassociate themselves from it and claim that RBS had not acted in their interests, this would already have happened thousands of times in other situations and the banks would have changed the way this type of transaction was organised to protect themselves.

IMHO
😉
[/quote]

Ok Given all the facts How in your opinion will this PAN OUT the most likely outcome.

 

[Portly]

[quote author=jason link=topic=41733.msg1169842#msg1169842 date=1283606484]
Ok Given all the facts How in your opinion will this PAN OUT the most likely outcome.
[/quote]

In my opinion if Broughton's current exercise to find new owners should fail, and if H & G can't meet their obligations to RBS, the club will eventually get new owners anyway. This is because whoever takes control, whether it is RBS or administrators, the business of LFC is not worth much except as a going concern, i.e. one of the world's most famous football clubs. Apart from the player registrations, the assets would be worth little on a break-up basis.

So I think we need only be patient and things will sort themselves out eventually.

 

[jason]

[quote author=Portly link=topic=41733.msg1169846#msg1169846 date=1283607438]
[quote author=jason link=topic=41733.msg1169842#msg1169842 date=1283606484]
Ok Given all the facts How in your opinion will this PAN OUT the most likely outcome.
[/quote]

In my opinion if Broughton's current exercise to find new owners should fail, and if H & G can't meet their obligations to RBS, the club will eventually get new owners anyway. This is because whoever takes control, whether it is RBS or administrators, the business of LFC is not worth much except as a going concern, i.e. one of the world's most famous football clubs. Apart from the player registrations, the assets would be worth little on a break-up basis.

So I think we need only be patient and things will sort themselves out eventually.
[/quote]

Yes Obviously someone else will own us but WHEN? And will we be a viable force, team at the end of it. Do you think administration is the most probable outcome. Can we afford to be patient.
IE I'm asking you to stick your neck out a bit.

 

[Portly]

If I were that clever, jason, I would be a rich man.

Of course as supporters we are kept in the dark as to what's going on at the moment. In spite of the world economic recession, I would be surprised if Broughton & co. were to be unable to find a suitable owner for a club of Liverpool's status. Maybe something is going on that we don't know about. Let's hope so.

 

[Rosco]

[quote author=Portly link=topic=41733.msg1169858#msg1169858 date=1283608601]
If I were that clever, jason, I would be a rich man.

Of course as supporters we are kept in the dark as to what's going on at the moment. In spite of the world economic recession, I would be surprised if Broughton & co. were to be unable to find a suitable owner for a club of Liverpool's status. Maybe something is going on that we don't know about. Let's hope so.
[/quote]

Name a date and time !

 

[jason]

[quote author=Rosco link=topic=41733.msg1169862#msg1169862 date=1283608988]
[quote author=Portly link=topic=41733.msg1169858#msg1169858 date=1283608601]
If I were that clever, jason, I would be a rich man.

Of course as supporters we are kept in the dark as to what's going on at the moment. In spite of the world economic recession, I would be surprised if Broughton & co. were to be unable to find a suitable owner for a club of Liverpool's status. Maybe something is going on that we don't know about. Let's hope so.
[/quote]

Name a date and time !
[/quote]
I was hoping someone might have more inside info but not able to reveal it.