Liverpool which owes two banks £350m has renegotiated its debt with the Royal Bank of Scotland. Although Liverpool fans will be relieved that a deal has been done, after fears that the loans might be called in, the sequence of events does nothing to reassure them that the American co-owners, Tom Hicks and George Gillett, have the financial clout the football club needs, particularly to build the Stanley Park stadium.
Liverpool which owes two banks £350m has renegotiated its debt with the Royal Bank of Scotland. Although Liverpool fans will be relieved that a deal has been done, after fears that the loans might be called in, the sequence of events does nothing to reassure them that the American co-owners, Tom Hicks and George Gillett, have the financial clout the football club needs, particularly to build the Stanley Park stadium. The two supporter groups, ShareLiverpool FC and Spirit of Shankly, warned against another short-term fix and have stepped up their efforts to launch a serious bid to buy the club. ShareLiverpool FV have launched a revised initiative to raise £150m that would be used to make an offer to buy 60 per cent of the club, with an additional £100m sought from a commercial partner. The remaining £100m debt would be exchanged for convertible loan stock in the club, which would be bought from the banks in instalments over a 20-year period.
Under the deal with RBS Hicks and Gillett are believed to have extended the £290m RBS debt for another year, but agreed to pay back £60m. Whereas Gillett has raised capital through the sale of the Montreal Canadiens ice hockey franchise, Hicks, whose sporting and business empire has been hit hard by the global credit crunch, was forced to request extra time in the negotiations. Wachovia has now dropped out of the deal and they were believed to be asking for a guarantee of £70m. The fact remains that the club is in serious debt. Latest accounts show the parent company Kop Holdings to have lost £46.2m in the year to August 2008. Interest payments accounted for £36.5m of those losses. Somehow funding has to be found if the club is going to be able to compete financially with the likes of Manchester United.