Financial situation, doom & gloom reports etc

[nobbylad]

I really hope those big, bad American guys read through all of the posts about them on the internet so they will stop telling lies and stop being mean to our club.

I mean it's not like they are trying to make money or anything is it?

[AFII]

Liverpool face funding crisis

Liverpool's American owners, Tom Hicks and George Gillett Jr, have postponed until 2009 plans to borrow £300 million from banks to pay for the club's new home at Stanley Park, plunging the project into fresh uncertainty.

Hicks and Gillett are confident of clinching a separate interim deal before Christmas with the Royal Bank of Scotland and American bank Wachovia to borrow £350 million to refinance a loan used to fund their £220 million takeover last February and pay for initial building work.

However, The Daily Telegraph has learned that there are now serious question marks over the rest of the money required to complete the move from Anfield. A combination of the global credit crunch and nervousness over the level of debt which will be placed on to Liverpool's balance sheet has forced Hicks and Gillett to abandon plans to raise all the money in one go.

Instead they are now looking to borrow £350 million to pay off a two-year loan with RBS worth approaching £270 million, inject £60 million of working capital for the new ground and cover £25 million of credit notes used to finance the summer purchases of Fernando Torres and Ryan Babel, again provided by RBS.

It is understood that while the £60 million of stadium financing will get Hicks and Gillett through the first 18 months of work on the Stanley Park project there are serious concerns over how they will raise the remaining £300 million needed to complete the stadium, which has been scaled back after the designs came in £50 million over budget.

Sources close to Hicks and Gillett maintain the Americans are confident of raising the money for the stadium in 2009 when it will be two years from completion and easier to secure contracts with future sponsors for naming rights and to predict income from the sale of club seats and executive boxes.

But contrary to promises made at the time of their takeover earlier this year, the owners are now preparing to load at least half of the new £350 million debt on to the club.

Banking sources said that, while Hicks and Gillett had now agreed to pump in £20 million each of their own cash to secure the new £350 million loan, one of the main sticking points previously has been the American pair's reluctance or inability to put up their own money. In addition to the £40 million in cash, the pair are also underwriting £75 million in letters of credit and £60 million in personal guarantees. The refinancing of the club's debts means that from next season Liverpool will have to shoulder about £30 million in annual interest repayments.

According to financial predictions for 2008, that will swallow up much of the club's spare cash, making it harder to provide funds for manager Rafa Benitez to invest in his squad. And although Benitez called a truce with Hicks and Gillett following a meeting on Sunday, tensions with the owners are likely to resurface if he is forced to sell players to fund new acquisitions in January.

http://www.telegraph.co.uk/sport/mai.../sfnfro120.xml

[Revo]

He's been shafted good and proper. He turned down real madrid twice because he was promised the funds he needed. How do you think he feels? I'll give you one guess. I know I'll get **** on this forum for saying this but nothing has changed don't believe the spin.

Dont know why you would get any ****, your observations should be worrying for everyone. If there is no movement from the club in the January window, Rafa wont be here next year.

[AFII]

Liverpool owners' staying power in question

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.

http://www.telegraph.co.uk/sport/mai.../sfnbon120.xml

[Danish_Pastry]

LEEDS

[Tom]

They are milking our club through the projected media profits. They are not in the slightest interested in success. £30 million in annual interest repayments. That's our transfer budget plus some every year. We're stuffed.

[sean_lfc]

Aye, I think it's time to hoist the flag.

[Rocket]

They are milking our club through the projected media profits. They are not in the slightest interested in success. £30 million in annual interest repayments. That's our transfer budget plus some every year. We're stuffed.

they clearly aren't that stupid fella. i hope

[AFII]

they clearly aren't that stupid fella. i hope

Well, if the article is correct then we won't have more or less no money for transfers until we sell the name of the stadium.

Rafa will have to sell before he buys until the name of the stadium is sold but the Mirror say that Rafa will get money for transfers so who knows what is correct or not.

Maybe G&H will spend some of their own money the next one, two years until the name of the stadium is sold.

[Guest]

Well, if the article is correct then we won't have more or less no money for transfers until we sell the name of the stadium.

Rafa will have to sell before he buys until the name of the stadium is sold but the Mirror say that Rafa will get money for transfers so who knows what is correct or not.

Maybe G&H will spend some of their own money the next one, two years until the name of the stadium is sold.

That article you posted was highly speculative & dubious mate.

