RBS moves to force George Gillett and Tom Hicks to sell Liverpool
• RBS places club's loans into its toxic-assets division
• Deadline for refinancing of owners' loans is 6 October
* Matt Scott
* guardian.co.uk, Thursday 9 September 2010 19.42 BST
A group of Liverpool fans wrote an open-letter to RBS this week claiming the club's owners Tom Hicks and George Gillett were 'liars'. Photograph: Dave Thompson/PA Wire/Press Association Images
Tom Hicks and George Gillett's ill-starred reign as owners of Liverpool looks like having less than a month to run after the club's loans with Royal Bank of Scotland were placed into its toxic-assets division.
The deadline for the refinancing of the owners' personal loans from RBS is 6 October, and that now looks set to be the date that Hicks and Gillett's association with England's most successful club will end. The bank's decision to switch the debts to its Global Restructuring Group is the strongest possible signal that these loans will not be extended.
The co-owners' previous attempt to refinance the debts in June, when they are believed to have offered to secure the loans against their US assets, was overruled by the club's board, led by the chairman, Martin Broughton. Now, with the loans having been shifted into RBS's so-called "bad bank", where all toxic assets have been housed since last year, it is clear the club's lender has also adopted a more steely stance towards the Americans.
One source with a knowledge of Liverpool's dealings with RBS said: "If it has been taken out of the hands of the corporate banking department they'll have a much more ruthless approach on 6 October." An informed view from another source close to the situation is that the bank would hope to sell the club, possibly at a knockdown price, in the coming weeks or as soon possible after 6 October.
According to the club's accounts to July 2009 Liverpool's owners owe £237.4m to RBS. Through a variety of companies in the UK and overseas, Hicks and Gillett are also personally exposed to tens of millions of pounds in other commitments to the club and its lender. These have been in the form of a mixture of cash, which the pair have injected through equity, and guarantees to the RBS loans. Last year's accounts stated this combination amounted to £145.3m, although it is believed to have risen dramatically after the last refinancing agreed five months ago.
RBS would hope to achieve an orderly sale without having to take control of Liverpool. However, depending on the terms of the April refinancing agreement – which have never been made public – that may prove difficult if the co-owners, who value the club at £800m, refuse to go quietly.
One tool at RBS's disposal is to force the insolvency of Liverpool's UK parent and associated companies. It is clear from mortgage documents lodged with Companies House that in the event of default RBS has the power to place Kop Football and Kop Football (Holdings), as well as Gillett's loan-security vehicle, Football UK Ltd, into administration. However that would be unpalatable for the bank, Liverpool's board and the Premier League since it would require the imposition of a nine-point penalty on the club.
By exercising those clauses the bank would also effectively take control of Liverpool. Although RBS's restructuring group describes itself as being responsible for "the management of any problem lending portfolios", the bank has no long-term plans to hold the club as its subsidiary. Instead it is expected RBS would prefer to fulfil another of its stated aims – the "maximising [of] debt recoveries" – by selling the club in short order.
That means there are also strong signs RBS will now be prepared to accept a knockdown price in order to cut its ties. During negotiations with prospective buyers Broughton, and the investment bank advising him, Barclays Capital, have maintained that Liverpool's debts with RBS must be paid in full as a minimum sale price.
Provided buyers still retain an interest in taking over Liverpool beyond 6 October, it will mean a more orderly sale process. There would be only one party for purchasers to negotiate with and the club would be debt free.
The departure of Hicks and Gillett is an outcome that would delight Liverpool fans. The Kop Faithful group wrote in an open letter to the RBS group's chief executive, Stephen Hester, this week: "Hicks and Gillett were proved to be no more than a pair of liars. The promised 'no Glazer style buy out' was all of a sudden [a leveraged buy out] – a club £350m in debt to effectively buy itself, when it had been sold for less than £180m in what seemed no time before."
http://www.guardian.co.uk/football/2010/sep/09/rbs-tom-hicks-george-gillett-sell-liverpool
We're being heard. This is the first relatively positive news for a while. Positive in the sense that RBS are now indicating that they'll not allow this to continue. Here's hoping...
