Coup under way at Liverpool FC

Jayob10

It looks good for Broughton and Co. according to an expert.

http://www.director.co.uk/ONLINE/2010/10_10_liverpool_NESV_takeover.html

Liverpool chairman Martin Broughton seems to have finally found a viable bid for the club. But do shareholders Tom Hicks and George Gillett have the power to block the deal? Legal expert Bernd Ratzke discusses the likely outcome of next week's High Court challenge

Liverpool FC co-owners Tom Hicks and George Gillett have a tough battle on their hands. The American duo, shareholders of Kop Football (Holdings) Limited, will take their case to the High Court next week in an attempt to force the board to abandon its plans to sell the football club to New England Sports Ventures (NESV). Hicks and Gillett are unhappy with the £300m offer on the table from NESV, which would represent a loss of around £140m on their original investment, once the Royal Bank of Scotland, the principal creditor, has been paid.

Although they are the major shareholders, Hicks and Gillett are outnumbered on the board, which voted in favour of selling the football club. On Wednesday, Hicks and Gillett tried to reverse that decision by attempting to sack managing director Christian Purslow and commercial director Ian Ayre.

On the face of it, the Liverpool board, chaired by Martin Broughton, is acting correctly. Kop Football (Holdings) Limited is deeply indebted to the Royal Bank of Scotland, which holds a legal charge over the shares in the football club. The bank has now demanded repayment of its facilities and has set a deadline after which it will exercise its security. That deadline offers Hicks and Gillett very little room for manoeuvre.

The board’s legal obligations are clear. It must follow whatever course of action is most likely to see Kop Football (Holdings) Limited’s creditors repaid and, once they have been dealt with, to account for any residual value to its shareholders. That the residual value of Liverpool FC amounts to a loss doesn’t alter the board’s duty.

The bank has made clear its intention to exercise its security if its facilities are not repaid by the deadline. For the football club, that would mean going into administration. Under FA rules, administration brings with it a points penalty that would threaten the club’s Premier League survival, thus putting at risk a valuable revenue stream and no doubt significant sponsor support. If relegated, the value of the club would be severely diminished.

The trick therefore is to keep the club playing and to sell it as a going concern. The way to do that is to sell the subsidiary through which the club is operated for cash and to pay off the bank, with any balance being left in Kop Football (Holdings) Limited for the shareholders. There is no question here of the company being sold off without Hicks and Gillett’s consent. What is happening is that the board are converting Kop Football (Holdings) Limited’s major asset into cash. The shareholders will get whatever is left. If that represents a loss, it merely reflects the poor performance of the company in which they chose to invest.

So will the High Court halt the board’s current plans? It seems unlikely. Section 172 of the Companies Act 2006 lays down a general duty—so far untested in the courts—for each of the directors to act “in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole”.

The section goes on to lay down six further criteria: 1) The likely consequences of any decision in the long term 2) The interests of employees 3) The need to foster good relationships with suppliers and customers 4) The impact of the company’s operations on the community and the environment 5) The desirability of the company maintaining a reputation for high standards of business conduct and 6) The need to act fairly as between members of the company. It’s important to note that the duties prescribed in Section 172 are owed by the directors to the company, not its shareholders.

Hicks and Gillett face at least two hurdles. First, in appropriate circumstances, the duties owed to the company under Section 172 become duties owed to creditors. Assuming administration is inevitable in the event of the company being unable to meet its obligations to RBS, it is hard to see why the interests of creditors would not prevail.

Additionally, a sale of the football club as a going concern seems more likely to safeguard the interests of its employees than a break-up. Although Hicks and Gillette could argue that the holding company itself has no employees whose interests need to be considered. In addition, loyal fans might also take the wider view that new owners would do much to enhance the football club’s prospects.

There are two further arguments to consider. It is not for the courts to make decisions that fall within the remit of company directors. So long as a director has acted reasonably, having considered all relevant factors, any decision he or she takes will be justified. It is irrelevant whether that decision proves right or wrong. What matters is that directors reach decisions for which they are willing to be accountable. This appears to be the case with the board of Kop Football (Holdings) Limited, which has taken plenty of advice and is quite willing to stand by its decision.

