Liverpool agree new refinance deal with RBS and Wachovia Bank

Liverpool football clubs joint owners have agreed a new refinance loan with Royal Bank of Scotland and Wachovia. The details of the new deal which is believed to be for another year, means Tom Hicks and George Gillett repay £60 million of the outstanding loans that will “reduce the debt to £230 million,” reports the Telegraph. £40 million is expected to be repaid this week, with the remaining £20 million due later in the year.

The original loan taken out by the owners in January of last year was for £350 million, however “Sources with knowledge of the deal” say that “figure has already been reduced to £290 million since last summer, and will come down by a further £60 million as a condition of the new deal.”

Club managing director Christian Purslow is understood to have negotiated the loan with the banks, who insisted on the £60 million repayment “as a condition of extending a loan facility.” By paying off £120 million of the outstanding debt, the Americans will reduce their annual interest payments, but it is possible the banks may have demanded a higher rate to extend their line of credit.

Liverpool’s owners unable to meet Friday’s loan deadline

Liverpool Football Club’s American owners, Tom Hicks and George Gillett Jr. were unable to secure an extension to their £350 million loan before Friday night’s deadline.

The co-owners, had reached an agreement in principle two months ago with the Royal Bank of Scotland (RBS) and Wachovia about refinancing their existing loans. However Friday night’s deadline passed with Hicks failing to provide the guarantee, “a sum believed to be in the region of £70 million, that Wachovia had requested,” claims The Times.

“That deadline has been described by sources as “fluid”, with negotiations set to continue into next week,” adds the story.

Gillett has raised capital through the sale of his ice hockey franchise the Montreal Canadiens, However the story suggests Hicks who’s “sporting and business empire has been hit hard by the global credit crunch, has been forced to request extra time in his attempt to satisfy Wachovia.” However the American businessman “is said to be optimistic that a solution will be found.”

Uncertainty over the ownership of the club is bound to continue, even if Hicks and Gillett succeed in securing another short-term loan.


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Hicks and Gillett bank deadline may be extended

Negotiations between Liverpool owners Tom Hicks and George Gillett and RBS over refinancing a £350 million loan may extend beyond Friday's deadline claims the Telegraph.

“The two parties have been in talks for several months and both sides have expressed confidence that a deal will be done.” But the story suggests that any deal may not be concluded by Friday despite that being the date of the loans expiry.

“The owners have thus far committed £185 million of personal guarantees and other collateral for the loan,” of which the football club are liable for £105 million. The remaining £245 million lies with the holding company, Kop Football Ltd, and secured by Hicks and Gillett.

RBS Bank write letter to LFC supporters

"The Royal Bank of Scotland has taken the unprecedented step of writing to Liverpool Football Club’s supporters to justify its continuing financial support of the club’s American co-owners" reports the Post.

The bank has been inundated with emails from Liverpool fans requesting the bank to withdraw its financial assistance to Tom Hicks and George Gillett.

“The sending of the email is virtual confirmation the loan will be refinanced.” Says the article.

The message from RBS says:

Thank you for your email expressing concern about RBS' banking arrangements with Liverpool FC and its current owners. We are aware of the strength of feeling of a number of fans on this matter and have corresponded with many during the course of the past year or so.

Perhaps I can start by putting RBS' relationship with Liverpool FC in context. RBS is the main banker to the Club including all of its operating accounts, cash management, online banking, automated payments, and credit card processing to facilitate ticket sales and retail merchandising. We also provide a credit facility to support the Club's working capital requirements and a letter of credit facility to facilitate the purchase of players from non-Premiership Clubs, along with a loan facility for design, planning and other preparatory work for the proposed new stadium at Stanley Park. We have set out to establish a long term relationship with the Club, and we look forward to this continuing for many years to come.

We also lent money to the Club's parent, Kop Football Limited, so that it could repay debt which was on the balance sheet of the Club at the time of its acquisition by George Gillett and Tom Hicks. This is the only portion of Kop Football's bank debt for which the Club is legally responsible. We took great care when making our original loan in early 2007 and when refinancing it last January to distinguish between obligations of the Club, primarily those outlined above, and obligations of its parent company, the latter being secured by personal guarantees and collateral from the owners and a pledge of the shares they own in the Club.

As a result the Club does not suffer the burden of debt implied by a lot of the recent press reports and, in our view and that of the executive management of the Club, it is financially healthy and able to service comfortably its debt obligations from cash flow generated by its playing and commercial activities. It is in our commercial interest to support the Club in the manner described above so that it can continue to perform successfully on and off the pitch.

As far as the Government is concerned, they have been very clear that they do not wish to exercise day to day control over RBS or make commercial decisions for us. Indeed they set up an independent body, UKFI, to oversee the Government's shareholding in RBS, so matters such as strategy and governance can be agreed, while they leave commercially related matters to us.

RBS attaches a great deal of value to being associated with Liverpool FC. I hope my comments reassure you as to the strength and depth of our relationship with the Club and that we will endeavour to contribute to its long term health and success.

Kind Regards,
Roger Lowry, Head of Group Public Affairs, Royal Bank of Scotland Group

Spokesman for fans’ group ‘Spirit of Shankly’, James McKenna said he was “surprised and disappointed.” Speaking to the paper last night, he said: “The fans’ relationship with RBS is not great because of their support for Hicks and Gillett. I’m disappointed that the bank doesn’t feel we should have any input or say on this, even though it is tax-payers’ money that has bailed them out. The main value for RBS must be financial, in terms of the interest payments they receive.”

Reds close to re-financing bank deal

New Liverpool managing director Christian Purslow will open talks with the Royal Bank of Scotland over refinancing the owners’ £350 million loan in the coming days, with a view to securing a new deal before the July 24 deadline reports the Telegraph.

The story goes on to say that “contrary to reports on Tuesday, owners George Gillett and Tom Hicks have not finalised the terms of the refinancing yet, though there is an expectation that an agreement will be reached.”

New managing director Purslow, who was appointed on Monday, has a finance and private equity background and “the RBS deal is among his priorities,” reports the story.

The article also says that “RBS will ask Gillett and Hicks to provide additional security on top of the £185 million in personal guarantees and cash they provided in January 2008. The owners are working hard to try to provide it, with Gillett selling the Montreal Canadiens and Hicks seeking a buyer for the Texas Rangers. Their willingness to cash in on US sports assets underlines their belief that Liverpool remains their most profitable sporting asset."

Hicks and Gillett will re-finance LFC loan

The former Football League chairman Keith Harris, believes that Liverpool co-owners Tom Hicks and George Gillett are likely to succeed in refinancing their £350 million loan from RBS and Wachovia banks before the July deadline claims today’s Telegraph. Harris, speaking at the Soccerex forum at Wembley Stadium, said. "I think there will be a negotiated settlement,"

"The only way banks can make money is to start lending again. The two banks RBS and Wachovia, have said they don't want to be involved in this kind of business and RBS are quite stretched.

Harris believes Premier League clubs have suffered a slump in value of up to 20 per cent since the economic crisis struck.

Harris said: "There is some renewed interest now. There's been a shocking fallow period but just like you are seeing investors putting money into property companies and banks, people are investing again in football clubs.