Liverpool's Debt Is Moved to RBS Restructuring Team as Deadline Approaches
Liverpool’s owners may struggle to get an extension on their 237-million pound ($366 million) loan after Royal Bank of Scotland Group Plc moved the 18-time English soccer champion’s debt to its restructuring team, two people familiar with the situation said.
RBS agreed in April to extend the loan until Oct. 6 to give Americans George Gillett and Tom Hicks time to sell. By involving its restructuring team, the government-owned bank is signaling that it’s unlikely to give them further time and will probably take a role in finding a buyer, one of the people said. The two people declined to be identified because talks are continuing.
Hicks and Gillett bought the club in 2007 for 219 million pounds, including debt, and their holding group now has debts of 351 million pounds. The five-time European champion failed to reach this year’s Champions League, which can add more than 30 million pounds in revenue. While Hicks in April said he wanted as much as 800 million pounds for the team, no bidder has approached the asking price.
“The roulette wheel stops spinning on Oct. 6,” said Stephen Schechter, founder and chief executive officer at Schechter & Co. in London, who has helped Newcastle, Southampton and Germany’s Schalke raise money.
Penalties
The loan extension had penalties for not selling the club by a deadline and the additional costs mean Kop Football (Holdings) Ltd, Liverpool’s parent company, owes about 260 million pounds to the bank, the people said.
Hicks and Gillett tried to refinance the debt with other lenders in June. Those attempts were blocked by board members Chairman Martin Broughton, Commercial Director Ian Ayre and Managing Director Christian Purslow.
Jonathan Brill, a spokesman for Hicks and Gillett, declined to comment. RBS Spokeswoman Aiofe Reynolds wasn’t able to immediately comment.
The bank has faced protest from Liverpool’s supporters. They’ve sent thousands of e-mails to bank executives, including CEO Stephen Hester, urging them not to extend the Americans’ credit facility. Under the terms of the deal, RBS may take control of the club if a new buyer isn’t found by the time the debt matures.
Interested Parties
Prospective buyers were told they would have to pay off RBS debts in full, finance a new stadium and improve the squad. The people said RBS would now accept a down payment of between 100 million pounds and 150 million pounds with an agreement to pay the remainder of the loan down over a longer term.
Groups from India and Hong Kong linked with Liverpool have released statements saying they are no longer interested in bidding. Yahya Kirdi, a Canada-based Syrian investor, claims to represent a group interested in acquiring the team.
“If you were a prospective buyer, I would call RBS and say I’m interested in buying your loan,” Schechter said. “I would notify Gillett and Hicks that I’m the new lender and there will be no extensions, renewal or modifications of the loan: It is due and payable in full on Oct. 6. What that does is stop the game.”
In March, Hicks and Gillett turned down a 110-million pound offer from New York-based Rhone Group LLC for 40 percent of the club. The money would have been used to pay down the debt.
To contact the reporter on this story: Tariq Panja in London at at tpanja@bloomberg.net
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