Earlier this year, binding undertakings not to change the composition of the board were demanded from Hicks and Gillett when RBS agreed temporarily to extend its facilities to Kop Football (Holdings) Limited, so attempts to oust Purslow and Ayre from their executive roles are unlikely to succeed. It rather looks as if the deal with the Red Sox owners is set to go through.

Bernd Ratzke is Head of Corporate at Dawsons LLP

mike65

mike65 wrote: »

Obviously! Anyway as was pointed out on the LFC thread there is no need to go to admin regardless of the court case. At worst RBS would roll over the debt for a few days and then NESV take over as the club is moved into their hands by RBS.

Fuhrer wrote: »

The question is where is Mike getting his information, its already been said by the chief of the Premier League that if they go into administration then they get docked.

This is the official head of the league, not some anonymous inside source.

http://www.sportingintelligence.com/2010/10/10/liverpool-latest-full-purslow-transcript-and-why-administration-makes-no-sense-101002/

Administration would take one of two forms: One is a “pre-packaged” deal whereby the club would enter administration for a few days before being sold to NESV anyway. If a nine-point deduction had been put on the club and NESV were genuinely scared by that, then no pre-packaged deal could be agreed, so that route would not be followed.

The other form is an uncertain “open” administration where RBS is not in control, Liverpool are hit with a points penalty, RBS have no idea of what the ultimate sale price might be, and therefore risk getting only a fraction of their cash back (20p in the £ or whatever).

Hence administration makes no sense for RBS if NESV are really going to pull out with a points penalty, and that’s one reason it’s unlikely to happen. RBS would be the ones to trigger administration; and they won’t act against their own self-interest.

Mental Mickey

Helix wrote: »

stop fretting about things you can do nothing about. when something is official its official, until then its idle speculation used to increase ratings or boost sales

ssn is an entertainment channel there to make money on ad sales, remember that

Not fretting at all. Just trying to get to grips with all this information. That's all.

pwd

http://uk.eurosport.yahoo.com/12102010/2/singapore-billionaire-bids-320-mln-stg-liverpool.html

Singapore billionaire bids 320 mln stg for Liverpool

* Will also make 40 million pounds available for new players

* Says cash offer will remove 200 mln pounds debt overhang

* Lim urges Liverpool board to consider his revised offer

Singapore's rags-to-riches billionaire Peter Lim bid 320 million pounds ($509.1 million) on Tuesday to buy Liverpool Football Club, a revised offer that tops rival bidder New England Sports Ventures (NESV).

The reclusive Lim, the Southeast Asian city-state's eighth richest man with a fortune estimated at $1.6 billion by Forbes magazine, said he will also make a further 40 million pounds available for manager Roy Hodgson to purchase new players.

Lim said in a statement that his cash offer, funded solely by his own wealth, would cover the club's debts estimated at 237 million pounds.

The rest would meet bank interest and 40 million pounds for working capital and other liabilities.

"My offer provides a firm financial platform from which the club can rebuild. Given the manner in which the sale process has been handled, I feel (Liverpool chairman) Martin (Broughton) and the board owe it to me, to the club, and to the supporters, to consider my offer," Lim said.

The offer, revised after an earlier bid of 300 million pounds, has been lodged with Broughton. It comes amid a battle in London's High Court to decide whether the club's much-hated American owners Tom Hicks and George Gillett can block the club's sale to NESV. [ID:nSGE69B09N]

Liverpool's independent directors led by chairman Broughton had earlier agreed to sell the club to NESV, the owners of the Boston Red Sox baseball team, in a deal valued at 300 million pounds.

Lim, 57, a sports fan better known for his links to Manchester United, made his fortune through stockbroking and has interests in a range of industries including palm oil, fashion, logistics, food and beverage and healthcare. [ID:nSGE69B02Q]

His investment holdings include large stakes in Wilmar , the world's largest palm oil firm, and Singapore fashion retailer FJ Benjamin .

"I am committed to rebuild (Liverpool football) club so that it can soon regain its position at the pinnacle of English and European football, where it truly belongs. This is why I have stepped forward with this offer," he said.

