Liverpool Could get hit with £60m Charge

Liverpool Football Club could face a £60m penalty charge if a solvent sale of the club does not succeed, it has emerged.

Last night Liverpool’s board agreed a sale to the owner of Boston Red Sox baseball franchise for around £300m, but the club’s current owners, Tom Hicks and George Gilett, have rejected the deal and threatened to derail a sale.

If a deal succeeds lender RBS’ £237m debt will be paid off and the club will continue, however Gillet and Hicks who have pumped millions into the club will be left considerably out of pocket. 

Hicks and Gillett are arguing that the true value of the club is almost double what the current bidders are offering, £600m, and the dispute is likely to land in lawyers’ hands to tussle over the true value of the company.

Andrew Nixon, partner for a major law firm has said, “ It’s very easy to name the paper value of the club, but until anyone is willing to offer £600m that is not what it is worth. At present the club’s stock is plummeting and it’s in the bottom three.”

RBS has endorsed the sale of £300m and has significant interest in the club’s future. However, if the deal does not go ahead before the bank’s deadline nine days away, RBS will hand the club a £60m penalty fee and may even call in its loan which would force the club into administration.

Nixon says, “That would lead to a situation whereby RBS would have control of the club, and administration would loom. The knock on effect of possible points deductions to compound the club's current status in the bottom three of the Premier League would be disastrous. Equally, the clubs stock and value would drop considerably.”

It is in the club and RBS’s interest to achieve a solvent sale of the business as a sale of Liverpool in administration will achieve a far smaller price.

Posted at 04:46PM Oct 07, 2010 by Marc Stenton in Insolvency  |  Comments[0]