Dubai International to make bid for Liverpool FC

[Neil Young]

I'm not just that worried anymore. If G&H can't pay the interest then they will sell up. It wouldn't look good if they started to sell off players or the tea lady to raise the money.

Not many other companies would do business with them after that.

In what universe do asset strippers/venture capitalists care about what things look like?

Corporations will do business with anyone they think it will be profitable to do business with.

[MattB]

But then Hicks is neither an asset stripper or a venture capitalist. He's a ruthless ****wit, which is arguably worse

[Alpha]

The latter. I don't think we will see DIC in the picture for quite a while.

CAD, out of interest, what do you make of the latest loan expiring in 18 months?

Why so short term?

[akjs123]

CAD, out of interest, what do you make of the latest loan expiring in 18 months?

Why so short term?

Its more due to the current credit crunch than putting debt on the club after getting rid of Gillet/Moores/Parry 18 months later.

[MattB]

Broadly speaking there are two scenarios

- 18 months is all the banks would give them
- 18 months is all they wanted

If it's the second one, your guess is as good as mine as to why

[sinbad]

The bottom line: refinancing puts Liverpool in the red

Liverpool's owners are only present in press releases, while the club is left to pay off their debt

by David Conn

January 30, 2008

Sport can deliver its lessons with merciless timing, and so it was, just a day after Liverpool supporters were invited to cheer news that £245m of the club's debt will be "at holding company level", Havant & Waterlooville arrived at Anfield. Their semi-pros, proud, composed and loving it, served up a reminder that strength in depth, passionate commitment and applied skill have made English football great, not corporate hunger for profit.

Tom Hicks and George Gillett were not at the game, of course; the owners of Liverpool were present in press release only, having announced, in defiance of the fans' suddenly discovered affinity for Dubai International Capital, that they had secured a £350m loan for Liverpool from the Royal Bank of Scotland and the US bank Wachovia. In the blizzard of figures Liverpool supporters should see clearly that £185m of this debt was taken on by Hicks and Gillett themselves, to buy the club in the first place.

At the time, Hicks promised they were not "doing a Glazer" by loading that debt on to the club, and in their official offer document, the pair declared that payment of the interest and capital "will not depend to any significant extent on the business of Liverpool". To fans genuinely concerned about the club's future, rather than hysterically overreacting to Hicks' admittedly ill-advised honesty about his and Gillett's conversations with Jürgen Klinsmann, the key question is whether this new £350m loan has, after all, saddled the club itself with paying off the owners' borrowings.

The answer was not clear from the statement put out by Kop Football Holdings, Hicks and Gillett's vehicle for buying Liverpool, which is owned in the low-tax US state of Delaware, via the Cayman Islands. "Of the £350m financing," the statement said, "£105m is club...#8209;level debt, which will be used to fund commencement of construction of the new stadium at Stanley Park, for future player transfers, and to meet the club's working-capital needs.

"The other £245m," it added, "will be at the holding company level and was used to refinance the £60m of debt that was on the club's books at the time of last year's acquisition as well as the loan related to the share purchase at that time [my italics]."

Gillett was not quoted on the statement, only Hicks, which further fuelled stories that the pair have fallen out, though that seems to be an exaggeration. Gillett, certainly, is understood to have disagreed with the statement, believing it should concentrate on fan-friendly news about stadium design, rather than on the difficult details of the refinancing.

Fair play to Hicks, then, for setting it out, and although the announcement did not provide a clear answer to the central question, his spokesperson's ready responses meant that the truth could be established. It is that Liverpool, the club itself, will indeed be paying off the £185m, plus interest, which the pair borrowed to buy it last February.

It works like this. Kop Football Holdings has now borrowed £350m. Hicks' spokesperson would not say what rates of interest are being charged, but said they are "market rates consistent with other football club loans". Informed suggestions reckon the rates are between 7% and 8% - approaching £30m a year in interest.

Liverpool's chief executive, Rick Parry, and David Moores, the former chairman who sold to Hicks and Gillett, were understood to have battled for the full £350m not to fall on the club, and that appeared to be the case in the announcement that £105m of it is "at club level" and £245m "at the holding company level". That £245m includes the £185m debt incurred by the owners to buy the club.

The detail, though, does not reassure. The holding company was formed to buy Liverpool and the club, still, is the sum total of what it owns. So although the £245m is secured on the holding company, that means it is effectively secured on the club, too. Hicks also announced that he and Gillett have provided £225m in personal guarantees, cash and letters of credit to support the borrowing - facilities the banks must have required for extra security.

