By Nick Harris
17 September 2010
Tom Hicks, the co-owner of Liverpool who is desperate to cling to ownership and control of the club despite being unwilling or unable to invest major resources in its future, is hoping he will find funding to refinance the club’s debt from the global investment firm Blackstone, and specifically its GSO Capital Partners subsidiary, sportingintelligence has learned.
GSO’s own section of the Blackstone website describes it as “one of the largest credit-oriented alternative asset managers in the world and a major participant in leveraged finance.” Hicks has worked with Blackstone before.
Hicks and his co-owner George Gillett are widely perceived to be in their dying days in control of a club they took over in February 2007 with promises of a new stadium and a bright future for the club; neither have yet materialised. It was obvious within a year that something was badly wrong. Instead, the club owes RBS Bank at least £237m (it could be as high as £280m now) and that debt is due to be repaid or refinanced in October.
Gillett is almost certainly finished at the club and has reportedly accepted as much; he is struggling to repay money he borrowed in American to part-fund his Liverpool venture.
But Hicks still believes he can find cash to refinance the RBS debt, and he hopes it will come from GSO, a scenario that will horrify supporters who want the Americans out.
From the fans’ perspective, a ray of optimism comes from the fact that Hicks would have to meet conditions to borrow from GSO that he seems unlikely to be able to meet, relating to conditions set by Liverpool’s board.
If he wants to borrow from any source to refund the debt, he will, as a matter of course, need to give some security against the new borrowed money. Sportingintelligence understands that if he attempted to offer the asset of Liverpool (the club) as security, then the board – and specifically Martin Broughton, Christian Purslow and Ian Ayre – can and will vote against such a proposal.
In other words, Hicks won’t be able to borrow any money using Liverpool as security.
But if he were able to produce another asset as security, he may indeed be able to borrow the cash and attempt a refinancing. There is no obvious other asset in his troubled portfolio of interests, although as with all things related to the saga of Liverpool’s ownership, there are bound to be more twists yet.
The board has already prevented one attempt by Gillett this summer to refinance using Liverpool as an asset.
Broughton and Purlsow insist they are committed to find the right buyer for the club, someone with money to reduce the debt and also start work on the proposed new stadium. The search for such an owner is ongoing.