Belfast Telegraph

Thursday 24 July 2014

Liverpool owners 'relaxed' about debt

Liverpool's American owners Tom Hicks and George Gillett may face some difficult decisions regarding their continued involvement at Anfield but the future of the club is not under threat.

The pair have just over six weeks to agree a refinancing package on the loan they took out to buy the Barclays Premier League side in 2007.

Accountants KPMG expressed concern over the level of debt being incurred by Kop Football Holdings, Liverpool's parent company, after it posted losses of £42.6million in the year ending July 2008.

Most of that was a result of £36million of interest payments on a loan of £350million - which has to be renegotiated by July 24.

However, suggestions Liverpool are facing financial meltdown have been dismissed by sources close to the American duo as "totally wide of the mark".

The club itself posted profits of £10.2million but that was swallowed up by the huge interest payments of the parent company.

"The owners seem remarkably relaxed about it, which can only be a good sign," an insider told PA Sport.

"There is no threat to the club. Liverpool's profitability and profits are up.

"There are other clubs who are considerably more in debt than Liverpool are."

Hicks and Gillett are confident they can refinance the loan in time for the July deadline.

However, leading football financial experts believe in the long term they need a huge influx of cash from outside or they will have to sell up.

In January Kuwaiti billionaire Nasser Al-Kharafi offered £425million for overall control but the Americans only want to sell 50% - which will prove a significant hurdle to further investment.

"It is quite difficult but not impossible to get debt refinanced but it is absolutely not the ideal time to be negotiating debt positions," said Vinay Bedi, divisional director of investment management firm Brewin Dolphin based in Newcastle.

"They wouldn't be short of banks to turn to but the bank would make it very much on their terms - all companies that have restructured their debt deals in the last few weeks have got very onerous restrictions."

However, Bedi does not believe the club is close to going under.

"It does create an element of financial risk to the business because it is not a good position but the credibility of English football would be badly tarnished," he added.

"For one of the top four clubs to be in this position is not particularly ideal but I wouldn't have thought the bank would want to call in the debt.

"I don't think anyone genuinely believes Liverpool will not be playing in the Premier League and Champions League next season - it is just a question of who is running it and how it is structured."

Bedi said that if Hicks and Gillett did decide to sell there would be a number of interested parties - at the right price.

"From an overseas point of view there are probably people to buy it as there is a better economic attraction because of the exchange rate," he said.

"The Premier League is still the best market for marketing yourself across the world and the fact Liverpool are one of the key clubs in the Champions League makes it an added attraction."

Another leading analyst, Professor Tom Cannon, believes Hicks and Gillett may have to sell their interest in their American sport franchises or even cash in on some of Liverpool's most saleable assets.

Midfielder Xabi Alonso is a reported £23million target for Real Madrid while Argentina captain Javier Mascherano is reportedly interesting Champions League winners Barcelona.

"It is almost hard to imagine they can resist the pressure on them to bring in another investor," Cannon, professor of strategic development at Liverpool University's school of management, told Sky Sports News.

"But whether another investor will come in on the type of conditions Hicks and Gillett seem to be asking is open to question.

"I think it is more likely Hicks will sell some of his interest in the Texas Rangers (baseball team) or [Gillett will sell] the Montreal Canadiens (ice hockey team).

"Unless they either sell Alonso or do more buying and selling then they will be operating in very difficult conditions.

"They desperately need new finances, not least to take the burden of this debt and the related interest.

"They can't really seriously think in terms of another six-month extension, they need long-term secure financing."

Paul Rice, chairman of the leading fans group Spirit of Shankly, called on the Royal Bank of Scotland - with whom the Americans have their loan - to call in the debt.

"The revelations underline Hicks and Gillett's utter failure as owners," he told the Liverpool Echo.

"We urge Royal Bank of Scotland to not refinance the loan and instead seek more responsible and appropriate custodians for Liverpool Football Club.

"All an extension would do is deepen the club's problems."

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