Asked whether the club's money - its earnings from fans buying tickets, TV rights and the rest - will be used to pay off interest on the holding company's £245m, Hicks' spokesperson said: "The holding company debt is supported by the assets it acquired (principally the club) and should there ever be any shortfall in cash flow at the club or anywhere else in Kop in any given year [my italics again], the owner obligation, under the terms of the financing package, is to fund whatever is required."

The thrust of that is clear enough: the club will be paying the interest out of its cash flow - its income. Only if it fails to make enough one year - which is clearly not the owners' intention - will they have to dip into their own pockets.

So, now we know. Hicks and Gillett borrowed £185m to buy Liverpool last February, and the club itself will be paying the interest, year after year, on the cost of being taken over. It is not easy to see how this is any different from "doing a Glazer" at Manchester United, whose accounts recently revealed the club is paying £42m to service part of the interest on the money the owners borrowed to take it over.

Those who inhabit the business world in which such deals are routine tend to sigh a little at questions about their legitimacy. It was similar some years ago when arguments were being advanced strongly in favour of flotation on the stockmarket. Then, sceptics were told it was naive to think football clubs were being floated mainly to make millions for the few men who owned shares, such as Martin Edwards, Doug Ellis and Sir John Hall, or that the structure, requiring clubs to pay out a dividend every year, looked wrong. Now, some of those dealing in football clubs tell us that plc status was, after all, dysfunctional, and that being loaded with new owners' debts from buying the clubs is actually advantageous and normal. Hicks's spokesperson said of the debt: "It is being handled exactly as at the vast majority of professional sports teams."

One comparison made is that this is the same principle as a mortgage. When we buy a house, we all borrow money - yes? Then we pay off the interest every year and hope the house grows in value, so it is worth more when we sell it.

Well, yes, but the correct domestic analogy is rather different. The takeovers of Manchester United and Liverpool and perhaps other clubs - we do not know yet because we have not seen any figures - are more like buy-to-let mortgages. When you are renting a house and a new landlord buys it he then expects your rent (which he may steeply increase), from your earnings, will pay off his mortgage. He hopes to make a fortune because the value of the house will increase.

There is, of course, nothing illegal in that, and it is indeed very common, but it is difficult to see how anybody can be described as benefiting from it - except the new owner himself.

The Arsenal example

The rationale for Liverpool's desire to be taken over was originally that the club needed wealthy backers to support building a stadium. Although the club will be repaying the £185m cost of Tom Hicks' and George Gillett's takeover, and the money for the new stadium will also largely be borrowed, Hicks' spokesperson said the pair's involvement had made that possible: "The club under the current ownership has and will have access to significantly greater financial resources than it did before."

Arsenal built the Emirates Stadium with £260m borrowed from banks, without the club being taken over, and the current board have resolved not to sell their shares for a further five years. Keith Edelman, Arsenal's managing director, maintains that this policy of independence is proving well judged. "For some clubs, takeovers have brought debt," he said. "And even if somebody comes and genuinely puts cash in, the club is insecure because it depends completely on that owner staying interested."

http://blogs.guardian.co.uk/sport/2008/01/30/the_bottom_line_refinancing_pu.html

[Jazzmaster]

from f365:

KRAFT HINTS AT LIVERPOOL BID
Posted 30/01/08 11:16EmailPrintSave




American businessman Robert Kraft admits he has not ruled out a possible takeover of Liverpool.


Kraft owns American football side New England Patriots and Major League Soccer outfit New England Revolution.


And the businessman - who is founder, chairman and chief executive of the Kraft Group - was strongly linked with a bid to buy the Reds before the Merseyside club was taken over by fellow Americans George Gillett and Tom Hicks for £470million in 2007.


However, Gillett and Hicks are rumoured to be unsettled on Merseyside following Liverpool's lacklustre form and a much publicised bust-up with manager Rafa Benitez regarding the club's January transfer policy.




Dubai International Capital are thought to remain interested in a bid to buy out Gillett and Hicks, after withdrawing from the race to own the Reds last year, and Kraft has now hinted that he could also consider a takeover at Anfield.


"We haven't ruled it out completely," Kraft told Sky Sports News.


"But I'm worried a little bit. I want to be able to win whatever we do. But there are no rules in terms of spending on players.


"We would never want to be in a business where we couldn't compete and right now some of the structure doesn't allow you to compete on a level playing field."




And Kraft admits he has met with David Moores, who was Liverpool chairman before selling his stake to Gillett and Hicks and is now a director at Anfield, in the past.


"I spent a lot of time with Mr Moores and his group in Liverpool and we know something about building an opportunity," Kraft added.


"The fan base in Liverpool is a lot like the fan base of the Patriots when we bought them.