• RBS places club's loans into its toxic-assets division
• Deadline for refinancing of owners' loans is 6 October
* Matt Scott
* guardian.co.uk, Thursday 9 September 2010 19.42 BST
A group of Liverpool fans wrote an open-letter to RBS this week claiming the club's owners Tom Hicks and George Gillett were 'liars'. Photograph: Dave Thompson/PA Wire/Press Association Images
Tom Hicks and George Gillett's ill-starred reign as owners of Liverpool looks like having less than a month to run after the club's loans with Royal Bank of Scotland were placed into its toxic-assets division.
The deadline for the refinancing of the owners' personal loans from RBS is 6 October, and that now looks set to be the date that Hicks and Gillett's association with England's most successful club will end. The bank's decision to switch the debts to its Global Restructuring Group is the strongest possible signal that these loans will not be extended.
The co-owners' previous attempt to refinance the debts in June, when they are believed to have offered to secure the loans against their US assets, was overruled by the club's board, led by the chairman, Martin Broughton. Now, with the loans having been shifted into RBS's so-called "bad bank", where all toxic assets have been housed since last year, it is clear the club's lender has also adopted a more steely stance towards the Americans.
One source with a knowledge of Liverpool's dealings with RBS said: "If it has been taken out of the hands of the corporate banking department they'll have a much more ruthless approach on 6 October." An informed view from another source close to the situation is that the bank would hope to sell the club, possibly at a knockdown price, in the coming weeks or as soon possible after 6 October.
According to the club's accounts to July 2009 Liverpool's owners owe £237.4m to RBS. Through a variety of companies in the UK and overseas, Hicks and Gillett are also personally exposed to tens of millions of pounds in other commitments to the club and its lender. These have been in the form of a mixture of cash, which the pair have injected through equity, and guarantees to the RBS loans. Last year's accounts stated this combination amounted to £145.3m, although it is believed to have risen dramatically after the last refinancing agreed five months ago.
RBS would hope to achieve an orderly sale without having to take control of Liverpool. However, depending on the terms of the April refinancing agreement – which have never been made public – that may prove difficult if the co-owners, who value the club at £800m, refuse to go quietly.
One tool at RBS's disposal is to force the insolvency of Liverpool's UK parent and associated companies. It is clear from mortgage documents lodged with Companies House that in the event of default RBS has the power to place Kop Football and Kop Football (Holdings), as well as Gillett's loan-security vehicle, Football UK Ltd, into administration. However that would be unpalatable for the bank, Liverpool's board and the Premier League since it would require the imposition of a nine-point penalty on the club.
By exercising those clauses the bank would also effectively take control of Liverpool. Although RBS's restructuring group describes itself as being responsible for "the management of any problem lending portfolios", the bank has no long-term plans to hold the club as its subsidiary. Instead it is expected RBS would prefer to fulfil another of its stated aims – the "maximising [of] debt recoveries" – by selling the club in short order.
That means there are also strong signs RBS will now be prepared to accept a knockdown price in order to cut its ties. During negotiations with prospective buyers Broughton, and the investment bank advising him, Barclays Capital, have maintained that Liverpool's debts with RBS must be paid in full as a minimum sale price.
Provided buyers still retain an interest in taking over Liverpool beyond 6 October, it will mean a more orderly sale process. There would be only one party for purchasers to negotiate with and the club would be debt free.
The departure of Hicks and Gillett is an outcome that would delight Liverpool fans. The Kop Faithful group wrote in an open letter to the RBS group's chief executive, Stephen Hester, this week: "Hicks and Gillett were proved to be no more than a pair of liars. The promised 'no Glazer style buy out' was all of a sudden [a leveraged buy out] – a club £350m in debt to effectively buy itself, when it had been sold for less than £180m in what seemed no time before."
http://www.guardian.co.uk/football/2010/sep/09/rbs-tom-hicks-george-gillett-sell-liverpool
We're being heard. This is the first relatively positive news for a while. Positive in the sense that RBS are now indicating that they'll not allow this to continue. Here's hoping...