Singapore, home to one of the world's busiest container ports, is known for its business-friendly environment and as a financial centre, especially for private wealth management.

It is also seeking to put its imprint on the global sports scene -- for the past three years it has immaculately hosted the only night-time F1 Grand Prix.

The city of 5.1 million people are soccer-mad. The English Premier League is a huge draw on cable TV and there are scores of Liverpool fan clubs across the island.

Bitter rival Manchester United is also extremely popular, and Lim has exclusive rights to own and operate a chain of Manchester United-themed restaurants and bars in Asia.

FJ Benjamin, in which Lim is the second-largest shareholder, previously operated the Manchester United Theatre of Dreams stores in the city-state.

Lim describes himself as the son of a fishmonger who worked his way through school as a cabbie, waiter and cook. He made his fortune as a stockbroker and became a private investor in 1996. He keeps a relatively low profile and rarely gives media interviews.

He lives in a condominium in one of the most expensive localities in Singapore, where he owns the entire building.

Liverpool fans seem to be saying they'd prefer buyers like John Henry & co, who have a good track record of developing clubs in an organic kind of way, rather than putting massive amounts of money in. Will they still have that point of view when there is a richer, less well-known, bidder?

Dont be at yourself

I'd prefer NESV. A track record of sport team management > ownership of a few Man Utd bars.

Dr Galen

pwd wrote: »

http://uk.eurosport.yahoo.com/12102010/2/singapore-billionaire-bids-320-mln-stg-liverpool.html



Liverpool fans seem to be saying they'd prefer buyers like John Henry & co, who have a good track record of developing clubs in an organic kind of way, rather than putting massive amounts of money in. Will they still have that point of view when there is a richer, less well-known, bidder?

yes

Mental Mickey

NekkidBibleMan wrote: »

I'd prefer NESV. A track record of sport team management > ownership of a few Man Utd bars.

Don't think he's anything more than an opportunist???

Fuhrer

Mental Mickey wrote: »

Don't think he's anything more than an opportunist???

A successful and profitable football club looks like a good opportunity

Mental Mickey

Fuhrer wrote: »

A successful and profitable football club looks like a good opportunity

What I meant was that I think he's chancing his arm, just to get a bit of the limelight at the last minute??

Plus, I think we need a hell of a lot more than £40m investment to improve our squad??

K-9

Mental Mickey wrote: »

Plus, I think we need a hell of a lot more than £40m investment to improve our squad??

Thing is, we don't know how much NESV are willing to spend.

Mental Mickey

Judgement brought forward to 10am lads.

Mental Mickey

Heard a lawyer on SSN this morning saying that it looks likely that RBS will take over the club, and that NESV will have full control within a couple of days!?

missingtime

Not so mental anymore, eh Mickey :pac:

thegen

tariqpanja tariq panja
RBS wins case against #LFC owners. NESV sale now subject to ratification at board meeting
37 minutes ago via twitter.

Mental Mickey

Have G&H released any statement about today's happenings yet?

Leiva

Mental Mickey wrote: »

Have G&H released any statement about today's happenings yet?

Yep...

Mental Mickey

mixednuts wrote: »

Yep...

Any link?











EDIT: PMSL


BTW........love your avatar!

amacachi

mike65 wrote: »

Ah the bitterness, boo hoo nonsense is great to read.

Gotta disagree really, the last few months in particular of Liverpool fans' nattering about this matter have been more tiresome than entertaining.

K-9

amacachi wrote: »

Gotta disagree really, the last few months in particular of Liverpool fans' nattering about this matter have been more tiresome than entertaining.

You shouldn't really click on a "Coup under way at Liverpool FC" thread if it is so tiresome.

That is far too obvious an answer though so I suspect something else.

amacachi

K-9 wrote: »

You shouldn't really click on a "Coup under way at Liverpool FC" thread if it is so tiresome.

That is far too obvious an answer though so I suspect something else.

How old is this thread? Maybe then you'll see what I was referring to rather than making veiled accusations.

K-9

amacachi wrote: »

How old is this thread? Maybe then you'll see what I was referring to rather than making veiled accusations.

Not too tiresome then?