"They are dedicated fans if you give them a quality product and they know you are doing their best to win."

[AFII]

In what universe do asset strippers/venture capitalists care about what things look like?

Corporations will do business with anyone they think it will be profitable to do business with.

Would it make you happier if I told you that I'm not worried anymore because things will look at loot better very soon?

[Alpha]

Would it make you happier if I told you that I'm not worried anymore because things will look at loot better very soon?

Have you been talking to your German friend?

[AFII]

Have you been talking to your German friend?

[Lucky]

I Heard something on radio 5 live about a press conference from a group wanting to buy us, can anyone confirm this?

[carlton]

Rash or Tom any DIC updates?

One of the blokes on RAWK said they have discontinued discussions at the moment but will return, maybe Rashid can confirm that?

[Rashid]

One of the blokes on RAWK said they have discontinued discussions at the moment but will return, maybe Rashid can confirm that?

As far as I know they are still talking. I don't know the hold up, I guess it's the price.

[sinbad]

Thurs meeting at the Sandon in Anfield

got this from another site, before it got removed

Tonight’s Supporters Meeting – Some VERY interesting news

Well, I attended the meeting tonight at the Sandon in Anfield for which there was an excellent turnout of >200 activists and committed Kopites, even The Urchins (our firm for those who don;t know) were well represented (and vocal). I had been invited anyway but at Matt’s request I kinda represented TIA there.

Some very very interesting information came out of this which believe me – you will be DISGUSTED at and if you’re not against Hicks and Gillette already then you will be...just read on.

Background

The meeting followed a secret meeting earlier in town regarding the Share Liverpool proposition.

Most of the fansites, fanzines and supporters groups were represented including us, RAWK, The Urchins, RTK, Liverpool Supporters Network etc. and a VERY important / interesting guest which I will come onto shortly. Notable in their absence were the official supporters club (surprise surprise – scared of banning orders as are many ‘normal’ fans I think) and indeed anyone from Share Liverpool.

The agenda was:

1. Aims & introductions
2. Refinancing package – proper expert explanation of / scrutiny
3. Views from the various supporters clubs / groups
4. Q & A to the floor / general opinion
5. Actions

The Journalist

Firstly, let me say that clearly – there is so much going on behind the scenes that the average fan can only learn about so much – not everything is printed in the papers even by journo’s who know the whole story so at times; fans can be forgiven for (as an example) taking a position of support for Hicks because they have only seen the good PR. There's no excuses now though...

Anyway, for me, this was the most important development of the whole evening. Excuse the cloak and dagger but a very senior journalist from a well known regional top selling newspaper – at great personal risk to his/her own job and connections within LFC – took the time out to attend the meeting and reveal some highly compelling information to the audience and answer some very searching questions. I will not reveal his / her name or paper as requested but I’m sure most of you will have a good idea and appreciate this person’s gravitas as both a journalist and connected person at all levels of LFC.

I’ll cover this persons comments / information by section:

(1) Last Saturday

This disgusted me as did last Saturday anyway:

We were told that naturally, Gillette and Hicks have their own people in our club at all levels who of course feed back to them what’s going on. A club email had been intercepted, forwarded and seen by this journalist TODAY stating to Hicks that after last weeks H&W match "he has nothing to worry about, the fans have calmed down". This was sent directly to Hicks by his moles and as a result, he then took a harder line in his negotiations with DIC (which I will come onto in a minute) because he now thinks the fans have backed down – this has hurt the club as I will explain. I am sickened by this as I was by the so called fans and ooters who very aggressively shouted down those trying to demonstrate on Saturday. If those same people see these facts now, they should hang their heads in shame.

We have gotten complacent people, G&H are a genuine threat and we took our eye off the ball.

(2) Parry, Moores & DIC.

Many people see Beavis and Butthead as the root of many of the clubs problems having sold to G&H in the first place. Whether that is However, the journalist explained a few fascinating things to us that you will all be keen to learn. Parry & Moores are according to him/her bitterly opposed to G&H (Hicks in particular) but know that if they are removed from the board then ALL of the debt will be signed over onto the club– they are allegedly – according to this journalist – the ones who have thus far stopped that by voting against it. Hicks is trying to find excuses to oust them and they themselves are working hard behind the scenes to get the Americans out – they know they have screwed up. enough for fans to forgive them in the long term I doubt it but it sounds like they may actually be on our side in this one.