[carlton]

If Moores really wanted to do something useful he could give Rafa the 80 million he made from the sale of the club to spend on players.

[tomasjj]

Well...if they don't have the cash to keep the promises they made when they bought the club, then please step down...cause you are the wrong owners to take us forward.

No milking cow please.

[AFII]

If Moores really wanted to do something useful he could give Rafa the 80 million he made from the sale of the club to spend on players.

Moores couldn't even give the club £10m for Kuyt, he loaned the club the money.

So in that sense he and G&H are the same, they don't spend any of their own money.

[carlton]

Hicks has got bloody cheek though offering DIC 15% of the club for 150 million pounds given they were only going to pay 174 million to buy it. So Hicks vlues each 1 per cent of the club at 10 million pounds! Crikey. If he wants a cash injecion maybe he should ask Moores for an interest free loan then.

[Tom]

Financing trouble from today's press

From today's torygraph. The quote about liverpool board members being extremly pissed off refers to Moores who is furious.

Liverpool owners face cash crisis
By David Bond, Chief Sports Reporter
Last Updated: 1:27am GMT 21/12/2007


Liverpool's owners, Tom Hicks and George Gillett Jr, have just over a month to refinance the loans they used to buy the club in a £220 million deal last February.


Although it was previously thought that the £270 million funding package arranged with the Royal Bank of Scotland was due to be repaid two years after they bought the club, The Daily Telegraph can confirm that the loan expires in February 2008, with an option to extend for a further 12 months.


That means the American businessmen are facing a race against time to finalise a new £350 million financial package with RBS and American investment bank Wachovia to pay off their original loans, inject £60 million into the new stadium project at Stanley Park and cover £25 million of credit notes used to buy players.

As revealed by yesterday's Telegraph, a plan to raise a further £300 million to complete the relocation from Anfield to a new 70,000-seater ground has been shelved until 2009 at the earliest. But of far greater concern to Hicks and Gillett is the need to reach an agreement with their bankers for the first phase of the refinancing.

Although RBS could take control of the club if the Americans defaulted on the loan in February, the extension option could give them some extra breathing space. But Hicks and Gillett are keen to conclude a new deal before the existing agreement expires.

City sources added that it was extremely unlikely that RBS would pull the plug on Liverpool, knowing the controversial move would be a public-relations disaster. And despite uncertainty surrounding the future funding of a new stadium, RBS know Liverpool remain a well-run business with an annual turnover in 2006 of £121 million. Qualifying for the group stages of the Champions League has also removed one added financial pressure.

Talks between RBS, Wachovia and the Americans' bankers, Inner Circle Sports, were continuing last night but while both sides remain hopeful of doing a deal, hopes are fading of clinching an agreement before the Christmas break.

Although a spokesman for Hicks and Gillett insisted yesterday that they were working towards announcing a deal in the next 24 hours, one banking source here said confirmation was unlikely to come before Christmas.

The hold-up is understood to have been caused by concerns over Gillett's ability to put up more than £87 million in cash and guarantees to underwrite the new bank financing.

Hicks and Gillett are being asked to pump in £20 million in cash each, along with £75 million in letters of credit and £60 million in personal guarantees. One solution could be for Hicks, the wealthier of the club's chairmen, to help cover Gillett's share of the guarantees.

According to City insiders, another major sticking point has been the owners' plans to load their £270 million acquisition debt on to the club's books. That is believed to have met fierce opposition from some members of the Liverpool board who don't want the club to be used to service the cost of the Hicks and Gillett takeover.

The attempt to load the acquisition debt on to the club's balance sheet is all the more controversial because Gillett and Hicks vowed not to follow the route taken by Manchester United owners, the Glazer family, when they took over last February.

Gillett said at the time: "We have purchased the club with no debt on the club so, in that regard, it is different [to the Glazers]."

An alternative structure is now being worked on which will result in more debt placed on to the club's parent company, Kop Football Ltd. But that has placed extra pressure on Hicks and Gillett to prove they have the money to guarantee the loans.

Liverpool chose to say nothing publicly about yesterday's Telegraph report, but a club source stressed plans for the new stadium would not be blown off course.

The Liverpool source added: "The stadium plans are still on track although, as was stated publicly earlier this week, the design may have to be scaled down in terms of extravagance. There is some tough talking going on between the Americans and the banks but the stadium plan is financially sound."

Liverpool announced earlier this week that the plans for the stadium, unveiled in July, were being scaled back after they came in £50 million over budget.