Hicks, Gillett Must Secure $160M For Liverpool Creditors

Gillett (l), Hicks (r) Have Less Than Six Months To Secure $160M Investment For Creditors

EPL club Liverpool co-Owners Tom Hicks and George Gillett "have less than six months to secure" the $160M (all figures US) investment "demanded by their creditors or they run the risk of being forced to put the club up for sale," according to Tony Barrett of the LONDON TIMES. RBS "has made it a prerequisite of another refinancing deal being secured that Liverpool cut their debts" by $160M. If they fail to do so, Hicks and Gillett "would be faced with two options: find another financial institution willing to enter into an arrangement with them or put the club on the market." Liverpool Managing Dir Christian Purslow "refused to guarantee that such investment would be secured in the specified time frame, although he did inform the supporters' group that he hopes it can be done." Hicks and Gillett are "not expecting their creditors to prop up their ailing regime for a further year unless the requirements ... are met," and Purslow's admission that "there is no Plan B should talks with a number of potential investors come to nothing raised the possibility of the Americans being forced to sell in the summer." Purslow said one of the club's "key priorities is to reduce the debt" by $160M. Purslow: "This is a requirement from our bankers and will allow us to look at a more flexible and longer-term refinancing when this investment is brought in." Purslow noted the new investment, which could include "around five or six potential investors," would mean a "dilution of the current ownership" (LONDON TIMES, 2/3).

EASIER SAID THAN DONE? In London, Herbert & Harris write the "pursuit of the investment seems to be proving more difficult than Purslow had originally foreseen, with initial hopes that a number of investors could be sought to secure" the $160M in return for a 25% share "now giving way to the acceptance that no new investor will be prepared to lay out millions simply to take a minority stake in Liverpool." A 34% stake "seems to be the minimum a buyer will accept, with Hicks and Gillett owning" 33% each (London INDEPENDENT, 2/3). The INDEPENDENT's Ian Herbert writes Liverpool needs the $160M "in a hurry and if they don't get it soon that will be the start of the endgame" for Hicks and Gillett. Purslow has assurances that if the debt figure "can be brought down by [$160M], the debt payments can be rescheduled over three to four years and that, critically, the club's main banker, RBS, would also provide backing to unlock the new stadium which is so crucial to Liverpool's financial destiny" (London INDEPENDENT, 2/3).

SLOW START: In London, Ben Smith reports Manchester United's first bond issue, "launched barely a fortnight ago, is in danger of falling flat after analysts confirmed it has become one of the market's worst performers this year." ManU officials last week confirmed that they had raised the $800M investment they "sought to get the club's spiralling debts under control." However, the price of United’s $400M "sterling denominated bonds has tumbled" to just 93% of their original face value, while the value of the $425M of "dollar-denominated bonds has fallen" to 94.5% of their face value. More than 50 low-risk investors "stumped up the cash at a fixed annual interest rate" of 9%, but if an investor had bought a $160,000 bond, "he would have made a loss" of $8,000. ManU "could issue more debt by increasing the size of the bond, but are reportedly not keen to return to the market at the moment" (LONDON TIMES, 2/3).