Parry and Moores (as well as Hicks separately) are still negotiating with DIC hard and according to the journalist, it is a case of when and not if. It has been hinted that the plans for the ground are simply a way of adding value to the sale of the club – it’s like if you have planning permission for an extension on your house; it is worth more without you actually having to build anything. With the stadium plans and loans in place; they think they can get more money for selling the club so the question is do they actually intend to build anything or is this all just a way of them making extra cash? Remember that they have only secured cash to pay for the basic groundworks and the real cost would come out of profits and future new loans held against future stadium revenue. Basically; everything suggests that they’re fully leveraged in terms of what money they can raise so if we don’t get the requisite success on the pitch then what happens? Our best financial year I think was £8m profit after winning the Champions League and it’s often been a significant loss. Worse case though we are not Leeds, we are still a very attractive asset and would be okay but it is still worrying. Foster Gillette - as was always intended actually as he held both jobs - is now back at Montreal Canadians (his wife apparantly hates being in Liverpool).

This journalist speaks to DIC on a daily basis and meets with them regularly, including this week although he/she admitted that they may not be knights in shining armour and the answer to all our prayers in the long run, they have though expressed to him/her big financial plans for the club including major backing for stadia and new players. We thus must – unless Share Liverpool turns out to be more than a pipe dream – keep up the pressure for DIC.

Hicks and Gillette are according to him/her hopelessly split, Gillette is at the maximum level of his investment which means he cannot invest more which is in itself worrying. Gillette is apparently ready to get out but he doesn’t want to leave it in Hicks hands – their relationship has come to that bad a level which is perhaps a good thing if what the journo says is true. It does make sense though, Gillette’s silence has been deafening.

(3) Rafa

As he/she does regularly, the journalist spoke to Rafa this morning and asked him about what he thinks of the demonstrations. Rafa’s view is that this is our club and he is behind us but that if we sing his name then he wants us to sing the players names ten times more because it is affecting them as players and he doesn’t think it is fair, he wants us to give our continued support to the players and do what we have to do regarding the rest.

Whatever you think of Rafa, there’s a lot of combining of issues at the moment which is a basic case of divide and rule by the Yanks. The problems with results, Rafa, whatever, are a SIDE ISSUE at the moment and it is not Rafa vs The Americans it is the fans vs The Americans. Let’s not confuse the issues with our ownership with the issues we may have with Rafa and the team. Lets demonstrate but equally, let’s support our players, through the wind, through the rain.

The Rest of The Meeting

I’ve summed the rest of the meeting up into one section because to be honest, in my opinion, there was a lot of passionate support from committed activists at the meeting but quite a poor framework running the show. There were a lot of soundbites and a lot of ‘we need to organise unions and collect dues’ but little in the way of solid actions. That was billed but it became a bit too committe-ish for me and after people starting rambling about pet issues that had nothing to do with the matters in hand, I felt it descended into a mess. The right people were there, the time was right, people were up for it but I think the people chairing it were not up for the task in my opinion, I would have liked to have seen them take control of things early on, suggest actions and drive them forward instead of basically letting every man and his dog have a say about everything they feel is wrong with Liverpool and trying to be all things to all people. We need leadership.

To be fair, if it was a meeting to decide long term goals and aspirations then yes some really good ideas came out of it and colours were nailed to the mast. Some good suggestions were made and I'm confident everything was noted down by the people chairing it. A separate issue perhaps but everyone uttterly pretty fed up with the fans who turn up at the match, spend 90 mins takin photos on their phone and tellin their mates in London on the phone that they’re in Liverpool at Anfield. It’s this type of ‘support’ from daytrippers that we all know is affecting larger campaigns of this nature.

What did come across well was a simple statement that the Americans can buy the stadium etc but they cannot buy the spirit of this club and we are that spirit.

Having been there 2 hours already, I left the meeting after some woman had rambled on about a non related issue for about 10 mins but I will get anything good that came out of it afterwards from the other people I knew there tomorrow including any specific actions they managed to agree for the weekends match.

As I said, the best part of the meeting was hearing what this journalist – who most reds in Liverpool know and respect – had to say about the inner goings on at the moment. The bottom line is Hicks is shafting us, DIC are still very much at the negotiating table, Moores and Parry may have fcuked up but they know it and are trying to fix things and that the fans not supporting the demonstrations on Saturday have hurt the club by making Hicks complacent and making him take a tougher negotiating line with DIC.

We must keep up the pressure, we must tell everyone who will listen that G&H are evil and need to go and we must keep demonstrating be it at the ground or by not buying any LFC products / merchandise.

This was obviously off the top of my head having just come in from this now so I’m sure I’ve forgotten loads of good stuff, any questions or thoughts please let me know

[Dhav]

Thanks for that sinbad, interesting and sobering stuff. I know how important it is to get behind the team in this time of crisis, but surely the priority must be to get the yanks out.