The immediate future of Liverpool is to be determined tomorrow at the High Court. Fans around the world will be waiting with baited breath to see whether Messrs Hicks and Gillett, the current owners, will successfully block the sale of the club.
The story broke last week that the Board of Directors at Liverpool had received 2 financial offers to buy the Club which would repay all of its long-term debt to the Royal Bank of Scotland (‘RBS’) in the sum of approximately £280 million. In another twist, this debt is apparently due on 15 October 2010 which means that RBS will have some influence over what happens next.
The offer which looks the most likely to go ahead is the £300 million takeover from New England Sports Ventures (‘NESV’), members of which are the owners of the Boston Red Sox Baseball Team whom have demonstrated an excellent track record in turning round and restoring the Boston Red Sox to their former glory days.
However, Hicks and Gillett apparently oppose the sale as it is alleged that they stand to lose an estimated £144 million through their Kop Holdings Company if the NESV sale goes through. They reportedly wanted £800 million for the club which was then reduced to £600 million. The £300 million offer by NESV is half this amount and could mean that they will be significantly out of pocket.
Last week there was apparently blood in the boardroom as Liverpool board members Martin Broughton, Christian Purslow and Ian Ayre are in favour of the sale. Broughton was appointed in April to oversee the sale, however Hicks has allegedly attempted to reconstitute the board in an attempt to prevent the sale. Broughton is allegedly relying on the Articles of Association (paragraph 81 a) which gives him as chairman the power to appoint and dismiss all of the directors apart from Hicks and Gillett themselves. The High Court decision will determine whether the sale can proceed based on the interpretation of these articles. In other words, if the Board that favoured the sale, led by Broughton, was validly appointed, then it has been approved. If the board ‘appointed’ by Hicks and Gillett is validly appointed, then the sale has not been approved.
If the sale is successfully blocked, or if it is delayed until after 15 October 2010, RBS could put Kop Holdings into administration to release the money owed to them. The implications of this could be catastrophic for the Reds both on and off-field. On field it could mean that they face a nine point deduction from the Premier League. This could in turn impact off-field leading to NESV pulling out of the sale. At this stage however, Purslow has insisted that the prospect of administration has not been discussed with NESV.
Even if the sale does go through, Kop Holdings could find itself in administration, as it would not be able to pay the £144 million still owed to Hicks and Gillett. They could decide to ‘pull the plug.’
West Ham escaped such a deduction when it was owned by the Icelandic Bank Straumaur. However, West Ham was a solvent part of a whole portfolio of different companies whilst Kop Holdings is solely concerned with Liverpool, meaning that the threat of deduction is a real possibility.
With the story changing rapidly, the fans await tomorrow’s High Court decision with almost as much trepidation as the Everton game on Saturday.
We will be providing an update following tomorrow’s High Court decision.